ING to distribute 2.5 billion euros of profits, lifts FY outlook
To distribute up to 2.5 bln euros via buy-back, dividend
Q3 NII falls more than 8% y/y, misses expectations
Lifts total income FY outlook to over 22.5 bln euros
Shares up 0.7% after falling nearly 6% in early trading
Releads, adds share move in paragraph 4, CEO quote in paragraph 6, rewrites throughout
By Mateusz Rabiega and Gianluca Lo Nostro
Oct 31 (Reuters) -ING Groep INGA.AS missed third-quarter earnings forecasts on Thursday, but shares in the Dutch bank rebounded from early falls as it raised its annual outlook and announced 2.5 billion euro ($2.71 billion) payout plans.
The distribution includes an up to 2 billion euro buy-back programme expected to be completed by the end of April 2025, and a cash dividend payment of 500 million to be paid on Jan. 16.
ING also lifted its annual total income outlook for the second quarter in a row to more than 22.5 billion euros from above 22 billion forecast earlier.
Shares in the largest Dutch bank by assets had reversed course to rise 0.7% by 1024 GMT after falling by as much as 5.8% in early trading.
The lender said earlier its third-quarter net interest income - a measure of earnings on loans minus deposit costs - missed market expectations, due to a decline in liabilities and treasury-related income, standing at 3.69 billion euros.
"We have seen more growth in lending and deposits, but also in fees, we're doing particularly well. And that has led us to believe that we can increase our revenues further," CEO Steven van Rijswijk said on a call with journalists.
The distribution to shareholders will help push the bank's CET1 ratio, a measure of capital strength for European banks that compares core capital against risk-weighted assets, towards its 12.5% target from 14.3% at the end of third quarter, it said.
The lender also lifted its guidance for the cost-to-income ratio to around 53% from 54% and raised its return on equity target to above 13% from 12%.
When asked about potential M&A targets, Van Rijswijk said the group had not been able to find anything fitting its criteria yet.
($1 = 0.9210 euros)
Reporting by Mateusz Rabiega and Gianluca Lo Nostro ; Editing by Sherry Jacob-Phillips, Eileen Soreng and Jan Harvey
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