(6,12 EUR, 5,37%) reported a 2Q11 net result of € 1,507m (vs € 1,326m expected and consensus of € 1,325m) and an underlying net profit of € 1,528m (vs € 1,347m expected and consensus of € 1,433m). Underlying profit before tax stood at € 1,977m (€ 1,827m expected) o/w € 1,304m from banking (€ 1,326m expected) and € 673m from insurance (€ 502m expected). Basic EPS stood at € 0.40. Earnings outstripped our expectations and confirm our investment case despite current market turmoil. We remain Accumulating with unchanged target at € 9.0.
2Q11 EARNINGS – MAIN ITEMS
Banking uPBT (€ 1,303.8m) benefitted from healthy interest margin (1.42% up 6bps y/y), higher client balances (rising 8 consecutive quarters), lower risk costs (47bps vs 55bps in 2Q10). Operating costs were under control (cost-to-income at 59.2% or 54.6% when excluding market impacts) declining 2.2% q/q but rising 5.3% y/y. The ROE (IFRS EU equity) stood at 11.7% (vs 14.2% in 2Q10). Banking earnings included € 187m impairments on Greek debt bonds. Risk weighted assets were reduced by 8.0% to € 315bn which may prove to be important with the upcoming additional systemic risk core Tier 1 requirements.
Insurance uPBT stood at € 673.3m (vs € -115m in 2Q10 or € 18m restated) including € 123m impairments on Greek bonds. The operating profit (margin format) stood at € 690m (+82.5%) fuelled by increases in the investment and technical. New life sales (APE) stood at € 944m (-13.4% or -6.3% excluding currency effects) which fell short of our expectations. NBV is not disclosed.
Group net result included € 51m net gains on divestments and € 37m in results from divested units/discontinued operations. Special items after tax were € -110m and related primarily to various restructuring programmes. After-tax separation costs were € 31m.
Solvency improved with a core Tier-1 ratio at 9.4% (8.6% end June 2010) and the IGD insurance solvency at 252% (262% end June 2010). (32,75 EUR, 1,64%) equity stood at € 40.3bn (€ 10.65 per share) including a € 3.9bn revaluation reserve which remained flat over the quarter.