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ING Groep launches $1.5 billion buyback despite Q3 pre-tax profit slump
Global Banking & Finance Review®
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AMSTERDAM (Reuters) – ING Groep NV, the largest Dutch bank, on Thursday reported a quarterly
AMSTERDAM (Reuters) – ING Groep NV, the largest Dutch bank, on Thursday reported a quarterly pre-tax profit of 1.38 billion euros ($1.36 billion), below expectations due to one-off charges, and rolled out a share buyback plan worth 1.5 billion euros.
Like other large European banks that have reported stable third-quarter results, ING benefited from higher interest rates.
Analysts had forecast a pre-tax profit at 1.50 billion euros, according to Refinitiv data, compared with 1.92 billion a year earlier.
The third quarter figure included exceptional charges of 631 million euros due to a hedge accounting adjustment and a one-off charge amid a government-imposed pause on mortgage payments in Poland.
Adjusted for those factors, analysts from Jefferies said “the underlying net interest income is up 6% quarter on quarter and significantly ahead of expectations.”
“The buyback will support shares until year end,” they said in a note.
The shares are down 19% year to date, closing at 9.89 euros on Wednesday.
Chief Executive Officer Steven van Rijswijk said the company had seen a “solid performance, especially in light of the challenging economic and geopolitical environment”.
Additions to loan loss provisions increased to 403 million euros from 39 million a year earlier, but were in line with the “through the cycle average”, ING said.
Among other key banking metrics, net interest margin declined to 1.28% from 1.38%. Without the one-off charges, margins would have improved to 1.42%, Van Rijswijk said.
The company’s CET1 ratio, the measure of solvency for European banks, was at 14.7%, which ING said made the buyback possible.
($1 = 1.0193 euros)
(Reporting by Toby Sterling; editing by Sherry Jacob-Phillips and Jason Neely)
One-off charges are non-recurring expenses that are not expected to happen again in the future. They can significantly impact a company's financial results for a specific period.
A share buyback is when a company purchases its own shares from the marketplace, reducing the number of outstanding shares. This can increase the value of remaining shares and improve financial ratios.
The Common Equity Tier 1 (CET1) ratio is a measure of a bank's financial strength, calculated as the ratio of its core equity capital to its total risk-weighted assets.
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