ING Business Returning to Pre-Covid Levels as Profit Beats

(Bloomberg) --

ING Groep NV said the outlook was improving after its borrowers proved resilient in the third quarter, delivering earnings that beat forecasts. 

The Dutch lender said its business was now broadly “comparable to pre-Covid 19 levels,” pointing to a rise in retail lending as well as increased fees on investment products. However, wholesale lending was subdued as corporate customers remained wary.

Net income was 1.37 billion euros ($1.6 billion) in the three months through September -- a rise of 73.5% on the same quarter a year ago, and slightly higher than in 2019. It beat a 1.29-billion-euro average estimate of analysts surveyed by Bloomberg

While the overall numbers were positive, the bank said it was too early to call the end of the health crisis. “The payments amounts and number of payments are back to pre-Covid levels, but if you look at our international payments they are still subdued. It is not quite at the level it was two years ago before the pandemic,” Chief Executive Officer Steven van Rijswijk said on a call with reporters.

Amsterdam-listed shares in the bank rose as much as 2.4% in early trading.

Low Defaults

ING set aside a net 39 million euros for bad loans in the quarter, far lower than analysts expected, and said “defaults in our portfolio have been limited.” A year ago it stashed 469 million euros to prepare for a spike in customers struggling during the pandemic. 

Net interest income rose 1.8% from a year earlier to 3.39 billion euros, underlining the continued demand for loans. 

The bank joins lenders around Europe and the world in taking a rosier view of the creditworthiness of borrowers as mass vaccinations lead governments to reopen their economies and unleash pent-up savings. ING is making some of the biggest investor payouts among European banks after the region’s top regulator lifted a cap on dividends and share buybacks at the end of September.

What Bloomberg Intelligence Says:

ING’s much better-than-expected 3Q report -- with estimate beats across all lines -- suggests there could be consensus upgrades to 2023 EPS of as much as 20% (to a ROE of 10% ) and a new 2022 buyback program. 

-- Philip Richards, BI banking analyst

Van Rijswijk told reporters the lender would give more details of capital returns alongside results in the first quarter of next year and indicated the possibility of more special dividends in future.

ING also took a 180 million-euro charge in the quarter to compensate Dutch retail clients who paid too much interest. The bank and rival ABN Amro Bank NV have flagged financial hits after they were found to not sufficiently follow market rates when setting interest on revolving consumer loans. 

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