Here’s why the ING Bank share price has fallen to a key support

ING Group (AMS: INGA) share price nosedived on Friday, becoming one of the worst-performing European bank stocks. The shares crashed to a low of €12.43, the lowest level it has been since August 2nd. It has dropped by more than 7.5% from its highest level this year.

Netherlands new banking taxes

ING Group is the biggest Dutch bank with almost 1 trillion in assets under management. It serves more than 14.9 million primary customers in the Netherlands and other European countries. This makes it a good barometer of the state of the Dutch economy.

The main reason why ING share price crashed by more than 5% is a new vote by the Dutch government to raise taxes. Precisely, they voted for a 70% increase in the bank levy, which they believe will bring in more than €850 million. 

The politicians also voted to introduce taxes on share buybacks, which they hope will raise over €1.2 billion. They hope to use the money to fund an increase in minimum wage and childcare support. Analysts believe that these taxes will hit ING and other banks like ABN Amro.

The most recent results showed that ING Bank was doing well. Its profit before taxes jumped by 14% to €3 billion. This increase was helped by the rising interest rates in Europe, where the European Central Bank (ECB) has pushed them to the highest level on record.

Banks like ING benefit when interest rates are rising since they lead to higher net interest income. The challenge is that high rates tend to have diminishing returns since they lead to higher default rates.

The other challenge is that higher rates have led to calls for windfall taxes, which will affect the overall returns to shareholders.

ING share price forecast

The daily chart shows that the ING stock price has been in a strong bullish trend in the past few months, helped by the rising profitability. Along the way, the shares formed an ascending channel pattern shown in green. It retested the lower side of this channel on Friday. 

At the same time, the shares dropped below the 25-day and 50-day moving averages. The Relative Strength Index (RSI) has formed a bearish divergence pattern. 

Therefore, at this stage, more downside will be confirmed if the stock moves below the lower side of the channel. If this happens, the next level to watch will be at €12. The alternative is where it bounces back to the upper side of the channel at €13.53.