US mortgage bonds keep drag on ING
Netherlands-based ING Group (ING) said it remains dedicated to unwinding its investments in U.S. mortgages, but is finding its real estate holdings are working out better than its mortgage bond holdings. In its second-quarter report released Thursday, ING said impairments on U.S. residential mortgage-backed securities amounted to nearly $54 million and were largely related to the subprime category. ING's 2Q net profit rose 19.7% to $2.15 million, or 56 cents per share. That compares to 45 cents in the year-ago period, up 25% per share. As of June 30, the remaining position in subprime RMBS was $1.6 billion, with a remaining pre-tax revaluation reserve at a deficit of $280 million. On the other hand, risk costs at ING Direct declined as a result of improvements in the U.S. mortgage portfolio performance. "Nonperforming loans as a percentage of total loans and amounts due from banks (including ING Direct USA and ING Car Lease) remained stable at 2.1%," the report states. ING is winding down its United States real estate holdings by 2013, a mandate that is part of its $13.5 billion bailout deal from the Dutch government. CB Richard Ellis is paying $940 million for ING REIM Europe, ING REIM Asia and Clarion Real Estate Securities. Clarion is ING REIM's U.S.-based manager of listed real estate securities. ING is committed to developing its U.S. insurance business, the earnings report states. Write to Jacob Gaffney. Follow him on Twitter @jacobgaffney.