AMSTERDAM (AP) — ING Groep NV, the bailed-out Dutch bank and insurance company, has announced plans to cut 2,400 jobs in Europe over the next two years as the company unveiled net profit rose in the fourth quarter due to larger gains from asset sales.
Net profit was €1.43 billion ($1.99 billion), up from €1.19 billion in the same period a year ago, as sales of assets this year were larger. The company said that "underlying" banking profits fell to €184 million from €664 million due to a weakening economic climate, with higher loan loss provisions, a lower interest margin, and higher costs due to higher taxes.
The job cuts, mostly at retail operations in the Netherlands and Belgium, come on top of 2,350 cuts at commercial banking and insurance operations announced in November. ING employed around 93,000 at last report, in June.
For the group's insurance operations, "underlying" profits swung to a €272 million profit from a €1.51 billion loss in 2011, when the company was forced to write down the value of its U.S. operations. Underlying profit, a nonstandard measure intended to help understand the company's operating performance, still varies widely depending on asset valuations and investment windfalls and losses.
CEO Jan Hommen said results "held up well, despite the sovereign debt crisis in Europe and weak economic climate which persisted throughout 2012." Underlying profits for the whole company were down 5.2 percent for the year.
Hommen said the economic outlook remains "challenging" and the company still needs to cut costs. Shares fell 0.6 percent to €6.89 in early trading in Amsterdam. That gives the company a market value of around €26 billion, roughly half of its book value.
ING has suspended dividends until it finishes repaying the Dutch state €10 billion in direct aid it received during the financial crisis of 2008. It has repaid €10.2 billion, but still has €2.25 billion left to go, due to interest costs.
ING must also fully split its insurance and banking arms by 2018 as part of a deal struck with European regulators to compensate for the aid it received in 2008. In the interim, the company has steadily been selling off operations, most notably this year the €1.1 billion sale of banking operations in Canada.
Other hangover costs from the crisis and its aftermath continue, as ING for the first time paid a €175 million bank tax imposed by the Dutch government to cover its costs from the financial sector — in 2008 it nationalized ABN Amro, the Dutch parts of Belgium's Fortis, and gave bailouts to ING and SNS Reaal NV. The ABN nationalization alone cost taxpayers €32 billion.
SNS finally failed anyway and was nationalized just this month; ING will have to pay around 1/3 of a special €1 billion levy on big Dutch banks in 2013, as the SNS nationalization saved them from greater costs they would have incurred had SNS been allowed to go bust.