ING Groep NV, one of Europe's largest bank and insurance companies, said Thursday it will cut 2,000 jobs in response to the euro-zone's deepening financial crisis, despite remaining profitable in the third quarter.
Chief executive Jan Hommen said its banking profits declined as interest margins narrowed, and the company _ which received several state bailout packages in 2008 _ is trying to remain ahead of developments by reducing costs.
"The third quarter saw a marked deterioration on debt and equity markets amid a slowdown in the macro-economic environment and a deepening of the sovereign debt crisis in Europe," Hommen said in a statement.
ING said it was trying to compensate for rising risk by "increasing hedging to preserve capital and selectively reducing exposures to southern Europe."
Net profit was euro1.69 billion ($2.32 billion), from euro239 million in the same period a year ago: last year the company wrote down the value of its U.S. operations by euro513 million and this year it booked euro516 million in gains by selling real estate and its car leasing business. However, it also wrote down the value of its Greek state bonds by euro467 million, and they are now held at 60 percent of face value.
"Underlying" bank profits _ a nonstandard measure the company uses to strip out one-time effects _ were down 29 percent to euro1.06 billion as a result of lower interest margins, falling trading profits and higher costs of hedging risks.
The company increased provisions for bad loans by 17 percent to euro438 million.
Insurance operating profits rose 27 percent to euro527 million on higher fees and premiums and a better investment result.
SNS Securities analyst Lemer Salah said the results "were better than market expectations but lagged our estimates" in a note on the earnings.
Shares fell 4.2 percent to euro5.42 in early trading.
ING employs around 100,000.
ING is in the process of splitting its banking and insurance operations by 2013 as part of a deal with the European Union regulators to compensate for the state aid it has received.
The company said its key measures of financial health remained solid in the quarter, with core Tier 1 capital ratio at 9.6 percent and its insurance IGD solvency ratio at 242 percent as of Sept. 30.