Company Reports

SpaceX has filed for one of the largest IPOs in history, with Anthropic and OpenAI expected to follow in the most significant fundraising cycle in years. No European bank holds a lead equity arranger role; that honor belongs to five US banks.

We believe ING's strong deposit franchises in its core markets are its greatest competitive advantage. Ultralow interest rates over much of the preceding decade completely obscured the benefits that come with having a constant source of cheap funding.

European banks have declined around 10% from their highs as rising oil and gas prices and the prospect of higher-for-longer interest rates fuel fears that loan defaults will rise.

ING closed the year on a stronger note. Fourth‑quarter pretax profit rose 22%, reversing the 6% drop seen over the first nine months and finishing the year with a 13.5% return on tangible equity, or ROTE. The bank nudged guidance higher and now targets a 15% ROTE in 2027, up from 14% before.

We revised our model inputs mostly on the fee income side following ING’s improved near-term guidance. ING has been successful in expanding digital banking, which has also helped fee client growth. We view ING’s focus on fee-generating products in a decreasing rate environment as a prudent step.

We believe ING's strong deposit franchises in its core markets are its greatest competitive advantage. Ultralow interest rates over much of the preceding decade completely obscured the benefits that come with having a constant source of cheap funding.

ING's second-quarter 2025 net profit grew 12% year over year and beat company-compiled forecasts by 14%. Healthy growth in fee income and higher loan volumes helped counter net interest margin pressure.

ING's first-quarter 2025 net profit fell 8% year over year but beat forecasts by 4%. Healthy growth in fee income and higher loan volumes helped counter net interest margin pressure. The bank unveiled a EUR 2 billion share buyback and reaffirmed its 12%-plus return on equity target.

We believe ING's strong deposit franchises in its core markets are its greatest competitive advantage. Ultra-low interest rates over much of the preceding decade completely obscured the benefits that come with having a constant source of cheap funding.

Narrow-moat ING has reported a net profit of EUR 1.2 billion for the fourth quarter of 2024, which is 6% below the company-compiled consensus estimate and a significant 26% lower than the same period last year. Operating expenses came in slightly higher than anticipated, contributing to the decline. While revenue aligned with consensus expectations, it has seen a steep decline from the previous year, primarily due to diminishing net interest margins as a result of lower interest rates.

Narrow-moat ING booked a net profit of EUR 1.9 billion for the third quarter of 2024, 10% ahead of the company-compiled consensus estimate but 5% lower than what ING achieved a year earlier. Earnings per share, however, increased by 6% year on year, illustrating the benefits of ING's substantial prior share repurchases.

No-moat ING booked a net profit of EUR 1.8 billion for the second quarter of 2024, nearly 10% ahead of the company-compiled consensus estimate. Earnings came in 24% lower than a year earlier, but operating trends aligned with what we saw in the first quarter. ING looks well set to meet our expectations and its guidance for the full year. The one blemish in the results was that ING needed to release some of its rainy day "overlay" provisions to smooth out the higher provisions taken in the quarter against nonperforming loans. The reported return on tangible equity was an already impressive 14%. Still, if one excluded ING's surplus capital, profitability would have been closer to 18%; therefore, we feel very comfortable with our midcycle return on tangible equity estimate of 13%. We keep our EUR 20/share fair value estimate.

We upgraded our fair value estimate for narrow-moat ING to EUR 20 per share (from EUR 17 per share previously) after incorporating the fresh guidance it gave at a recent capital markets day. We now expect a less pronounced earnings decline over the next three years than before. We expect broadly stable revenue, with robust growth in fee income offsetting some initial pressure on net interest margins. Inflationary cost pressure looks set to remain while we factor in a modest increase in loan loss provisions. We forecast that ING will return EUR 18 billion (36% of its current market value) to shareholders through dividends and share buybacks over the next three years.

We believe ING's strong deposit franchises in its core markets are its greatest competitive advantage. Ultra-low interest rates over much of the preceding decade completely obscured the benefits that come with having a constant source of cheap funding.

Narrow-moat ING reported earnings per share of EUR 0.43 for the first quarter, 10% ahead of company-compiled consensus expectations. Net income was broadly stable year on year and sequentially; the 8% year-on-year growth in EPS was solely due to share buybacks. Net interest margin shrank another 3 basis points over the quarter to 151 basis points, contributing to a 5% decrease in net interest income compared with the comparable period of 2023. Stronger-than-expected fee income growth of 11% year over year, complemented by a solid 1% improvement in the cost/income ratio, partially offset the NIM contraction. Lending and volume growth surprised on the upside. Stronger-than-expected volume growth and slower increases in the cost of deposits led ING to slightly increase its guidance for net interest income and overall profitability.

ING is more than merely a play on European interest rates. We believe ING's strong deposit franchises in its core markets is its greatest competitive advantage. Ultra low interest rates over much of the preceding decade completely obscured the benefits that come with having a constant source of cheap funding.

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.

Narrow-moat ING reported a net income of EUR 2 billion for third-quarter 2023, double what it booked a year earlier, but 10% lower quarter on quarter. ING also stepped up its share buyback program, announcing a fresh EUR 2.5 billion buyback—the previous two buyback programs were EUR 1.5 billion each. ING has returned EUR 21 billion to shareholders since 2018—something that we do not believe the market has adequately rewarded ING for. More importantly, it is evident that ING continues to generate significant organic capital, which could support an ongoing effective payout ratio above 100% of earnings. We maintain our fair value estimate of EUR 19/share for ING.

The lower house of the Dutch parliament approved proposals for higher bank taxes and measures to eliminate the difference between withholding taxes on dividends and share buybacks. We estimate that the increase in Dutch bank taxes implies a 2% hit to our 2023 earnings estimates for ABN Amro and ING. The tax treatment of withholding taxes differs according to investors' residency and tax status and should not directly influence our valuation for ABN Amro and ING. However, we are concerned that continued European regulatory and government intervention will lead to higher risk premiums and lower valuations for banks. We recently had the opportunity to speak to several U.S. institutional investors and the risk of increased government/regulatory intervention in European banks was a topic that came up in all our discussions. The Dutch proposals follow windfall taxes on Italian and Spanish banks and the pandemic-related dividend distribution ban.

Narrow-moat ING reported a net income of EUR 2.2 billion for second-quarter 2023, 83% higher than a year earlier and comfortably ahead of FactSet consensus of EUR 1.7 billion. If ING can maintain the current earnings run rate into the second half of the year, our estimate of EUR 6 billion for fiscal 2023 net income is starting to look light. While management will only update the market on its distribution policy at its third-quarter results, we believe there is a good possibility that ING can step up the pace of share buybacks. We anticipate earnings growth to slow, but we think that a return to positive interest has led to a lasting structural increase in ING's profitability, which is not reflected in its 0.9 times price/tangible book multiple. Given its increased profitability, we believe ING should trade at a premium to its long-term multiple, which is not the case currently. We recently updated our fair value estimate for ING to EUR 19/share.