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ING Groep Q2 profit up YOY, will redeem $500M Additional Tier 1 securities

ING Groep NVs second-quarter group net result rose to €1.37 billion from €1.30 billion in the same period in 2016, on the back of a €97 million one-time gain on the sale of an equity stake from the real estate run-off portfolio and relatively low risk costs.

EPS for the period was 35 cents, compared with 33 cents a year earlier. The S&P Capital IQ consensus normalized EPS estimate for the quarter was 35 cents.

"During the second quarter, we made important strides in establishing the internal operational framework for our digital transformation. We also realized further progress on our commercial ambitions, with €6.4 billion of net core lending growth at stable margins, despite aggressive competition in some of our markets, and a €5.3 billion increase in net customer deposits," CEO Ralph Hamers said.

The underlying net result, defined as the net result from continuing operations excluding special items after tax and excluding the result on warrants on NN Group NV and Voya shares, declined to €1.40 billion from €1.42 billion a year earlier, which included a €200 million one-time gain on the sale of shares in Visa Europe.

Net interest income rose year over year to €3.36 billion from €3.27 billion, while net commission income totaled €714 million, up from €610 million a year earlier. The group also booked investment income of €43 million in the quarter, down from the year-ago €172 million.

Risk costs totaled €229 million in the period, down from €307 million a year earlier.

Second-quarter underlying return on equity was 10.8%, compared to 8.8% a year earlier.

For the six months to June-end, the group's net result was €2.51 billion, down slightly from €2.55 billion a year earlier. EPS for the half was 65 cents, compared to 66 cents a year earlier.

ING said it will pay an interim cash dividend of 24 cents per share for the first half, unchanged from a year ago. The group said it aims to pay a progressive dividend over time.

As of June-end, the group's fully loaded and phased-in common equity Tier 1 ratios stood at 14.5%, unchanged from the end of March. Hamers said ING Groep is "committed to maintaining a capital position in excess of prevailing fully loaded requirements and to providing an attractive return to shareholders." The company aims to redeem $500 million of Additional Tier 1 instruments in September.