Proactive Increase in Loan-Loss Provisions for ING in Q4 2021

Narrow-moat ING reported a net attributable profit of EUR 945 million for fourth-quarter 2021, 30% ahead of the EUR 727 million it recorded a year earlier, but below the EUR 1.4 billion it booked for third-quarter 2021. The central tenets of our investment case for ING are its gearing toward a higher interest rate and significant potential for capital return of around EUR 10 billion (20% of ING’s current market value) to shareholders. There was limited new information about these two factors in the results. Net interest income will remain depressed in the near term as it will take some time for the benefit of higher interest rates to filter through into ING’s income statement due to its interest-rate hedging programme. ING does not expect the European Central Bank’s TLTRO support package to continue in 2022. TLTRO accounted for EUR 300 million of ING’s revenue in 2021, around 4% of its preprovision profits. Capital return is still under discussion with the regulators and ING expects to update the markets before announcing its first-quarter 2022 results. We maintain our EUR 14/share fair value estimate for ING.