NETHERLANDS - A revaluation of its Summit portfolio in Canada was the main contributor to an €180m after-tax loss for ING's property investments in the second quarter of this year, the Dutch bancassurer has revealed.
The company today reported a net profit of €1.9bn during the second quarter for the entire company, which is almost 29% down compared to the same quarter of the previous year.
ING attributed the €754m reduction to market deterioration to private equity valuations and lower equity capital gains as well as its real estate portfolio.
The completion of a full appraisal of ING's Canadian property led to a negative revaluation of assets of €195m but revaluations in other markets were limited to a reduction of -€43m, largely seen in Australia, in contrast to Asian property which continued to see positive gains.
According to ING, the impact from sub-prime, Alt-A and other pressurised asset classes also contributed to a loss of €44m after tax.
"We took advantage of the brief market rally in April to reduce our equity exposure," said Michel Tilmant, chief executive of ING.
"However, this effect was partly offset by €291m on impairments on equities, as markets sustained their decline. Hedges on the equity portfolio had a positive impact of €56m compared to the second quarter of 2007," he added.
Despite the ongoing uncertainty in the financial markets, ING did achieve a net inflow of €3.6bn in assets under management (AuM) between April and the end of June.
Its total AuM declined by €6.7bn, however, as a result of lower asset prices, while portfolios also saw a further drop of €2.5bn caused by currency rate pressures, the company stated.
Insurance profits in Europe (excluding the Benelux) were down by 3.3%, "due to higher greenfield investments, mainly to support second and third pillar pension funds in Romania," it said.
Net inflows to the pension funds in Central Europe rose by 51.5% to €544m.
That said, the figures were partly supported by regional wage inflation, ING made clear.
The company's total sale of life insurances increased by 8.8%, on a net production of €3.1bn.
"Financial services are facing unprecedented market volatility, limited liquidity and intensified competition for deposits, which we see continuing into 2009," Tilmant stressed.