* ING could revisit state aid repayment schedule - CFO
* Dutch review of loan books has "negligible" impact
* Extra 300 jobs to go in restructuring plan
* Bank beats fourth-quarter earnings target
(Recasts, adds detail, quotes)
By Laura Noonan
AMSTERDAM, Feb 12 Dutch financial services group
ING could ramp up the repayment of state aid this year,
its finance chief said on Wednesday, paving the way for it to
resume dividend payouts.
ING dismantled its once-fashionable banking and insurance
model and announced thousands of job cuts and other savings
after its 10 billion euro ($13.7 billion) state rescue in 2008,
which also served to call a halt to dividends.
The comments from Chief Financial Officer Patrick Flynn came
after ING reported better than expected fourth-quarter results,
lifting its shares 4.72 percent by 1346 GMT.
The group also reiterated that it is on track to complete
the sale of its European insurance business this year and that
it will cut a further 300 jobs at its Dutch retail banking
business, on top of the previously announced 4,100, as customers
migrate to mobile banking faster than expected.
ING has already repaid 11.3 billion euros to the state and
is ahead of schedule to exit its bailout. It is due to make
another repayment in March and the final repayment in May 2015.
"We would love to exit the state as fast as we can, but we
have to be prudent with what we see in 2014," CFO Flynn said on
a conference call, adding that the bank wants to see the outcome
of EU-wide tests on bank capital and complete the insurance sale
before making decisions.
"If we can get that done, we'll think again," he said.
The bank announced that it had seen only a "negligible"
impact from the Dutch central bank's review of its commercial
real estate loans, but it remains uncertain of what to expect
from the European Central Bank (ECB) review of ING and another
127 of the euro zone's biggest lenders.
"The ECB asset quality review is another chapter that we're
just beginning and it's not easy to predict the outcome," Chief
Executive Ralph Hamers said.
The ECB could push for restructured loans - or loans where
repayment terms have changed - to be treated in the same way as
loans in arrears, which could force a surge in loan-loss
provisions at some banks.
Hamers told reporters that ING had 5.5 billion euros of
restructured loans at the end of 2013, including 4.7 billion
euros in commercial loans and 0.8 billion euros in retail loans.
Those have the same levels of provisions set against them as
impaired loans, Hamers added.
The ECB review will feed into EU banking stress tests that
will force lenders to hold at least 8 percent of capital based
on a strict new defintion known as Common Equity Tier 1. ING
reported a ratio of 10 percent for the end of 2013, which Citi
and Deutsche Bank analysts described as below expectations.
On a conference call, Flynn described the 10 percent ratio
as a "solid number" and rejected concerns about the impact that
one-off payments in 2014 would have on the ratio.
CAPITAL TRACK RECORD
"It's important to think about whether any of the perceived
drop is due to a structural or temporary event. The bank has
generated a consistent pattern of strong capital generation in
the past and I think that's likely to continue," Flynn said,
adding that he is confident the ratio will stay above 10 percent
French rival Societe Generale had a ratio of 10.3
percent at the end of 2013 and was able to announce a rise in
dividends on the back of its higher earnings, but ING's ratios
will be dragged down in early 2014 as it makes its next state
repayment and takes a 1.2 billion euro charge for previously
announced pension changes.
Flynn said the bank would give guidance on its dividend
outlook during a strategy day at the end of March.
ING will also use that day to outline prospects for its
banking business, Hamers said on Wednesday, adding that
acquisitions are not being contemplated at the moment. The group
is banned from making acquisitions until it has paid back all
its state aid.
ING posted net earnings of 539 million euros for the last
quarter of 2013, beating the 221 million euros expected by
analysts in a Reuters poll.
Hamers said the bank is experiencing a "slight recovery" in
its home market, which was stripped of its AAA credit rating by
Standard & Poor's in November over fears of economic weakness.
The bank took 560 million euros of loan losses in the
quarter, including 220 million euros for Dutch business and
mortgage lending. Hamers said he expected Dutch loan losses to
remain at that level over the next few quarters, given the
($1 = 0.7312 euros)
(Editing by Sara Webb and David Goodman)