ING Groep NV – Value Analysis (XETRA:INN1) : December 26, 2017

Capitalcube gives ING Groep NV a score of 46.

Our analysis is based on comparing ING Groep NV with the following peers – Banco Santander S.A., Nordea Bank AB, HSBC Trinkaus & Burkhardt KGaA and Commerzbank AG (BSD2-DE, 0JNL-GB, TUB-DE and CBK-DE).

Fundamental Overview

ING Groep NV has a fundamental score of 46 and has a relative valuation of OVERVALUED.

Fundamental Score

Company Overview

  • It’s current Price/Book of 1.19 is about median in its peer group.
  • The market expects INN1-DE to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • INN1-DE has relatively high profit margins while operating with median capital turns.
  • Changes in annual revenues are in line with its chosen peers but lags in terms of earnings suggesting that the company is less cost conscious and may be spending for growth.
  • INN1-DE‘s return on equity currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • While INN1-DE‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company’s equity capital investment program suggests it is under-investing in a business that is producing peer median returns.
  • INN1-DE seems to be constrained by the current level of debt.

Drivers of Margin

  • INN1-DE‘s lending operations show some differentiation with pricing advantages.
  • The company’s comparatively high proportion of net interest income (net interest income/total revenues) of 80.63% versus peer median of 47.68% suggests that INN1-DE‘s lending operations show some differentiation with pricing advantages. However, INN1-DE‘s pre-tax margin of 34.46% is around the peer median suggesting higher operating costs relative to peers.
  • The company’s comparatively low proportion of fee based income (i.e. non interest income/total revenues) of 19.37% versus peer median of 52.32% — suggests that INN1-DE‘s operating margins are likely to be more volatile. In contrast, INN1-DE‘s proportion of overhead costs (i.e. non interest expense/total revenues) is less than peer median (45.76x compared to 57.55x) — suggesting relatively low fee-based overhead operations or even room for expanding this part of business.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

ING Groep NV engages in the provision of banking, investments, life and non-life insurance, and retirement and asset management services. It operates through the following business segments: Retail Netherlands, Retail Belgium, Retail Germany, Retail Other, and Commercial Banking. The Retail Netherlands segment offers current and savings accounts, business lending, mortgages, and consumer lending. The Retail Belgium segment provides banking, life and non-life insurance, and asset management products and services The Retail Germany segment involves retail and private banking, which offers current and savings accounts, mortgages, and customer lending. The Retail Other segment comprises of retail banking activities. The Commercial Banking segment offers core banking services such as lending, payments, and cash management to corporate clients. The company was founded on January 21, 1991 and is headquartered in Amsterdam, Netherlands.