Dutch bancassurer ING Groep missed fourth-quarter expectations, casting a shadow over plans to spin off its insurance business and refocus as a leading European retail bank.
ING also said on Wednesday it would take more time to achieve its goal on loan loss provisions, which is just less than half of where those provisions currently stand.
ING posted a loss of €712 million ($972 million) for the fourth quarter, which it had said it would do after paying back €5 billion in state aid plus penalties. A Reuters poll had found a forecast for a €306 million loss.
The banking business earned €132 million on an underlying pretax basis, below the forecast for €317 million. Higher savings margins and a favorable yield curve were offset by fresh impairments and revaluations on mortgage-backed securities and real estate.
The insurance unit posted a surprise loss of €47 million, against a forecast for a €380 million profit. ING said assumption changes in its US and Japanese variable annuity businesses, reflecting lower than-expected surrenders of policies, led to a charge of €343 million.
As part of its restructuring agreement with the European Commission, ING must sell or spin off its insurance business, the world's sixth largest, by the end of 2013.
It has expressed a preference for an IPO of the entire operation, but weak markets of late have raised questions about whether it might opt for a trade sale instead, given heavy interest from the industry.
“We are confident that we will be able to meet the commitment related to the spinoff,” chief financial officer Patrick Flynn said in an interview on CNBC.
Loan-loss provisions rose to €686 million, below expectations. Nonetheless, they still stand at more than twice ING's goal.
“In basis points, the losses are 96 basis points. We have said before that over time the long term trend is around 45 basis points. That will take a little more time,” Flynn said. (Reuters)