ING Groep NV, the biggest Dutch lender, said first-quarter profit declined 29 percent on growing regulatory expenses and a loss at its financial-markets division.
Net income dropped to 1.26 billion euros ($1.43 billion) from 1.77 billion euros a year earlier, the Amsterdam-based bank said in a statement. That compares with 1.24 billion euros, the average of seven analyst estimates.
“I wish we could say we were at peak regulatory costs,” Chief Financial Officer Patrick Flynn said in an interview with Bloomberg Television. “I hope that any additional regulatory costs comes from us growing the business.”
While Chief Executive Officer Ralph Hamers has transformed ING into a bank focused on Europe, the lender is looking worldwide for more financial-technology investments to build its capabilities in areas from lending and payments to money management.
Lenders’ profit margins are being squeezed as the European Central Bank holds interest rates at record lows while
regulators press banks to bolster capital, stoking competition for savers’ money.
First-quarter regulatory costs jumped to around 496 million euros from 174 million euros a year earlier on higher levies and contributions to fund deposit-insurance programmes. Besides, the bank expects costs of 960 million euros for the full year, up from 620 million euros in 2015.
The financial markets division, which provides products such as risk management and structural finance, fell to a loss of 2 million euros, from a profit of 149 million euros a year earlier, mainly due to lower income from rates and equities trading, ING said.
ING sold its remaining stake in NN Group NV in April at a loss as the Dutch bank completed its drawn-out exit from the insurance business. The deal is expected to result in a net loss of 66 million euros in the second quarter.
The bank’s performance excluding the regulatory costs and financial markets division was “solid on the back of strong volume growth, higher margins and lower impairments,” Matthias de Wit, an analyst at KBC Securities in Brussels, said in a note to clients.
Net interest income, the revenue generated from the difference between what banks charge for loans and pay for funding, rose to 3.1 billion euros in the quarter from 3 billion euros a year earlier.