ING Groep Shares Lifted by Quarterly Print, Fresh Buyback — 3rd Update

By Ian Walker and Elena Vardon

ING Groep shares rose after the Dutch lender said it plans to buy back up to 2.5 billion euros ($2.68 billion) of shares and reported a first-quarter profit driven by income from fees and interest rates.

The bank posted a rise in total income--which includes net interest, fees and commissions, investments and other income--of EUR5.58 billion for the three months ended March 31, which was 0.3% higher on year and 3.4% ahead on quarter. The result beat expectations of EUR5.43 million taken from a company-compiled consensus.

Net interest income, which has been boosted by rate increases in the last couple of years, fell on year due to higher funding costs in its financial-markets division and an accounting asymmetry impact despite strong volumes. This was offset by growth in fee and commission income, driven by higher fees in retail and in wholesale banking, it said Thursday.

The group's net profit for the quarter beat estimates, coming in at EUR1.58 billion, compared with EUR1.59 billion a year prior and consensus's EUR1.45 billion.

The Amsterdam-listed group confirmed its full-year outlook alongside the results and tweaked a few metrics. For 2024, it expects total income to remain strong in a positive rate environment but to be "somewhat below" 2023's level, with fee growth between 5% and 10% and cost growth of 3%. ING now targets a return on equity of more than 12%, from 12% previously.

It specified that net interest income is expected to come in at the upper end of its previously guided EUR15 billion to EUR15.5 billion range, in line with current consensus's view. "We see the resilience of our net interest income also in a decreasing rate environment," Finance Chief Tanate Phutrakul said in a call with analysts.

"Loan volume trends, fee growth and delivering on costs are positive signs of improving business momentum," RBC Capital Markets analysts wrote in a note to clients.

The company said that the buyback--which was in line with expectations--will run through to Oct. 29 and aims to bring down its common equity Tier 1 ratio toward its target of around 12.5% by 2025. For the first quarter of 2024, it reported a CET1 ratio--a key measure of balance-sheet strength--of 14.8%, in line with expectations.

At 1118 GMT, shares traded EUR0.91 higher, or 6.1%, at EUR15.77, while Amsterdam's blue-chip index slipped 0.08%.

Citi analysts had expected "a positive reaction to a straightforward set of results that beat expectations across key lines and delivers strong messages on the outlook."

Write to Ian Walker at ian.walker@wsj.com and to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

May 02, 2024 08:05 ET (12:05 GMT)

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