ING: We Increase Our Fair Value Estimate by 12% Due To Share Buybacks

We now assign narrow-moat ING Groep a fair value estimate of EUR 19/share, up from EUR 17/share previously. We believe that ING is willing and able to execute share buybacks of EUR 15 billion (32% of its current market value) spread over the next four years and maintain a common equity Tier 1 capital ratio north of 13%. We estimate that ING will grow its EPS by 30% a year over the next three years, with the bulk of earnings growth to come in 2023. Revenue growth should continue to benefit from higher net interest margins. At the same time, the inherent operating leverage of a relatively stable cost base will amplify the impact on ING’s bottom line, tempered somewhat by higher loan-loss provisions.