ING ING Groep NV

By Maarten van Tartwijk 

AMSTERDAM-- ING Groep NV on Wednesday said its second-quarter net profit soared as the Dutch bank expanded its loan book and kept margins stable despite pressure from record low interest rates.

The Amsterdam-based bank, the Netherlands' largest lender by assets, said net profit was EUR1.3 billion ($1.46 billion) in the three months to the end of June, up from EUR358 million in the same period a year earlier. Underlying net profit, which excludes asset disposals, rose 27% to EUR1.4 billion, beating market expectations.

The bank's shares rose 8% following the results.

ING said its latest results were lifted by the strong growth of its loan book, which expanded by EUR14.8 billion in the quarter, as well as improved performance at its financial-markets division and a drop in loan-loss provisions.

The bank' underlying interest margin, the difference between the rate at which it borrows and lends, remained relatively stable despite ultralow interest rates. It was 1.50% compared with 1.43% last year and 1.51% in the previous quarter, and ING said it expects it to stay at these levels in the coming quarters.

European bank shares have been hit hard in recent months, in part because of concerns that historically low interest rates and more stringent regulations will eat into their profitability. ING's shares have fallen more than 20% since the start of 2016 and by around 40% in the past year.

ING, one of Europe's largest savings banks, with EUR452 billion in retail client deposits, has been able to protect margins by slashing rates on savings accounts and charging fees on large corporate deposits. The bank has also shifted its focus from mortgages to higher-yielding consumer and business loans.

Chief Executive Ralph Hamers said cost-savings and customer growth also contributed to the strong performance. "Our goal to restructure, invest and focus on digital services is paying off," he said. "The only way to counter [low rates] is to have a sound business."

Overall, net interest income was EUR3.3 billion, representing a 5.3% increase from last year and a 0.6% rise from the previous quarter.

The results were further boosted by a EUR200 million gain on the sale of its stake in Visa Europe, offsetting a EUR137 million provision linked to a scandal in the Netherlands involving mis-selling of interest-rate derivatives.

ING said it would declare an interim dividend of EUR0.24 a share, unchanged from the previous year.

Write to Maarten van Tartwijk at maarten.vantartwijk@wsj.com

(END) Dow Jones Newswires

August 03, 2016 07:07 ET (11:07 GMT)

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