© Reuters. FILE PHOTO: A pedestrian walks past the logo of ING bank by the group’s main office in Brussels, Belgium, October 3, 2016. REUTERS/Francois Lenoir/File Photo
By Diana Mandia and Matteo Allievi
(Reuters) -ING Groep, the largest Dutch bank, on Thursday announced its second share buyback programme of the year, of up to 2.5 billion euros ($2.65 billion), following third-quarter net profits that more than doubled from the previous year.
However shares were down as much as 4.8% in morning trading, with some brokers pointing to a poor beat in third-quarter income estimates. By 1101 GMT they were 2.3% lower.
“It seems that investors are looking at the ‘low’ quality of the beat in income estimates, which was driven by other income and very low risk costs”, Rodger Rinke from Landesbank Baden-Wuerttemberg said.
Net interest income (NII), a key measure of earnings on loans minus deposit costs, was also lower than expected, he said.
The bank’s net profit more than doubled to 1.98 billion euros between July and September, beating a 1.83 billion euro company-compiled consensus forecast, but NII reached 4.03 billion euros in the quarter, below 4.12 billion euros expected.
“A HOLDING PATTERN”
The sector has been one of the main beneficiaries of rising interest rates over the past two years, but central banks seem now to be at the end of this cycle of monetary tightening.
European Central Bank (ECB) kept its benchmark rates unchanged last week, snapping a 15-month streak of hikes, but tried to push back on rate cut expectations.
“For now we believe that interest rates will be higher for longer …. for now we see the ECB in a holding pattern,” Steven van Rijswijk said.
Net additions to loan loss provisions amounted to 183 million euros, below the 322 million euros expected in the company-compiled consensus, partially due to what Chief Risk Officer Ljiljana Cortan described as “successful de-risking from Russia”.
The grouped noted that its target of a CET1 ratio, the measure of solvency for European banks, of around 12.5% by 2025 would depend on earnings prospects, risk-weighted levels and macro and geopolitical developments.
The new share buyback starting on Friday will bring the total amount of capital the bank returned to shareholders in 2023 to 7 billion euros.
($1 = 0.9437 euros)
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