ING Group

ING Groep N.V., more commonly known as ING Group, is a Dutch multinational banking and financial services corporation headquartered in Amsterdam. Famous for its distinctive orange lion logo, ING is a major player in the global financial landscape. Originally a pioneer of the bancassurance model—combining banking and insurance under one roof—it has since transformed into a more streamlined, bank-focused institution. Its operations span the globe, offering services from retail and direct banking (like its popular ING Direct online savings accounts) to commercial banking, investment banking, and asset management. For investors, ING represents a story of ambitious growth, a near-fatal brush with the 2008 financial crisis, and a remarkable recovery and reinvention. Understanding this journey is key to evaluating its position as a potential investment today, as it sheds light on the company's current strengths, weaknesses, and strategic focus on digital-first banking in Europe.

ING's history is a dramatic one, marked by a period of aggressive expansion followed by a government-mandated diet. This story offers a fantastic case study on corporate strategy and risk.

ING was born in 1991 from the merger of Nationale-Nederlanden, a leading Dutch insurance company, and NMB Postbank Groep, a state-owned retail bank. This was a bold move at the time, creating one of the first “financial supermarkets” that could cross-sell banking products to insurance customers and vice versa. Throughout the 1990s and early 2000s, ING expanded rapidly across the globe. It snapped up other financial institutions, most famously the UK-based Barings Bank in 1995 after its collapse. By the mid-2000s, it was a sprawling global giant with significant operations in banking, insurance, and asset management across Europe, the Americas, and Asia.

The 2008 financial crisis hit ING hard. Its significant exposure to risky assets, including US subprime mortgages, led to massive losses and a crisis of confidence. To avoid collapse, ING accepted a €10 billion bailout from the Dutch government, facilitated by the Dutch National Bank. This lifeline came with strict conditions from the European Commission. To ensure a level playing field and repay the state aid, ING was forced to undergo a radical restructuring. This meant dismantling its bancassurance model and selling off its insurance and investment management divisions. This massive divestment program resulted in the creation of two separate, publicly traded companies:

• NN Group: Comprising ING's European and Japanese insurance and investment management businesses.
• Voya Financial: Comprising ING's US-based insurance and retirement services businesses.

This process forced ING to slim down and refocus its strategy, turning it into the more straightforward, banking-centric institution it is today.

For a value investor, ING is a fascinating case. It’s a mature, large-cap European bank that has been through the fire and emerged with a clearer focus and a stronger balance sheet.

• Digital Leadership: ING was a pioneer in direct banking and has a strong, user-friendly digital platform. This gives it a competitive edge in an industry increasingly moving online.
• Strong Capital Position: Following the post-crisis restructuring, ING is well-capitalized, making it more resilient to economic shocks than it was in 2008.
• Focused Strategy: By shedding its insurance arms, ING now has a clear focus on its core banking operations, primarily in the stable Benelux countries (Belgium, Netherlands, Luxembourg) and a handful of “Challenger” markets.

• Interest Rate Sensitivity: Like all banks, ING's profitability is sensitive to interest rates. A prolonged low-interest-rate environment can squeeze its net interest margins, which is a key source of revenue.
• Economic Headwinds: As a primarily European bank, its fortunes are closely tied to the health of the European economy. Economic slowdowns or recessions in its key markets will impact loan growth and increase the risk of defaults.
• Competition: The banking sector is fiercely competitive, not just from traditional rivals but also from nimble fintech startups chipping away at profitable niches.

When analyzing ING, a value investor might focus on the following:

1. Valuation: Banks are often valued using the price-to-book ratio (P/B). A P/B ratio below 1 can sometimes suggest that the market is undervaluing the company's assets. It's crucial to compare ING's P/B ratio to its historical levels and those of its European peers.
2. Profitability: Return on Equity (ROE) is a key metric for measuring a bank's profitability. A consistent and healthy ROE indicates that management is effectively generating profits from shareholders' money.
3. Dividend: For many, the main attraction of bank stocks is the dividend. ING has a policy of paying out a significant portion of its profits to shareholders. However, investors should remember that dividends are not guaranteed—ING suspended its dividend during the crisis, a stark reminder that even a “boring” bank stock carries risk.