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Shares in ING are creeping up this morning after the Dutch bank announced it was raising its dividend by the minimum amount possible to meet its target of a “progressive” pay-out, even after beating expectations with a two-thirds jump in underlying quarterly profits.

Profits were down by 8 per cent in the three months to December, dragged lower by a €1.1bn cost cutting of 7,000 of ING’s 52,000 staff in a restructuring plan announced last October

The bank said that strong growth in its ING Direct online banking business outside of its domestic Benelux markets and in its wholesale banking operation helped it to achieve 10 per cent growth in underlying quarterly revenues.

Shares in the bank rose almost 2 per cent in early trading but gave up some gains by mid-morning as analysts asked why it had only increased its annual dividend from 65 cents to 66 cents per share.

Ralph Hamers, chief executive, told analysts that he wanted to keep some financial resources back to fund “growth opportunities” and to cope with “regulatory uncertainty” – notably a potential increase in capital requirements from the Basel committee of regulators.

Analysts at Royal Bank of Canada said the dividend was “very slightly below our estimate” but added the “2016 full year dividend yield at 4.9 per cent is still attractive and slightly above sector average”.

The bank’s common equity tier one ratio – a key measure of financial strength that is closely watched by regulators – increased to 14.2 per cent. That is above most of its main European rivals and ING’s own minimum target of 12.5 per cent.

Over the full year, ING said its underlying revenues were up 5.5 per cent at €17.5bn and its net profits rose 16 per cent to €4.65 per cent. Citigroup analysts said: “ING continues to surprise positively with all segments delivering better results.”

Most measures of the bank’s performance improved, including its ratio of costs to income, which fell from 55.9 to 54.2 per cent, while its ratio of bad debts to total loans fell from 2.5 to 2.1 per cent.

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