The underlying pre-tax profit of Dutch financial group ING’s private banking division slid by 60 per cent in the third quarter of 2008 from a year ago to €22 million ($27.7 million). The overall Dutch-listed group fell into the red as weaker markets took their toll.

In a statement, ING said private banking pre-tax profits in the first nine months of 2008 were €122 million, a fall of 38.4 per cent on the same period of 2007. Assets held by private banking, however, rose to €68.7 billion at the end of September this year, a rise of €1.5 billion since the second quarter.

“In response to stock market declines, clients are shifting towards deposits, resulting in lower interest income, securities brokerage and asset management commissions,” ING said.

The private bank’s underlying cost/income ratio also rose sharply to 80 per cent in the third quarter from 65.8 per cent a year before. Operating expenses rose by 0.9 per cent to €108 million in the third quarter.

The Dutch firm, meanwhile, logged a loss of €478 million in the third quarter of this year, sharply reversing its position from a profit of €2.31 billion in the same period of last year.

ING, which in October received a €10 billion ($12.6 billion) lifeline from the Netherlands government, was the first company to draw on money set aside by the Dutch government to prop up financial firms. The firm logged pre-tax impairments on equities, debt and other securities of €1.5 billion, it said in a statement.

At its asset management division, ING said it logged a net inflow of €2.5 billion but total AuM declined by €6.0 billion, or 1.0 per cent, in the quarter to €608.1 billion. Lower asset prices for equity and fixed income securities had a negative impact of €24.7 billion, while exchange rate fluctuations had a positive impact of €18.4 billion.