Can The ING Tortoise Grow Into A Hare?

Comparing the performance of ING Groep (ING) to watching paint dry over the last six months is unfair … to paint. At least when you watch paint dry, you’ll have something to show for it sooner or later. But with ING Groep, weak growth and overall inhospitable market towards bank stocks have combined for a nearly 20% drop since my mid-December update. Although there are plenty of poor banking performances over that time (including fellow Benelux banks ABN Amro (OTCPK:ABNRY) and KBC (OTCPK:KBCSY)), ING’s performance has been pretty weak as investors are no longer so willing to pay a premium for a bank with lackluster growth prospects and trouble meeting its return targets.

I’m still relatively bullish on ING Groep, given that I believe it is a high-quality bank that is well-managed with respect to risk and investing in some markets that can spur better growth. I don’t expect scintillating performance, but I think that if ING Groep can get long-term earnings growth into the mid-single-digits (with a 10% to 12% ROE range in line with management’s target), there is worthwhile upside in addition to a respectable dividend.

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Can The ING Tortoise Grow Into A Hare?