ING Profit Rises as Company Avoided Writedowns

ING Profit Rises as Company Avoided Writedowns

Feb. 20 (Bloomberg) -- ING Groep NV, the biggest Dutch financial-services firm, said fourth-quarter profit rose 18 percent as the company avoided large writedowns on asset-backed securities and booked investment gains.

Net income increased to 2.48 billion euros ($3.65 billion) from 2.1 billion euros a year earlier, ING said today in an e- mailed statement. That beat the 2.38 billion-euro median profit estimate from eight analysts surveyed by Bloomberg. ING had gains of 1.03 billion euros from selling shares in ABN Amro Holding NV and Royal Numico NV and reported a 194 million-euro pretax loss on subprime mortgage and other related issues.

Banks around the world have booked more than $146 billion of writedowns and credit losses amid the collapse of the U.S. subprime mortgage market. Amsterdam-based ING, which traces its roots to 1743, said in November that its 83 billion-euro asset-backed security portfolio was of ``high quality.''

``ING is a good and solid company as they capitalize well on opportunities in emerging markets, especially in Latin America and Asia,'' Paul Beijsens, an analyst at Theodoor Gilissen Bankiers NV in Amsterdam, said ahead of the results. Beijsens rates ING a ``buy.''

ING has dropped 36 percent over the last year in Amsterdam trading compared with a 32 percent decline in the 60-member Bloomberg Europe 500 Banks and Financial Services Index. Among 36 analysts tracked by Bloomberg who cover ING, 23 have ``buy' ratings on the stock while six advise selling. Seven rate it a ``hold.''

``ING has ample room to fund organic expansion and add-on acquisitions and we will continue to reinforce our franchise to drive commercial growth,'' the company said today, adding that it plans to raise its 2007 dividend 12 percent to 1.48 euros a share.

`High Quality' Assets

Asset markdowns and charges reduced ING's profit by 61 million euros in the third quarter, said ING, which operates in more than 50 countries. About 3.1 billion euros of its asset-backed security portfolio, as of the end of September, were subprime assets, ING said in November.

The Dutch company's risk related to so-called Alt-A residential-mortgage-backed securities was 26.9 billion euros and collateralized debt and loan obligation risks were 1.1 billion euros, the lender said on Nov. 9. Alt-A mortgages fall between subprime and prime and require little or no documentation.

ING Chief Executive Officer Michel Tilmant said Nov. 9 that he expects a gain in the fourth quarter of about 1 billion euros from selling shares in ABN Amro, which was acquired by a group of lenders last year in the biggest banking takeover, and from divesting a stake in Numico, the Dutch baby-food maker bought by Groupe Danone SA from France.

ING spent more than $4 billion last year buying financial companies in Turkey and Latin America. The company agreed to purchase Banco Santander SA's Latin American pension and annuity businesses for $1.6 billion, making it the largest pension-fund manager in the region after Banco Bilbao Vizcaya Argentaria SA. In June, it agreed to pay $2.67 billion for Turkey's Oyak Bank.

BLOOMBERG