Bloomberg News
AMSTERDAM The Dutch banking and insurance giant ING Group NV on Thursday reported earnings for 2000 in line with expectations, saying operating profit rose 24%, to $3.7 billion.
However, the company did sound a note of caution about prospects for 2001.
Still with the consolidation of last years acquisitions of insurers ReliaStar, Aetna Financial Services, and Aetna International, analysts said ING should have little trouble topping the 12% organic growth in operating profit per share achieved in 2000, despite worries about a slowdown in the global economy.
The group reported a rise in operating profit in its core insurance operations of 20%, to $2.17 billion, while the banking activities saw a rise of 30%, to $1.53 billion.
But despite the full-year growth in banking, ING suffered a serious slowdown in the fourth quarter as results at its investment banking division nose-dived, turning in a fourth-quarter loss of $53.5 million.
The troubles at Barings investment banking were largely anticipated and ING has since announced a radical scaling back of its European operations, while it sold a chunk of its U.S. activities to Dutch rival ABN Amro Holding NV at the end of January.
But the deterioration was far worse than expected, said Bart Horsten, an analyst at Fvan Lanschot Bankiers in Amsterdam.
For the full year, the division reported a risk-adjusted return on capital, a measure to assess performance on a risk basis, of just 1% compared with 9% the previous year.
Given the uncertainties experienced by rivals in the banking sector, analysts reiterated that ING is likely to prove one of the safer plays among large financial stocks because of its focus on insurance.
According to Mr. Horsten, with the consolidation of Aetna and ReliaStar in 2001, insurance will account for almost three-quarters of INGs overall business.
The group said that in the current year, it will focus on integrating its acquisitions and achieving synergies and has no plans for any major purchases for the time being.
The group is also proposing a 2-for-1 share split which will be put to its shareholder meeting in April.
