UPDATE 5-ING to post first quarterly loss, shares slump

Fri Oct 17, 2008 4:32pm EDT

Related Topics

* ING sees 500 mln euro Q3 loss

* Still assessing government capital injection plan

* Shares slump 27.5 percent to 13-year low (Adds details, executive's, AFM comments)

By Gilbert Kreijger and Aaron Gray-Block

AMSTERDAM, Oct 17 (Reuters) - Dutch bank ING (ING.AS), the Netherlands' biggest listed bank, said on Friday it expects its first quarterly loss ever, hit by financial market turmoil and falling asset prices, sending its shares to a 13-year low.

As the loss of confidence spread beyond shaky institutions to banks previously considered well-capitalised, ING also said its capital position is in line with targets despite the turmoil in financial markets, which accelerated substantially in the third quarter.

"ING's business model is sound and our commercial performance is solid. However, that does not mean that we are immune to the external environment," Chief Executive Michel Tilmant said in a statement.

"The crisis is far-reaching, and even the healthiest companies are feeling the negative effects."

ING said it expected to post a net loss of about 500 million euros ($674 million) for the third quarter, its first quarterly loss since the group was formed in 1991. A spokesman said ING would still post a profit of around 2.5 billion euros for the first nine months of 2008.

ING's results had initially proven to be more resilient through the credit crisis than many of its peers, such as Belgian-Dutch rival Fortis FOR.BRFOR.AS, which was broken up earlier this month, partly nationalised by the Dutch government and partly sold off to French rival BNP Paribas (BNPP.PA).

After speculation it would be a buyer of some of Fortis's operations, ING said on Sept. 29 it would not make an offer for Fortis's ABN AMRO's Dutch operations as the transaction would not meet its financial requirements.

ING said on Friday third-quarter impairments on stocks and bonds, losses attributable to financial counterparties and fair value changes on property amounted to 1.6 billion euros. Loan loss provisions at the bank increased to about 400 million euros.

ING Bank's core tier-1 ratio, a measure of financial strength, was at 6.5 percent and its tier-1 ratio was above target at 8.5 percent at the end of the third quarter. [nHUGBSRZKa]

"There is no issue on the solvency. That was the most important message to send out," said an analyst who did not wish to be named.

ING shares initially trimmed losses but closed 27.5 percent lower at 7.335 euros. Earlier in the day, the shares had dropped on concerns about ING's capital position.

The Dutch stock markets regulator AFM said it had been in contact with ING prior to its statement, but a spokesman for the AFM declined to comment further.

CAPITAL INJECTION

ING said it will consider a Dutch government programme to inject capital into healthy financial institutions once more details are available.

"We know of course about the 20 billion programme and we will always look at what the exact conditions are because if there is recapitalisation taking place in the entire world, we will also look at whether we want that as well," Chief Risk Officer Koos Timmermans told state broadcaster NOS.

"But what we want to make clear today is that we don't have an issue where you have to make repairs to your balance."

The Dutch government has set aside 20 billion euros ($27 billion) for capital injections into financial institutions and is also prepared to guarantee interbank loans.

Larger financial stocks such as ING and Aegon (AEGN.AS) had welcomed the government steps, but did not indicate whether they planned to make use of the capital, while smaller firms such as SNS Reaal SR.AS, Van Lanschot (VLAN.AS) and BinckBank (BINCK.AS) said they did not need any government money.

Britain had earlier announced similar measures, and this week British banks Royal Bank of Scotland (RBS.L), HBOS HBOS.L and Lloyds TSB (LLOY.L) took the funding lifeline and effectively became partially nationalised.

The finance ministry would not say on Friday whether it has been in discussions with financial institutions over capital injections.

ING operates the world's biggest online bank, ING Direct, and said earlier this month it is acquiring more than 3 billion pounds ($5.2 billion) worth of British deposits from troubled Icelandic online savings providers Icesave and Kaupthing Edge KAUP.IC.

ING said the information it issued on Friday was preliminary and final third-quarter results will be released on Nov. 12. (Editing by Jon Loades-Carter, Paul Bolding, Gary Hill)

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