ING Groep NV beats expectations for second-quarter profits

ING Groep NV beat expectations for second quarter profits after releasing money set aside for doubtful loans and said it would boost payouts for investors.

The Dutch lender's net income soared to 1.46billion euros in three months from 299 million euros a year earlier. That compared to the average of analysts surveyed by Bloomberg in 1.15 - billion Euros. The bank will return 3.62 billion euros to investors after September, ING said on Friday.

Banks are taking a rosier view of the creditworthiness of borrowers as mass vaccinations have so far led governments to reopen their economies and unleash pent-up savings. ING rose 0.5% before erasing gains, trading at 11.15 euros after 9: 06 AM in Amsterdam trading. It is 46% this year, a rise that is more than the 24% advance for the 33 - member Bloomberg - Index of Banks and Financial Services.

In recent years, the European lender built up high levels of financial reserves and is now hanging some of the fattest dividends among Dutch banks.

'Given the strength of our banking sector, the resilience of our customer base it is a good time to return to business as usual and normal capital returns," Chief Financial Officer Tanate Phutrakul said in an interview with Bloomberg Television after the results Friday. 'The macro picture looks a lot better than it did 12 months ago.

ING plans to return 3.62 billion euros of the 4.03 billion euros in September - subject to approval by the European Central Bank. The bank announced it wants to pay 1.87 billion euros in dividends in October while the remaining 1.74 billion euros will be returned in cash or via share buybacks.

The bank exceeds its minimum capital requirements, meaning it has additional funds that it could pay out to shareholders. ING says it plans to gradually lower its common equity Tier 1 ratio - which stood at 15.7% at the end of June - toward about 12.5% over coming years.

Still, ING said it will keep the capital ratio above '' that level 'until there is more clarity on how the economy will emerge from the Covid 19 pandemic.

While economies are reopening, the Delta variant of the coronavirus is causing a resurgence in infections.

'After Delta, there may be Epsilon and after that maybe a Gamma variant. You never know. We need to remain prudent, ING Chief Executive Officer Steven van Rijswijk told reporters on Friday. 'We are still in an environment where government measures are continuing, where some of the payment holidays have not expired.

The bad lender still has 425 million euros of the 'overlay' built on top of the Dutch loan provisions to account for the uncertainty in the pandemic, the CEO said.

ING lacks the type of large trading operations that have buoyed the earnings of many rivals, meaning it is more exposed to Europe's negative interest rates which have eroded profitability in the savings and loan business.

Banks have been forced to deposit funds at the ECB since mid-2014, as part of an effort to encourage spending following the financial and sovereign debt crises.

The response by ING and other lenders was to credit more and charge an increasing number of clients for deposits, but pandemic set their efforts back last year when consumers stayed home rather than spending cash in restaurants and shops.

Lending income fell from 5% to 3.34 billion euros in a year earlier. That compares with analysts surveyed by Bloomberg expected about 3.37 billion euros on average. The bank stashed 91 million euros of credit provisions in contrast to a year earlier when it released 1.34 billion euros, ING said on Friday.