By Reed Stevenson

AMSTERDAM (Reuters) - Dutch financial services group ING Groep (ING.AS: Quote, Profile, Research) reported a bigger-than-expected 19 percent drop in quarterly net profit, hit by weaker returns from real estate, private equity and market investments.

First-quarter net profit was 1.54 billion euros ($2.4 billion), compared with 1.89 billion euros a year earlier, ING said on Wednesday. The average expectation of 12 analysts polled by Reuters was 1.66 billion euros.

ING blamed the bulk of the decline on weaker valuations in ING's real estate and private equity investments, as well as lower stock investment gains, all of which pushed profit down 436 million euros from a year earlier.

Falling equity prices in the first three months of the year, during which the S&P 500 .SPX declined 10 percent, have also hurt other groups with insurance businesses in the Benelux region, including Fortis (FOR.BR: Quote, Profile, Research) and Aegon (AEGN.AS: Quote, Profile, Research).

ING Chief Executive Michel Tilmant said the downturn in financial markets offset growth in ING's insurance, banking, pensions and real estate businesses.

"If you look at the results of this quarter, you see the benefits of diversification," Tilmant told reporters. "We have weathered this situation well compared to some of our peers."

ING also took a charge of 55 million euros on its subprime-related investments, while weaker global currencies relative to the euro accounted for a 55 million euro fall in profit. There was also a 94 million euro charge on the restructuring of ING's Dutch business, but a 62 million euro gain on the sale of its Chilean health business.

ING shares were up 1.8 percent at 24.91 euros by 1146 GMT, and analysts said the relatively small 55 million euro subprime charge had reassured the market. On Tuesday, Fortis announced that it took a 380 million euros charge against similar investments in the same period.