ING shareholders will get double the dividend expected in 2015 if the European Central Bank's landmark bank tests do not produce upsets for the Dutch banking giant, its chief financial officer said on August 06. ING abandoned dividends after its 10 billion euro bailout in 2008. It has promised to resume payments next year after a major restructuring that saw it shed its investment bank, spin off its insurance arm NN Group and cut thousands of jobs.
Having achieved significant loan growth for the first time in six years and improved its capital position with the NN Group listing, ING said the only thing preventing it from repaying its last 1.025 billion euros of state aid ahead of a May 2015 deadline was the ECB's review of euro zone lenders.
"We would love to end this as quickly as we can," said chief financial officer Patrick Flynn.
"We said at our strategy day that in 2015 the bank will be paying a 40 percent plus dividend payout ratio. If we are able to pay the state fully, 40 percent will go to shareholders."
"The base case, if we are repaying in 2015, is half (of the dividend) goes to the state," Flynn said.
The ECB is due to publish the findings of its review of about 130 of the euro zone's biggest lenders in October, at which point banks could be forced to set aside more cash to deal with potential losses, or to raise more capital.
Flynn told Reuters Insider TV that the bank was not worried, but did not elaborate.
ING's common equity tier one capital - a key measure of banks' strength - improved to 10.5 percent at the end of June from 10.1 percent at the end of March. The ECB requires a ratio of 8 percent throughout a downturn.
ING's banking arm, the mainstay of the group after the July listing of its insurance division, beat earnings forecasts for the second quarter. Underlying pretax profits rose to 1.278 billion euros, ahead of the 1.137 billion euros expected by 11 analysts surveyed by Reuters.
The results were up 11.4 percent from the same period in 2013 as an improving Dutch economy led to a 38 percent fall in loan losses and net lending grew by 7.4 billion euros.
Bad loans climbed to 2.9 percent of ING's total as of the end of June, marginally up on 2.8 percent at the end March, with the highest levels in Dutch business lending and some parts of commercial banking.