ING Groep NV missed analysts’ estimates for profit in the fourth quarter as the lender saw lower policy rates weigh on its lending income while inflation pushed up staff expenses.
The Netherlands’ biggest bank reported net income of €1.15 billion ($1.2 billion) for the three months through December, compared with analysts’ estimate of €1.29 billion. Net interest income, or the difference between what it earns on loans and pays for deposits, fell 5%. Operating expenses rose 8.5%.
The results are “ok to slightly soft,” analysts at Deutsche Bank AG said in a note, pointing to the impact of higher costs. Shares of the lender fell 3.4% at 9:04 a.m. in Amsterdam, the worst performer in an index of European banks. The decline pared gains this year to 2%.
Chief Executive Officer Steven van Rijswijk has sought to diversify ING as European banks begin to grapple with a lower rate environment. Last year, ING announced a target of growing total income by 4% to 5% a year on average through 2027, by boosting fee income, increasing the capital allocated to its retail business and improving capital efficiency in wholesale banking.
The bank said it was on track to reach its goals, while guiding that total income in the year would probably “end up at roughly the same level” as in 2024. It warned about geopolitical volatility and a fragmented economic outlook but anticipates those headwinds to be offset by its geographical presence across Europe, US and Asia.
“There is growth in different markets in Europe and we have a significant part of our book focusing on mortgages that is going to grow in any case,” Van Rijswijk said.
ING’s full-year outlook doesn’t include the impact from plans to sell its Russian operations, the bank said. The deal, which is expected to result in a hit of about €700 million to profit, is seen to close in the third quarter.
