Feb. 20 (Bloomberg) -- ING Groep NV, the biggest Dutch financial-services firm, said fourth-quarter profit rose 18 percent as the company booked investment gains and avoided large writedowns on asset-backed securities.

ING climbed as much as 5.7 percent in Amsterdam trading after the company said profit increased to 2.48 billion euros ($3.65 billion) from 2.1 billion euros a year earlier, more than analysts estimated. The company reported gains of 1.03 billion euros from selling shares in ABN Amro Holding NV and Royal Numico NV and said it plans to raise its dividend 12 percent.

Banks worldwide have booked more than $146 billion of writedowns and credit losses during the U.S. subprime mortgage market collapse. Amsterdam-based ING, whose roots date to 1743, said today that impairments, trading losses and writedowns cut pretax profit by 194 million euros, a fraction of the markdowns reported by Europe's largest bank, UBS AG.

``At the end of the day these are decent numbers,'' said Patrick Lemmens, who helps manage about $3.6 billion at ABN Amro Asset Management in Amsterdam and holds ING shares. ``I really assume the combination of regulators and accountants has done its job when ING valued its asset-backed securities.''

ING closed 20 cents higher, or 0.9 percent, at 21.96 euros on a day when all European markets fell. ING has declined 36 percent over the past year compared with a 32 percent drop by the Bloomberg Europe 500 Banks and Financial Services Index. Of 36 analysts tracked by Bloomberg who cover ING, 23 have ``buy'' ratings on ING, six advise selling the stock and seven rate it a ``hold.''

`Solid Risk Management'

Chief Executive Officer Michel Tilmant said ``solid risk management'' helped shield ING from the direct impact of the credit and liquidity crisis. ``We're essentially long-term investors and aim to hold on to our long-term investments until maturity.''

ING's impairments and losses included 47 million euros on subprime assets, 36 million euros on collateralized debt obligations and 66 million euros on monoline insurers. Tilmant described the current business environment as ``challenging.''

The company also reported ``negative revaluations'' of 751 million euros on investments in subprime and Alt-A mortgage assets and CDOs in the fourth quarter although they were not directly booked as a loss.

That was offset by gains from asset sales and ING's insurance earnings, which rose 37 percent to 1.82 billion euros in the quarter from a year earlier. Premium income increased 10 percent.

Banking, Canada

Profit at ING's banking business was little changed at 1.15 billion euros as earnings from wholesale banking unexpectedly rose, offsetting a decline at the online banking unit. Analysts had estimated banking results at 992 million euros.

Net income at the unit ING Canada Inc., Canada's largest property and casualty insurer, declined for a seventh quarter, dropping 12 percent to C$95.8 million ($94.7 million) on rising car insurance claims, the company said.

Asset markdowns and charges reduced ING's profit by 61 million euros in the third quarter, said the company, which operates in more than 50 countries. About 2.9 billion euros of its asset-backed security portfolio at year-end were subprime assets, ING said.

The Dutch firm's risk related to Alt-A residential-mortgage- backed securities was 27.5 billion euros and collateralized debt and loan obligation risks were 1.9 billion euros, the lender said. Alt-A mortgages fall between subprime and prime.

Stake Sales

Tilmant had said in November that he expected a fourth-quarter gain of about 1 billion euros from selling shares in ABN Amro, which was acquired by a group of lenders last year in the biggest banking takeover, and from divesting a stake in Numico, the Dutch baby-food maker bought by Groupe Danone SA from France.

ING spent more than $4 billion last year buying financial companies in Turkey and Latin America. The company agreed to purchase Banco Santander SA's Latin American pension and annuity businesses for $1.6 billion, making it the largest pension-fund manager in the region after Banco Bilbao Vizcaya Argentaria SA. In June, it agreed to pay $2.67 billion for Turkey's Oyak Bank.

``ING is a good and solid company as they capitalize well on opportunities in emerging markets, especially in Latin America and Asia,'' said Paul Beijsens, an analyst at Theodoor Gilissen Bankiers NV in Amsterdam. Beijsens rates ING a ``buy.''

Earnings per share rose to 1.18 euros from 98 cents a year earlier, ING said in a statement. The quarterly results beat the 2.38 billion-euro median profit estimate from eight analysts surveyed by Bloomberg.

`Add-on Acquisitions'

ING said it has ``ample room to fund organic expansion and add-on acquisitions and we will continue to reinforce our franchise to drive commercial growth,'' adding that the company plans to raise its 2007 dividend to 1.48 euros a share.

The proposed dividend increase is a ``firm signal,'' Lemmens said. ``And how many financials are able to execute a share buyback program at the moment?'' ING today said it will complete its 5 billion-euro buyback program by June.

``This year will offer opportunities for strong companies like ING,'' Tilmant said.

To contact the reporter on this story: Martijn van der Starre in Amsterdam at vanderstarre@bloomberg.net

Last Updated: February 20, 2008 11:42 EST