ING Profit Dented by Regulatory Costs -- Update
May 10 2016 - 7:28AM
Dow Jones News
By Maarten van Tartwijk
AMSTERDAM--ING Groep NV said Tuesday its first-quarter net
profit fell because of higher regulatory costs and lower income at
its financial-markets division.
Net profit for the three months to the end of March dropped 29%
to EUR1.26 billion ($1.43 billion), from EUR1.77 billion in the
same period a year earlier. Underlying pretax profit, the bank's
preferred measure of its operating performance, fell 29% to EUR1.19
billion.
The latest results were dented by EUR496 million in costs to
cover new and stricter regulatory requirements as well as lower
revenue at ING's financial-markets division because of market
volatility in the first months of this year.
Analysts said the regulatory costs overshadowed an otherwise
solid operating performance, which benefited from robust interest
income, lending growth and a drop in loan impairments. Shares in
ING rose more than 4% in Amsterdam in early trading.
The results came as many European banks are grappling with
ultralow interest rates, tougher regulations and a still fragile
economy. Several big lenders have reported disappointing
first-quarter results in recent weeks.
ING, one of Europe's biggest deposit gathers, said the low
interest rate environment represents a challenge but that it
managed to protect margins by lowering rates on savings accounts in
the Netherlands, Belgium, Spain, France and Austria.
The bank struck a gloomy tone on the impact of new rules imposed
by national and international regulators, saying regulatory costs
will rise to EUR960 million for the whole year, higher than
previously thought. Last year, regulatory expenses amounted to
EUR620 million.
The expected increase is primarily driven by higher
contributions to deposit-guarantee schemes in the Netherlands and
Germany and a recently introduced bank tax in Poland.
Chief Executive Ralph Hamer said the regulatory burdens are
increasingly weighing on ING's cost-income ratio--a measure of
efficiency--and that he will "look for ways to offset these higher
costs."
Write to Maarten van Tartwijk at maarten.vantartwijk@wsj.com
(END) Dow Jones Newswires
May 10, 2016 07:13 ET (11:13 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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