ING profits drop 40 percent due to cornavirus crisis
Due to the coronavirus, ING saw its profits fall by 40 percent. In the first quarter of this year, the Dutch bank made 670 million euros in profit, compared to 1.1 billion euros in the same period last year. "As a global bank, we are affected in several ways, including the impact of the epidemic on our customers, employees and the communities where we operate," CEO Ralph Hamers said, NOS reports
This drop in profits can largely be attributed to extra money the bank put aside for loans to companies that may not be repaid. For example, ING loaned money to American oil companies, and the oil price in the United States is now so low that companies may collapse. Money was also set aside to cover loans to Dutch and Belgian shops that may run into problems.
In multiple countries, ING gave deferral to over 100 thousand customers to repay loans later because of the crisis. The bank had to set aside 661 million euros for loans to companies that may not be repaid, compared to 207 million euros in the first quarter last year.
The uncertainty on the world market is high. "You don't know which scenario will come out," Hamers said to NOS. "That is the problem of this crisis. That is the problem of our customers, and with that our problem. Social distancing is here to stay. Even if you get out of the lockdown and sectors start working again, it will take a long time before there is recovery."
Despite the uncertainty, Hamers is convinced that ING can weather this storm. Sufficient profits are still being made in most of the bank's business, he said. "That is the first line of defense. You need it to absorb the risk costs. In addition, you have our buffers. This puts us among the highest in Europe. We can handle this even in the worst scenario."
Nevertheless, the bank will investigate where costs can be saved in the near future.