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Berenberg has raised the price target for ING Groep NV (AS:INGA: NA) (NYSE: ING) to €20.00 from €19.50, while maintaining a Buy rating on the stock. The adjustment reflects a positive outlook on the bank's potential for medium-term growth, particularly in its retail challenger and growth (C&G) markets.
The firm emphasized that these markets are often underestimated but could significantly contribute to ING's objectives for loan and deposit expansion, fee growth, and efficiency. These factors are anticipated to support the bank in achieving a 15% return on equity (ROE) for the full year 2027.
The analysis further highlighted that the C&G business segment of ING is currently undervalued. This undervaluation presents an opportunity for ING's price-to-earnings (P/E) premium over the sector to widen. The bank's P/E premium is currently at 10% compared to the sector, with a multiple of 7.2 times its forecasted earnings per share (EPS) for the fiscal year 2025.
Berenberg's stance is that ING's growth targets, particularly in the C&G markets, are not fully appreciated by skeptics. This underappreciation could lead to a re-rating of the stock as the bank works towards its efficiency and profitability targets.
In other recent news, ING Group (NYSE:ING) reported strong performance for the second quarter of 2024 with significant customer growth and robust financial results. The company's fee income reached nearly EUR 1 billion, and it remains on track to meet its EUR 4 billion fee income goal for the year.
An interim dividend of EUR 0.35 per share was announced, contributing to a year-to-date yield of over 13%. Despite a 3% increase in total expenses due to inflationary pressures and business investments, risk costs were below average, indicating the strength of the loan book.
ING Group's mobile primary customers increased by nearly 250,000, totaling 13.7 million, with mortgage sector growth contributing to an expanding lending book. The company's core tier 1 ratio stood at 14%, with an update on the target ratio of around 12.5% expected in the third-quarter results.
ING Group is confident in achieving its EUR 4 billion fee income outlook for the year, with the full-year total income expected to be above EUR 22 billion. However, the company did face some challenges.
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