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ING profit dented by loss on sale of Korean arm

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AMSTERDAM (AP) — 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 ($136 million), down from €659 million in the same period a year ago. During the quarter, it booked a €950 million loss on the sale of its South Korean insurance arm. Underlying profits, which exclude tax and one-time items, were €891 million, up 5.6 percent.

ING received €10 billion 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, leaving it with a remaining tab of €1.5 billion.

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 percent higher at €9.68 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 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 as homeowners repaid the underlying mortgages, and the state currently stands to book a €400 million 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.

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