ING sweetens profit beat with 1.6 billion euros of shareholder returns

By Mateusz Rabiega

(Reuters) -ING will return 1.6 billion euros ($1.9 billion) to investors through share buybacks and dividends, the Netherlands' largest bank said on Thursday, as strong growth in fee income and lending volumes helped it beat quarterly profit forecasts.

The international lender, which serves around 40 million consumers, corporate clients and financial institutions, said it planned to buy back 1.1 billion euros worth of its own shares, starting immediately, and pay out 500 million euros in dividends in January.

ING's quarterly net profit fell 5% to 1.79 billion euros as lower interest rates turned down income streams. It still beat analysts' median forecast of 1.66 billion euros.

Shares of the Amsterdam-listed bank rose around 4% in early trading, pushing its valuation to more than 66 billion euros.

As European central banks continue to ease their key rates, ING has needed to adjust its business approach to offset the slow but certain decline of interest revenues.

It focused on growing its fee income and used lower rates to offer more attractive loan terms to drive up demand.

"We grew with additional 200,000 mobile primary customers (in the third quarter). And when you have more customers, they do more business with you," ING CEO Steven van Rijswijk told journalists in a call.

FEE INCOME DRIVES OUTLOOK HIKE

ING also raised its targets for 2025, expecting its fee income, one of the key drivers of its continued strong run, to grow by more than 10% this year, exceeding the previously expected range of 5% to 10%.

The bank also expects its total income to rise to roughly 22.8 billion euros, after previously guiding for an unchanged annual revenue of around 22.6 billion euros.

ING's France-based peers Societe Generale and Credit Agricole also beat market forecasts on Thursday.

($1 = 0.8575 euros)

(Reporting by Mateusz Rabiega in Gdansk, editing by Milla Nissi-Prussak and Matt Scuffham)