ING fourth-quarter profit rises to $1.49bn

Bloomberg

ING Group NV, the largest Dutch lender, said profit jumped 68 percent, more than analysts expected, as wholesale lending revenue rose while costs and bad-loan provisions fell.
Underlying profit rose to 1.38 billion euros ($1.49 billion) in the fourth quarter from 822 million euros in the previous year, the Amsterdam-based bank said in a statement on Thursday. That beat the 1.15 billion-euro average estimate of six analysts surveyed by Bloomberg. Wholesale banking, which includes trading and lending to large firms, generated 553 million euros, almost twice last year’s result.
ING, which pioneered online banking two decades ago, is now among large European lenders stepping up digital investments and trimming costs as the use of smartphones to manage money becomes commonplace. Chief Executive Officer Ralph Hamers is seeking 900 million euros in annual savings over the next five years, in part through the elimination of as many as 7,000 jobs, or 13 percent of the workforce.
“ING continues to surprise positively with all segments delivering better results,” Citigroup Inc. analysts including Stefan Nedialkov said in a note.
Within wholesale banking, ING’s capital-markets and treasury-management businesses benefited from “increased client activity” especially in equities, foreign-exchange and debt trading. Revenues from corporate lending rose 15 percent from a year ago as bad-loan provisions
fell to 2 million euros from 63
million euros in a “benign risk
environment.”
The stock rose as much as 1.9 percent and was up 0.9 percent at 9:21 a.m. in Amsterdam, while the STOXX 600 Banks Index was down 0.4 percent. ING has gained 36 percent over the past 12 months, giving the bank a market value of about 53 billion euros.
The lender plans to pay a 66-cent dividend for 2016 and maintained its dividend targets, the bank said. ING booked 1.14 billion euros in one-time charges related to digital changes and job-cutting plans announced in October.
“Putting clients first, digital first, is clearly working,” Chief Financial Officer Patrick Flynn said in an interview with Bloomberg Television. ING is not expecting any quick increase in interest rates and “the impact in our results will feed in very slowly.”
Net income fell 8.4 percent to 750 million euros, beating analyst estimates for 376 million euros. The bank said revaluations of its warrants in NN Group NV and Voya Financial Inc., two assets offloaded in recent years, lifted the result. Operating expenses fell 6.7 percent to 2.37 billion euros from a year ago.
ING’s common equity Tier 1, a key capital indicator, strengthened to 14.2 percent at the end of the year, well above its goal of 12.5 percent. Its leverage ratio, or capital as a fraction of total assets, reached 4.2 percent, also exceeding its target.