ING Signals The Worst Is Over, And The Shares Remain Undervalued

Around the time of the U.S. Presidential election, bank stocks both here and abroad finally started moving, with investors more optimistic about the outlook for a global economic recovery that would not only limit credit losses but eventually help reinflate interest rates (and spreads). As a spread-driven bank, that’s obviously good news for ING Groep (ING), and while management remains cautious on rates, the worst does seem to be over from a provisioning standpoint.

ING shares (the ADRs) are up about a third from the time of my last update, underperforming U.S. bank stocks, but with the local shares doing a little better than the Europe 600 Banks index. Pull the comparisons out to a year and ING ADRs and local shares have underperformed U.S. banks by a little less and outperformed European bank stocks by a little more.

I continue to believe that ING shares are undervalued, and this remains one of my favored picks in Europe. ING’s capital is rock-solid, and capital returns are likely to be significant over the next few years, and I like the bank’s disciplined multimarket lending approach, as well as the prospects for long-awaited opex savings from years of back-office investment in IT.

 

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ING Signals The Worst Is Over, And The Shares Remain Undervalued