ING Groep NV on Thursday reported first quarter earnings grew 12 percent on fat banking margins and improvements at its insurance business, and said it intends to pay back euro3 billion ($4.45 billion) in bailout money and penalties it owes the Dutch state.
Net profit was euro1.38 billion ($2 billion), up from euro1.23 billion in the same period a year ago.
The banking operations, which are to be split from its insurance arm as a penalty for having taken state support during the financial crisis, were up 32 percent to euro1.7 billion.
Like other banks right now, ING's margins are healthy as it pays clients little for deposits and borrows cheaply itself but can lend or invest at higher rates. It also took fewer provisions for bad loans.
ING's insurance earnings almost quadrupled to euro421 million on better investment returns and higher fees. The company plans separate initial public offerings for its U.S. and Asian insurance operations, and to sell its smaller Latin American insurance business.
Shares rose 2.8 percent in early Amsterdam trading to euro9.034.
SNS Securities analyst Lemer Salah said in a note on the earnings that the better performance at insurance boded well for proceeds when the businesses are spun off.
ING received euro10 billion in state aid at the height of the 2008 financial crisis, and also got the Dutch government to agree to take over the bulk of its subprime mortgage portfolio, capping risks.
It has gradually been repaying the aid, but after the latest payment it will still owe the Netherlands euro3 billion plus a euro1.5 penalty when it repays.
ING said its core Tier 1 Capital ratio _ the key measure of solvency for banks _ has risen to 10 percent after the earnings, but it will fall back to 9.1 percent after the upcoming repayment, scheduled for May 13.
"Both the Bank and the Insurance company posted strong results in the first quarter, illustrating clear progress on their respective performance improvement programs as they prepare for their futures as stand-alone companies," said CEO Jan Hommen in a statement.
He said ING plans to repay the remainder of its bailout money around this time next year but did not set a date for the insurance IPOs. They will happen when "market conditions are favorable," he said.