Liking ING Groep (ING)
has been nothing but an exercise in frustration for years, with the
recent COVID-19 outbreak only exacerbating what had been an extended
period of underperformance. While ING’s credit quality and risk
exposures screen relatively favorably, the bank’s heavy reliance on
spread lending remains a significant risk and investors have been
waiting in vain for a while now for some spark to ignite the business
and the share price.
There are a lot of
cheap-looking bank stocks out there now, so investors have the luxury of
being picky. I do think that ING shares are trading significantly below
long-term fair value, but the full impact of COVID-19 on credit quality
is yet to be seen and ING has not yet named a new CEO. I believe
whomever the board selects will be starting off from a period of low
expectations and healthy capital, and I think the valuation is
appealing, but this has been a value trap for quite some time now and
that may well be the case for a while longer.
Click here to continue:
ING May Finally Have Found Its Bottom
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