ING’s third quarter net profit fell on the hit of Polish mortgages. Launch of €1.5 billion buyback — update

Ed Frankl

ING Groep NV on Thursday launched a €1.5 billion ($1.47 billion) share repurchase program after third-quarter net profit fell year-on-year, mortgage holidays and hedging losses in Poland said to do.

Dutch lenders posted a net profit of €979 million in the three months to end September, down from €1.37 billion in the same period last year.

According to ING, total revenue fell by 5% to €4.41 billion.

Analysts surveyed by FactSet said net profit came in at €1.08 billion and gross revenue was slightly below expectations at €4.43 billion.

The bank was impacted by hedge accounting of €288m, but said it would have a positive impact in the coming years.

Net interest income was €3.33 billion, down 1.7% year-on-year, due to the impact of a €343 million mortgage moratorium implemented by the Polish government to protect consumers from rising interest rates.

The blow itself was partially offset by rising interest rates, as ING earned more from its loans.

Fee income remained stable year-on-year as higher daily bank fees were offset by lower investment product fees as trading activity slowed due to the stock market decline.

ING’s Common Equity Tier 1 ratio, a measure of the bank’s financial strength, remained stable at 14.7% in the quarter, but exceeded its target of around 12.5%.

However, the company’s return on equity, a measure of shareholder profitability, fell two percentage points year-on-year to 6.8%.

Chief Executive Stephen van Rijswijk warned of challenging economic and geopolitical environment in the quarter, with bank expenses hit by rising inflationary pressures and unfavorable currency developments However, he said that controllable costs were contained.

The bank also said it will immediately begin its share buyback program, which is expected to end by December 30. The remainder of the program after that date will be paid to shareholders in cash, he added.

ING completed a €380 million buyback at the beginning of the year.

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