Reply #18: ING reports small Q4 impairment, shares rise

[Demeter]

http://news.yahoo.com/s/nm/20080220/bs_nm/ing_results_dc_3

LONDON (Reuters) - Dutch financial services group ING took a lower-than-expected impairment charge of 194 million euros ($286 million) on riskier investments in its fourth-quarter results on Wednesday, while a stake sale helped offset the loss.

ING's shares rose as much as 5.6 percent, bucking a lower market, after the Dutch lender and insurer said net profit in the quarter rose 18 percent from a year earlier to 2.48 billion euros, or 1.18 euros per share, just ahead of analysts' average forecast of 2.34 billion euros, or 1.12 euros per share.

The impairment charge was offset by a gain of 1.03 billion euros on the sale of its stake in local rival ABN AMRO to a consortium of three banks in October. ING had also booked gains from ABN and other asset sales in the third quarter.

Analysts had expected ING to take a charge of 200 million to 1 billion euros on its riskier investments, including residential mortgage-backed securities in subprime mortgages made to risky borrowers and "Alt-A" loans, which are made to borrowers with a slightly better credit profile, as well as from collateralized debt obligations (CDOs).

ING's writedown was smaller than its European rivals, including Credit Suisse, which took a $2.85 billion charge this week on its asset-backed investments, and HSBC, which took an $880 million charge last year.

U.S. banks have written off even larger amounts in the credit crisis, triggered last year by widespread defaults on mortgages extended to less creditworthy borrowers.

Underscoring the risk of further losses, ING said it made an additional provision of 751 million euros in the quarter on investments in subprime, Alt-A and CDO assets. This was taken to a revaluation reserve, not against profit, as these assets were still considered recoverable, despite a fall in market value.

For 2007, ING said it had provided for a total 1.38 billion euros in such assets.

ING Chief Financial Officer John Hele said the revaluation was "nothing very special," and the company had taken steps such as taking out credit protection on its portfolio.