AMSTERDAM - DUTCH banking and insurance group ING reported on Wednesday a 28.8 per cent fall in net profit for the second quarter, but performed far better than analysts' forecasts.

The group said net profit for the quarter totalled 1.946 billion euros (S$4.07 billion) from 2.735 billion euros in the same period last year, blaming a fall in earnings from investments.

'ING continues to weather the turmoil in credit markets well, as writedowns on pressurised assets remained limited in the second quarter,' said chief executive officer Michel Tilmant.

'We are, of course, not immune to the challenging environment around us, and the sustained weakness across financial markets put pressure on earnings.'

ING reported only a small direct impact from the credit crisis, and its profit fall was far smaller than the 1.52 billion euros forecast made by analysts polled by Dow Jones Newswires.

Mr Tilmant said the group managed to reduce its equity exposure, but 'equity gains net of impairments were significantly below the exceptional levels realised last year.

'Combined with lower real estate and private equity valuations, lower investment results accounted for the vast majority of the profit decline.' Impairment is a term used for exceptional charges and the writing down of the value of assets.

Net banking income, a measure of profit from deposits and lending, fell by 8.1 per cent to 17.4 billion euros.

But interest income in the banking business rose strongly.

The bank said the effects of the subprime credit crisis had weakened the result by 44 million euros.

Net earnings per share dropped 20.3 per cent to 94 cents, it added.

But commercial growth continued, driven by a large increase in lending. The value of new business rose 39.8 percent to 267 million euros, and sales of life insurance grew by 8.8 percent.

'All capital and leverage ratios are well within target,' said the statement. 'The Group has 3.9 billion euros of spare leverage capacity after the completion of ING's five-billion-euro share buyback and the payment of last year's final dividend in the second quarter.'

The board signalled an interim dividend of 74 cents per share, to be paid fully in cash.

'Financial services companies are facing unprecedented market volatility, limited liquidity and intensified competition for deposits, which we see continuing into 2009,' said Mr Tilmant.

'We are executing our strategy in the context of this challenging environment by focussing on growing client balances, while keeping a close eye on margins and expenses.' -- AFP