ING’s core Tier 1 capital ratio, a key measure of financial strength, dropped to 11.9 percent at the end of December from 12.1 percent in the third quarter, as the company repaid the Netherlands 1.13 billion euros in aid and premiums.
The firm had “less benefits from de-risking than we had anticipated,” Jan Willem Weidema, an Amsterdam-based analyst at ABN Amro Bank NV, said by e-mail. “Capital ratios somewhat disappointed.” ABN had forecast a core Tier 1 ratio of 12.4 percent, he said.
Underlying pretax profit at ING’s banking operations slid 72 percent to 184 million euros, hurt by a loss of 126 million euros on the sale of southern European bonds. That reduced risk- weighted assets by 1 billion euros. The firm set aside 588 million euros for so-called doubtful loans, up from 445 million euros a year ago.
Interest income dropped an annual 5.9 percent to 2.87 billion euros as the bank reduced short-term capital markets funding and returns on bond investments fell, ING said.
Bank Tax
Fourth-quarter earnings were also cut by 175 million euros to pay for a new Dutch tax, introduced in October to force banks to share the costs of ensuring financial stability after the nation bailed out companies including ING, SNS Reaal NV and ABN Amro Group NV in 2008 and 2009.
The firm will also have to pay about a third of a 1 billion-euro one-time industry levy next year imposed after the Netherlands took control of SNS Reaal on Feb. 1.
ING shares have dropped 10 percent since SNS was nationalized for 3.7 billion euros. Shareholders and holders of subordinated bonds in SNS were also forced to share in the costs of the bailout.
Insurance Arm
The insurance division, whose units are up for sale, had an underlying pretax profit of 272 million euros in the fourth quarter, compared with a loss of 1.51 billion euros a year earlier.