ING Q3 profit falls following Korean asset sale; new CEO says 'thanks' for 2008 state aid

AMSTERDAM – ING Groep NV saw its third-quarter profit fall sharply after it booked a loss on the sale of operations in South Korea.

However the company’s new chief executive said Wednesday profits on an underlying basis were stable and that the company is close to repaying rescue money it received from the Dutch state in times of crisis in 2008 and 2009.

Jan Hommen, the executive who stepped in after the bailouts to oversee ING’s restructuring, retired on Oct. 1. His replacement, Ralph Hamers, said Wednesday that ING is “grateful” for the taxpayer money.

Net profit for the quarter was 101 million euros ($136 million), down from 659 million euros in the same period a year ago. During the quarter, it booked a 950 million euro loss on the sale of its South Korean insurance arm. Underlying profits, which exclude tax and one-time items, were 891 million euros, up 5.6 per cent.

ING received 10 billion euros of state aid in 2008. It has been steadily shedding operations and repaying that debt, plus interest, ever since. On Wednesday it repaid 1.13 billion euros, leaving it with a remaining tab of 1.5 billion euros.

Investors appeared impressed by the underlying performance and the pledge to repay the bailout cash and the company’s share price was trading 4.4 per cent higher at 9.68 euros in early trading in Amsterdam.

Alongside the quarterly results, ING updated markets on the results of a deal the company struck a deal in 2009 with the Dutch state to offload most of its 24 billion euros portfolio of subprime U.S. mortgage-backed bonds.

That agreement, struck when the value of the portfolio was difficult to determine, has proved surprisingly fair: the portfolio has shrunk to 6 billion euros as homeowners repaid the underlying mortgages, and the state currently stands to book a 400 million euro profit when it sells the remainder of the portfolio next year.

ING said it was near to meeting demands from European regulators for it to hive off its insurance operations to compensate for the advantage of having a state backstop during the financial crisis. Earlier this year, ING’s U.S. insurance arm was separated in an initial public offering.

The company also said it expects to float off its European insurance operations next year and has decided to include its Japanese insurance arm in that offering, rather than selling it separately as it has other Asian operations.