ING almost quadrupled its net profit in the first quarter of this year. Just like ABN AMRO, which already presented its results on Wednesday, the financial group benefited considerably from the rise in interest rates. ING also sees scope to reward shareholders by repurchasing up to EUR 1.5 billion in shares.
The quarterly profit increased to almost 1.6 billion euros. ING saw its profit in the first quarter of last year, with which the figures are now compared, more than halve to 429 million euros as a result of the war in Ukraine. Because of the conflict, the bank then set aside 834 million euros for loans to companies, which may never be repaid. ING decided not to do any new business with Russian companies and to reduce its presence in that country. The loan book for Russian companies initially amounted to 6.7 billion euros, but that has now been reduced to 2.6 billion euros.
The long-term low interest rates have put a lot of pressure on banks’ earnings models in recent years. But the European Central Bank (ECB) started raising interest rates in the middle of last year in the fight against high inflation. Banks benefit because this gives them the opportunity to increase margins on savings, for example. Savings interest is going up ‘more gradually’, ING CEO Steven van Rijswijk puts it in an explanation. While the ECB has already raised its interest rates by several percentage points, the savings rate at ING is still below 1 percent.
Little affected by unrest in the banking sector
Economists at De Nederlandsche Bank (DNB) have already pointed out that the impact of ECB policy on savings rates in the Netherlands is still more limited and weaker than in other countries. That could be due to the limited competition here. Various smaller banks are raising interest rates on savings significantly more than the large banks. Comparison site Geld.nl suggested that many people do save at major banks such as ABN AMRO, ING and Rabobank. “So they do not necessarily have to offer higher interest rates to attract sufficient savings.”
In the past quarter, ING was not affected by the recent turmoil in the banking sector. This unrest arose when several American banks and Credit Suisse ran into problems and had to be bailed out. Van Rijswijk says that ING customers continued to trust the bank. According to him, things went well with attracting customers, especially in Germany.
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