ING Group: Margins Peaked Earlier Than We Thought

We are less bullish than before on narrow-moat ING. But we still believe the share offers value. We now forecast that ING's earnings will decline by 17% in 2024, and we are cutting our fair value estimate by 11% to EUR 17 per share. Despite our lower net interest margin estimates, we expect that ING will continue to generate profitability above its historical average. Even with the structural improvement in profitability and capitalization, ING continues to trade at a discount to its historical price/tangible book value multiple. A step-up in the pace of share buybacks could be a catalyst to drive a rerating of the share. We model for share buybacks and dividends in 2024 to equal 17% of ING's current market value.