ING posts $1 bln loss, UniCredit profit falls 58 percent
Güncelleme Tarihi:
The Associated Press
Oluşturulma Tarihi: Mayıs 14, 2009 00:00
AMSTERDAM, MILAN - ING Groep, the Dutch bank and insurer, reported yesterday a 793 million euros ($1.08 billion) net loss for the first quarter, blaming falling asset prices, the weak performance of insurance contracts, and charges for restructuring its business.
Italy's largest lender, UniCredit, meanwhile, said first quarter earnings dropped by 58 percent.
The ING loss compares with a net profit of 1.54 billion euros in the same period a year ago and with a 3.1 billion euros loss in the fourth quarter.
Losses came from all directions for the financial group, which said it suffered a total of 1.7 billion euros worth of "negative impacts stemming from the market turmoil."
"Market conditions remained challenging in the first quarter as equity markets declined further, credit spreads remained elevated, real estate prices continued to fall and loan losses increased as the crisis spread from the financial markets to the real economy," said ING Groep Chief Executive Jan Hommen, who took the job after his predecessor resigned in January.
Global economic environment continues to be fragile
He didn't offer any forecast for the rest of the year, saying "markets are volatile and the economic environment continues to be uncertain."
"Our first priorities are to reduce costs, risk and leverage to strengthen the Group," Hommen said in a statement. ING's insurance arm lost 979 million euros on a mix of bad investments and a 550 million euros charge on insurance contracts that aren't worth as much as the company originally thought.
Its banking arm had pretax profit of around 700 million euros, benefiting from the large numbers of investors keeping their money in cash accounts on which ING pays them little interest.
However, provisions for bad loans rose dramatically, to 772 million euros from 98 million euros a year ago.ING said its Tier 1 ratio - a key measure of solvency for banks - rose to 9.7 percent from 9.3 percent at year-end.
Thousands of jobs cut, more may be in the pipeline
The company also took a 329 million euros hit for restructuring costs.ING announced 7,000 job cuts in January, representing 5 percent of its total work force, and said yesterday that 5,380 have been cut so far. Italy's largest bank, Unicredit, yesterday said first quarter earnings fell by 58 percent, as a lack of nonreccuring tax benefits offset an improvement in trading profit.
UniCredit said in a statement that its net profit was 447 million euros ($611.63 million), compared with 1.06 billion euros in the same period of 2008, citing the "challenging environment."UniCredit has said it would seek as much as 4 billion euros in state aid to stave off the effects of the global economic downturn.
The bank has insisted it has enough liquidity to survive the downturn, but was considering the aid to remain competitive with other banks in the market that have been shored up.
UniCredit said its core Tier 1 ratio dipped to 6.4 percent in the first quarter from 6.5 percent in the previous quarter, but would be at about 7.1 percent if counting the 4 billion euros in government bonds, CEO Alessandro Profumo told a conference call.
To help weather the crisis, UniCredit cut bonuses in 2008, canceled a cash dividend and has been cutting costs and jobs.
The ING loss compares with a net profit of 1.54 billion euros in the same period a year ago and with a 3.1 billion euros loss in the fourth quarter.
Losses came from all directions for the financial group, which said it suffered a total of 1.7 billion euros worth of "negative impacts stemming from the market turmoil."
"Market conditions remained challenging in the first quarter as equity markets declined further, credit spreads remained elevated, real estate prices continued to fall and loan losses increased as the crisis spread from the financial markets to the real economy," said ING Groep Chief Executive Jan Hommen, who took the job after his predecessor resigned in January.
Global economic environment continues to be fragile
He didn't offer any forecast for the rest of the year, saying "markets are volatile and the economic environment continues to be uncertain."
"Our first priorities are to reduce costs, risk and leverage to strengthen the Group," Hommen said in a statement. ING's insurance arm lost 979 million euros on a mix of bad investments and a 550 million euros charge on insurance contracts that aren't worth as much as the company originally thought.
Its banking arm had pretax profit of around 700 million euros, benefiting from the large numbers of investors keeping their money in cash accounts on which ING pays them little interest.
However, provisions for bad loans rose dramatically, to 772 million euros from 98 million euros a year ago.ING said its Tier 1 ratio - a key measure of solvency for banks - rose to 9.7 percent from 9.3 percent at year-end.
Thousands of jobs cut, more may be in the pipeline
The company also took a 329 million euros hit for restructuring costs.ING announced 7,000 job cuts in January, representing 5 percent of its total work force, and said yesterday that 5,380 have been cut so far. Italy's largest bank, Unicredit, yesterday said first quarter earnings fell by 58 percent, as a lack of nonreccuring tax benefits offset an improvement in trading profit.
UniCredit said in a statement that its net profit was 447 million euros ($611.63 million), compared with 1.06 billion euros in the same period of 2008, citing the "challenging environment."UniCredit has said it would seek as much as 4 billion euros in state aid to stave off the effects of the global economic downturn.
The bank has insisted it has enough liquidity to survive the downturn, but was considering the aid to remain competitive with other banks in the market that have been shored up.
UniCredit said its core Tier 1 ratio dipped to 6.4 percent in the first quarter from 6.5 percent in the previous quarter, but would be at about 7.1 percent if counting the 4 billion euros in government bonds, CEO Alessandro Profumo told a conference call.
To help weather the crisis, UniCredit cut bonuses in 2008, canceled a cash dividend and has been cutting costs and jobs.