(Bloomberg) -- ING Groep NV shares rose after the lender unveiled a €2 billion ($2.2 billion) stock buyback and lifted its outlook for full-year revenue.
The lender now expects revenue to be more than €22.5 billion this year, up from an earlier forecast of more than €22 billion. The move came after profit topped analyst estimates in the third quarter as fees rose 11%.
“We see demand from retail customers on mortgages remaining strong,” Chief Financial Officer Tanate Phutrakul said in a Bloomberg Television interview on Thursday. “We are confident in managing the balance sheet through different rate cycles that we are expected to see in the next 12 months or so.”
ING’s shares rose as much as 1% before paring some of those gains. The stock has climbed 15% so far this year, outpacing the 11% advance of the 25-company AEX Index.
The surge in fee income helped offset a bigger-than-expected drop in net interest income, or the difference between what it gets on loans and pays for deposits. NII slumped 8.4% to €3.69 billion in the third quarter, missing the average analyst estimate of €3.83 billion.
Lending income was hurt by results in the wholesale bank.
“The macro picture is somewhat more uncertain,” Phutrakul said. “And the impact of a long period of high inflation has some effect on the growth prospect in the wholesale bank.”
Phutrakul’s warning comes as fears are growing that Europe’s early-year recovery has run out of steam. Earlier this month, the European Central Bank lowered interest rates for the third time this year, a hastier retreat than previously expected.
In addition to the buyback, the Dutch lender on Thursday also announced a cash dividend of €500 million.
ING, like many of its European counterparts, has built up excess capital due to the boost it received from higher interest rates in recent years. The bank has vowed to keep making payouts to shareholders as it seeks to reduce the cushion it has on top of its regulatory requirements.
The Amsterdam-headquartered bank has bought back €9.8 billion worth of its stock over the past three years, including a €2.5 billion program it completed earlier this month.
ING is seeking to cut its common equity Tier 1 ratio — a regulatory metric of capital strength — to about 12.5% by 2025. The ratio came in at 14.3% at the end of September.
--With assistance from Lizzy Burden.
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