ING Shares Jump After Fourth-Quarter Earnings Beat Estimatesby
Lender proposes final dividend of 65 cents a share for 2015
Main retail and commercial banking businesses boosted results
ING Groep NV rose the most since in more than four years after the company reported fourth-quarter profit that beat estimates on gains at its main banking businesses and lower loan-loss provisions.
ING jumped as much as 11.2 percent in Amsterdam, the most since December 2011. Net income was 819 million euros ($915 million) the biggest Dutch lender said in a statement on Thursday. That beat 789 million euros, the average of five analyst estimates compiled by Bloomberg. ING proposed a total dividend of 65 cents a share on 2015 earnings.
A strong operational performance, “solid dividend pay-out and outlook, coupled with reassuring message on oil and gas, provides the necessary ingredients for a strong bounce today,” JanWillem Knoll, an analyst at ABN Amro Group NV, said in a note to clients.
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.
ING was up 10.8 percent at 10.72 euros at 1:19 p.m., paring the decline for this year to about 14 percent.
Provisions for bad loans fell to 302 million euros from 400 million euros a year earlier. The decline was driven by a recovering Dutch economy and rising house prices, the bank said.
“The loan-loss charges are likely to increase in the second half of the year, but the bank’s expectation is that they will stay in proportion,” Cor Kluis, an analyst at Rabobank with a buy rating on the stock, said by phone.
Profit from banking increased to 807 million euros from 530 million euros a year earlier and core lending increased by 4.2 percent, ING said. Net income was also boosted as so-called other income, which totaled 265 million euros compared with a year earlier loss of 34 million euros. The measure includes increases in credit and debt values and revenue from financial markets.
ING expects regulatory costs to be 850 million euros this year as it faces higher levies and contributions to fund deposit-insurance programs. That’s about 50 million euros higher than it predicted in the previous quarter.
Net income fell from 1.18 billion euros a year earlier, when the bank’s quarterly results were boosted by 644 million euros of gains from discontinued operations.
In Russia, where the slump in oil prices and U.S. and European sanctions over the Ukraine conflict are weighing on the economy, ING trimmed outstanding loans to 6.1 billion euros from 7 billion euros a year earlier.