ING first-quarter pretax profit slumps 35% on COVID-19 provisions

Michelle K. Wallace

FILE PHOTO: The logo of ING bank is seen at the entrance of the group’s office in Brussels, Belgium, October 3, 2016. REUTERS/Francois Lenoir/File Photo

AMSTERDAM (Reuters) – ING Groep NV (INGA.AS), the largest Dutch bank, on Friday posted first-quarter pretax earnings of 1.02 billion euros ($1.11 billion), down 35.7% from last year, citing higher provisions taken for the potential fallout from the coronavirus outbreak.

The numbers, however, came in higher than estimates, as analysts polled by Refinitiv had expected a pre-tax profit of 549 million euros, but the lender cautioned that the impact of the pandemic in most markets started by mid-March.

ING took 661 million euros in loan provisions in the quarter, up from 207 million euros in the year-ago period.

“The COVID-19 pandemic is profoundly affecting society and the economy throughout the world, and it will continue to do so for some time,” Chief Executive Ralph Hamers said in a statement.

The loan provisions included “several larger additions for files in wholesale banking and mid-corporates lending, on both existing and some new files,” ING said.

The Dutch company also took more general provisions for increased risk – about 41 million euros in its U.S. loanbook resulting from falling oil prices and 206 million euros from worsening macroeconomic conditions as a result of the lockdown measures put in place to curb the spread of the coronavirus.

The company said gross results improved at its large retail banking businesses in the Netherlands, Belgium and Germany, while its wholesale banking business saw declines due to negative valuation adjustments.

Core lending grew by 12.3 billion euros in the quarter, while customer desposits rose 9.2 billion euros.

The company’s net interest margin, a key measure of profitability, dipped to 1.51% from 1.57% a quarter earlier.

Reporting by Toby Sterling; Editing by Clarence Fernandez and Sherry Jacob-Phillips

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