ING Group’s pre-tax earnings plunge 36% in Q1 as Coronavirus fuels loan losses

In its report on Friday, ING Group (AMS: INGA) said that its pre-tax earnings came in 36% lower in the first quarter. The largest bank in the Netherlands booked higher losses due to loan provisions in the recent quarter but reported its retail operations to have performed well.

At £890 billion, ING’s earnings were significantly lower than £1.38 billion in the same quarter last year. Analysts, on the other hand, had anticipated the company to print an even lower £480.58 million in earnings, as per Refinitiv.

ING Group books £578.62 million in provisions for loan losses

ING also highlighted on Friday that the Coronavirus pandemic weighed heavily on its financial performance in March. The Dutch financial services company booked £578.62 million in provisions for loan losses in Q1. In the comparable quarter last year, the figure was capped at a much lower £181.20 million.

According to ING, roughly £35.89 million in provisions were attributed to the sharp decline in oil prices. Worsening economic conditions, in general, were associated with around £180.33 million in provisions in the recent quarter.

ING was reported 5.9% up in premarket trading on Friday.

Despite its wholesale banking units posting significant decline ascribed to the provisions, ING said its retail banking segments in Germany, Belgium, and the Netherlands saw an improvement in the gross quarterly results.

At £548 billion, the multinational bank posted an increase of £12.96 billion in lending in the first quarter. This included £4.90 billion in loans that were partly underwritten by governments under crisis programs.

ING Group’s net interest margin drops to 1.51% in Q1

The loan growth, ING said, hints at businesses withdrawing from their credit facilities. Customer deposits, the company added, surged to £8.05 billion in Q1. The bank’s net interest margin came in at 1.51% in the first quarter versus 1.57% in the prior quarter. CEO Ralph Hamers attributed the lower profitability measure to low-interest rates and a growing balance sheet.

At £4.44 per share, ING Group is currently more than 50% down year to date in the stock market. The Dutch company’s downward rally started in late February when the flu-like virus started to quickly cross borders and pushed the share prices down to £3.76 in March.

Its performance in 2019, on the contrary, was reported fairly upbeat with an annual gain of over 10%.

At the time of writing, ING Group has a market cap of £17.28 billion and a price to earnings ratio of 4.12.