Dutch bank ING Groep NV reported an expectations-beating rise in its profit during the third quarter, boosted by loans and deposits, with this leading to a jump in the bank’s shares.
The Amsterdam-based lender said in a release on Thursday that its profit surged 22 percent to €1.34 billion ($1.49 billion) in the quarter, up from €1.09 billion during the same period a year ago.
The underlying net result figure surpassed what analysts had expected. The average of estimates provided to Bloomberg came in at €1.15 billion.
ING Bank shares surged as high as 4.2 percent in Amsterdam trading Thursday morning, according to Bloomberg. The rise was the highest seen in three months.
The impressive earnings in the third quarter were driven by rise in lending and customer deposits. ING posted net core lending growth of €3.6 billion while also seeing net customer deposits of €2 billion during the period.
Performance in the third quarter not only showed continued loan growth, but also higher commission and fee income.
Net interest income, the difference between charges on loans and what banks pay on deposit, climbed to €3.4 billion in the quarter, from €3.1 billion a year ago. Net commission income gained 16 percent to €605 million.
Netherlands’ largest lender saw its investment income swing to €139 million, compared to a loss of €7 million recorded a year earlier.
Chief Executive Ralph Hamers has prioritized investment in financial technology as a means of cutting down on costs that could weigh down on the bank’s financial results.
ING Bank, which is also seeking to expand its loan market beyond its home country, revealed last month that it was planning to cut around 5,800 jobs, which is equivalent to 11 percent of its workforce, as part of its cost-cutting drive.
Hamers said in a statement that the restructuring measures were needed “to enable ING to evolve with changing customer expectations and to increase operational efficiency.” These are the bank’s means of managing the current low interest rate environment and continuous regulatory pressure to ensure further growth.
“The low-rate environment has been here for quite a while and now we see in markets such as Belgium retail an impact that will deliver pressure on net interest income,” Hamers said via a media call. “We need to make sure that we have an efficient operation going forward.”
ING Bank has been implementing cost-saving measures since 2011. It said the different programs have helped in saving €977 million so far. Gross annual savings of €1.2 billion and €1.3 billion are forecast for 2017 and 2018 respectively.
Banking cost-income ratio stood at 50.9 percent in the quarter, an improvement over 56.1 percent recorded a year earlier.
ING Bank is just one of European lenders that have embarked on cost-cutting programs amid heightened regulatory pressure and negative interest rates. Germany’s Commerzbank AG and Deutsche Bank AG are two of the continent’s leading financial institutions that have also announced job cuts.
Deutsche Bank has even announced suspension of dividend payments and scrapping of generous bonus awards for top-level management.