ING Groep NV rose the most in more than four months after HSBC Holdings Plc upgraded its stock, saying the Dutch bank is set to end a six-year hiatus from shareholder payouts earlier than forecast.
ING rose as much as 3.6 percent, the biggest intraday gain since April 1, and increased 2.8 percent to 9.92 euros at 13:13 p.m. in Amsterdam. HSBC analysts raised the biggest Dutch bank to overweight from neutral, noting that ING has effectively completed a multi-year restructuring involving the sale of many of its assets.
ING will probably resume dividends with a payout in mid-2015, analysts including Steven Haywood said in a note to investors today. They estimated the dividend for the full year would be 0.42 euros. That compares with a 41-cent average estimate of 16 analysts in a Bloomberg survey, a 7.3 percent increase since ING reported second-quarter earnings on Aug. 6.
There is “some possibility” of a payout on 2014 returns, depending on the outcome of an asset review by the European Central Bank in October, the London-based analysts said.
“For the first time in several years, we see ING in a good position, with potential excess distributable capital to come and limited restraints left from its European Commission restructuring plan,” the analysts said.
ING last paid a dividend in August 2008, shortly before the bank fell victim to the financial crisis and turned to the government for 10 billion euros ($13 billion). European Union regulators agreed to the bailout on condition the bank sell its global insurance and investment management operations. ING still owes taxpayers 1.03 billion euros, due no later than May.
The bank last week said it may reimburse the government before the deadline depending on the outcome of the ECB review. If the firm pays off the bailout ahead of schedule, a full 40 percent of 2015 profit may go to shareholders, Chief Financial Officer Patrick Flynn said on Aug. 6. In the bank’s original scenario, investors would split the profit with the state, he said.
Further capital returns of about 5.2 billion euros to shareholders are possible by the end of 2016 from the proceeds of ING’s remaining insurance operations, NN Group NV in Europe and Voya Financial Inc.in the U.S., the analysts said.