(8,97 EUR, 2,08%) reports a 1Q11 net result of € 1,381m (vs € 1,293m expected and consensus of € 1,237m) and an underlying net profit of € 1,492m (vs € 1,431m expected and consensus of € 1,376m). Underlying profit before tax stood at € 2,156m (€ 1,946m expected) o/w € 1,695m from banking (€ 1,488m expected) and € 461m from insurance (€ 458m expected). Basic EPS stood at € 0.37.
Banking underlying earnings before tax (€ 1,695m) benefitted from healthy interest margin (1.44%), higher client balances, lower risk costs (42bps vs 60bps in 1Q10) and cost control. The ROE (IFRS equity) stood at 13.7% (vs 11.7% in 1Q10). The core Tier 1 ratio stood at 10.0%. will (as announced) buy back € 2bn of core capital securities + € 1bn repurchase premium on 13 May 2011.
Insurance underlying earnings before tax (€ 461m vs € 121m in 1Q10) was driven by higher fees and premium-based revenues, robust sales growth, an improvement in investment margin (investment spread at 95bps) and cost control. The operating profit (margin format) stood at € 561m (vs EUR 414m in 1Q10) which was lower than our forecast € 675m. New life sales (APE) stood at € 1,384m (+11.4% or +8.0% excluding currency effects) which was better than we expected (€ 1,243m). NBV is not disclosed.
Divestments and special items in 1Q11 amounted to € -111m after tax and related primarily to various restructuring programmes. After tax separation costs were € 20m (we took € 50m in our forecast) out of a total of € 200m projected for FY11E.
restructuring remains on track with two planned IPOs (US and Europe & Asia) whereas the strategic options for Latin American insurance are still being explored. Steps are also taken for the divestment of Direct USA and the carve-out of WestlandUtrecht Bank from the Dutch retail banking business.
1Q11 underlying earnings before tax were better than we expected, notably in banking whereas insurance underlying earnings before tax were exact in line.
We remain Accumulating with an unchanged target at € 9.0.