ING Groep NV, the Dutch bank and insurer, reported Wednesday a euro793 million ($1.08 billion) net loss for the first quarter, blaming falling asset prices, the weak performance of insurance contracts, and charges for restructuring its business.
The figure compares with net profit of euro1.54 billion in the same period a year ago and with a euro3.1 billion loss in the fourth quarter.
Losses came from all directions for the financial group, which said it suffered a total of euro1.7 billion worth of "negative impacts stemming from the market turmoil."
"Market conditions remained challenging in the first quarter as equity markets declined further, credit spreads remained elevated, real estate prices continued to fall and loan losses increased as the crisis spread from the financial markets to the real economy," said Chief Executive Jan Hommen, who took the job after his predecessor resigned in January.
He didn't offer any forecast for the rest of the year, saying "markets are volatile and the economic environment continues to be uncertain."
"Our first priorities are to reduce costs, risk and leverage to strengthen the Group," Hommen said in a statement.
Shares fell 10.3 percent to close at euro7 in Amsterdam. They are down from euro24 a year ago, but up from a low of euro2.30 on March 9.
"The drag of distressed assets, and provisions for market volatility are still weighing on overall performance," said Cubillas Ding, an analyst at consultancy firm Celent.
ING's insurance arm lost euro979 million on a mix of bad investments and a euro550 million charge on insurance contracts that aren't worth as much as the company originally thought.
Its banking arm had pretax profit of around euro700 million, benefiting from the large numbers of investors keeping their money in cash accounts on which ING pays them little interest. However, provisions for bad loans rose dramatically, to euro772 million from euro98 million a year ago.
ING said its Tier 1 ratio _ a key measure of solvency for banks _ rose to 9.7 percent from 9.3 percent at year-end.
According to its balance sheet, total equity was euro30.5 billion, euro10 billion of which is due to the direct investment lifeline it received from the Dutch government last year.
The company announced 7,000 job cuts in January, representing 5 percent of its total work force, and said Wednesday that 5,380 have been cut so far.
The company took a euro329 million hit for restructuring costs in the quarter.
Among ING's investment losses were a euro361 million impairment charge on direct real estate investments and an additional euro290 million charge on troubled U.S. mortgage-backed securities.
In January, ING said it had lost euro2 billion on U.S. real estate derivatives in the fourth quarter. The Dutch state then assumed 80 percent of the risk for the remaining euro27.7 billion in such derivatives that ING holds, at roughly 2/3 of their face value. Wednesday's charge implies Dutch taxpayers have taken a hit of at least euro1 billion on that deal.
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