AMSTERDAM (AP)—ING Groep NV is struggling with how to repay €3 billion ($4 billion) it still owes the Dutch state from bailouts following the 2008 financial crisis but is unlikely to spin off its insurance business until sometime in 2013.
The remarks from chief executive Jan Hommen came as the bank and insurance company reported fourth quarter earnings that showed a significant rise in profit for in the fourth quarter of last year, even though Europe’s debt crisis increasingly weighed on business.
“The financial crisis spread further into the real economy, and uncertainty around the European sovereign debt crisis continued to erode confidence and amplify market volatility,” Hommen said Thursday.
Shares fell 3.6 percent to €6.995 in early trading in Amsterdam.
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The group reported a fourth quarter net profit of €1.19 billion ($1.58 billion), way up from the €130 million it posted in the same period the year before.
The increase was mostly due to a one-time €1.29 billion profit from selling its insurance business in Latin America and its real estate investment management businesses in Europe and Asia. ING also benefited from a €647 million gain from buying back ING-issued bonds that were trading below their face value—a maneuver only possible when investors doubt the bonds will be repaid.
Those one-off items helped compensate for tough conditions for its day-to-day businesses.
Its banking division saw “underlying” operating profits—a nonstandard measure—drop 45 percent in the fourth quarter to €793 million.
SNS Securities analyst Lemer Salah said the banking operations performed worse than expected as competition for retail deposits increased and the bank had to offer customers better deals, hurting margins.