ING Stock Jumps on 2015 Dividend Promise

Bank first needs to finish paying off bailout funds

Bailed-out Dutch bank ING (ING) said that it would begin paying out dividends next year — a promise that boosted its stock in early morning trading.

ing bank bailoutING stock is up 4% in trading today.

Execs said that the bank would doll out dividends beginning in 2015, with a payout ratio of at least 40%. Wall Street cheered the announcement, with analysts quickly pushing solid predictions for the bank’s long-term future.

The payout would be ING’s first since its all-but-financial-collapse after the 2008 global finance crisis in which the bank required government intervention to help stabilize.

Before the payouts would begin, however, the bank needs to pay back some 1.03 billion euros ($1.4 billion) worth of bail-out aid. Officials said this would happen by May of 2015.

“Now that we are in the end stage of the restructuring, with our divestment program and repayment of the Dutch state almost complete, we are proud to be in a position to look ahead to the future,” said Chief Executive Ralph Hamers in a statement.

Via the Wall Street Journal:

[The bank] aims to grow lending by an annual 4% in the period to 2017. Cost savings and an expected drop in provisions for bad loans should lead to a return on equity, a key measure of a bank’s profitability, of 10% to 13%.

Speaking to analysts, Mr. Hamers said ING has room to expand outside its home market. He pointed to Germany, Italy and Spain, where ING has established a successful deposit gatherer through its online franchise.

Mr. Hamers also said it will keep a lid on costs and invest in information-technology to adapt to what he called a “rapidly changing banking landscape.”

That ING is back to payouts is being seen in Europe as a signal that banks have now finally returned to health after the disastrous financial collapse that led to government bailouts across the globe.

ING stock is up 98% from last year.

Article printed from InvestorPlace Media,

©2020 InvestorPlace Media, LLC