Netherlands’ largest bank posts bigger Q4 profit

ING Group on Thursday (Feb 2) reported a fourth-quarter net profit of 1.1 billion euros (S$1.6 billion), exceeding forecasts, but its shares fell as guidance for 2023 fell short of expectations.

Net profit for the three months ended Dec 31, 2022 at the largest Dutch bank was up from 945 million for the same period a year earlier. Refinitiv data showed that the quarter’s earnings also topped the 1 billion euros predicted by analysts.

Loan-loss provisions were at 269 million euros, down 22 per cent from 346 million euros in the fourth quarter of 2021.

But analysts said that two forecasts for 2023 fell short of expectations. The first was for a 10 per cent income growth, and the second was for an improvement of the bank’s cost-to-income ratio, to 55 per cent from 60 per cent.

“We expect low single-digit downgrades to 2023 consensus,” JPMorgan analysts said.

ING shares fell 5 per cent to 12.72 euros at 0711 GMT on Thursday. They gained 17 per cent in January.

The bank’s chief executive, Steven van Rijswijk, said its margins should benefit from rising interest rates in 2023, though customers’ appetite for borrowing and the bank’s appetite to lend would not be strong, given inflation and economic uncertainty.

“With the current circumstances, we want to focus on existing clients, so don’t take on too much risk,” he said. ING’s fourth-quarter core lending grew by a modest 3.1 billion euros, down from 13.4 billion euros a year earlier.

“Once the economic cycle improves again – we expect a bit of flatlining in terms of GDP (gross domestic product) growth in the eurozone for the next 12 months – they will continue to expand,” the chief executive added.

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ING said it expected housing prices to fall by 10 per cent from a 2022 peak. It was also anticipating that demand for mortgages, which make up the lion’s share of ING’s loan book, would fall.

Interest margins fell by 0.01 percentage points, but Van Rijswijk said they should improve this year.

“That’s what we anticipate now.” REUTERS