ING eyes second-half interest income growth after Q2 beat
"We expect it to stabilise in the third quarter, and start to rise in the fourth quarter ... compared to the first half (of the year)", CFO Tanate Phutrakul told journalists.
The expected rebound in commercial net interest income will however be offset by a larger-than-expected forex effect from a strong euro, KBC Securities analysts say, pointing to a 150 million-euro impact that is expected to push full-year interest income into a range of 15.2 billion to 15.3 billion euros.
Interest income has been under pressure across the banking sector as lower inflation in the euro zone has prompted the European Central Bank to start cutting its interest rates, ending a period of record-high net profits.
The ECB cut its deposit rate to 2% early in June, reaching the middle of the 1.75%-2.25% range it sees as neutral, and has since kept it unchanged.
Banks like ING, however, have passed on the lower interest yield to customers through deposit pricing, and focused on increasing earnings from fees, which has aided income stabilisation.
ING shares were muted after the results announcement, down 0.3% at 0759 GMT.
ING's second-quarter net profit came in at 1.68 billion euros ($1.92 billion) for April-June versus 1.57 billion euros forecast in a company-compiled consensus, supported by resilient income and lower tax rates.
Commercial net interest income - a measure of earnings on loans minus deposit costs - was slightly lower compared to a year earlier at 3.77 billion euros, while earnings from fees and commissions rose by more than 12% to 1.12 billion euros.
The bank also said it now expects fee income at the higher end of its previously indicated 5%-10% range, with total operating expenses expected at the lower end of its forecast of 12.5 billion to 12.7 billion euros.
French peers Societe Generale (SOGN.PA), opens new tab and Credit Agricole (CAGR.PA), opens new tab also beat second-quarter expectations in results published on Thursday, with shares in Soc Gen rising to their highest level since 2008, when the financial crisis decimated European banks.
($1 = 0.8747 euros)
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