ING Group NV Earnings - Q4 2025 Analysis & Highlights
ING Groep NV's Q4 2025 earnings call highlighted a year of outstanding commercial growth and financial performance, driven by strategic execution and resulting in a record total income for the third consecutive year. The company reported a strong return on equity and capital generation, enabling attractive shareholder distributions. Management also provided an upgraded outlook for 2026 and 2027, emphasizing continued income growth, cost discipline, and operational efficiency.
Key Financial Results
Return on equity for 2025 was 13.2%, exceeding initial guidance.
Net profit for the past year exceeded €6.3 billion.
Total income reached a record level for the third consecutive year.
Commercial NII was €15.3 billion.
Fee income grew by 15% compared to 2024, now accounting for 20% of total income.
Total sustainability volume mobilized reached €166 billion for the year, a 28% increase versus 2024.
Business Segment Results
Retail Banking delivered €10.1 billion in net core lending growth in Q4, primarily from residential mortgages.
Wholesale Banking added €10.3 billion in Q4, supported by strong demand in Lending and Working Capital Solutions.
Retail Banking contributed €11.3 billion to deposit growth in Q4, benefiting from targeted campaigns and seasonal inflows.
Wholesale Banking experienced a small net outflow in deposits due to lower short-term balances in cash pooling activities.
Investment products performed well with 9% customer growth, 16% growth in assets under management, and 22% more trades.
Retail Banking maintained its number one NPS position in 5 out of 10 markets.
Wholesale Banking achieved an NPS of 77.
Business Banking propositions were successfully launched in Italy and Germany, showing strong customer growth.
Capital Allocation
50% of the €6.3 billion net profit is distributed as a regular cash dividend.
15% of capital generated was used to fund profitable growth.
Additional distributions totaling €3.6 billion were announced.
A share buyback program announced in November is underway and expected to be completed by April 2026.
€500 million in cash was paid out in January to meet the cash hurdle of €3.3 billion.
A final cash dividend of €0.736 per share is planned for April 24, 2026, subject to AGM approval.
Capital allocated to Retail Banking increased to 54%.
Two SRT transactions in November optimized capital efficiency in Wholesale Banking.
Industry Trends and Dynamics
Customer growth and increased cross-sell supported fee income growth.
Clients' financing needs increased, supporting Wholesale Banking growth.
Inflationary pressure is the main driver of cost increases, predominantly impacting staff expenses.
Geopolitical uncertainty and a relatively low PMI index were noted in the context of Wholesale Banking Lending.
Shortage of housing, low unemployment levels, good salary increases, and an increase in households are macroeconomic fundamentals driving mortgage growth.
Competitive Landscape
The company aims to become the best European bank.
Competition on deposits is a factor in liability margin assumptions.
ING considers itself one of the most successful banks in Romania.
Macroeconomic Environment
Lower interest rate differential between the euro and other currencies like the US dollar and Turkish lira is expected to result in less income from foreign currency hedging.
Updated macroeconomic forecasts contributed to a net release of €24 million for Stage 1 and Stage 2 provisions.
Growth Opportunities and Strategies
Adding more customers and doing more business with them to grow and diversify income.
Expanding investment product offerings.
Introducing a subscription model for retail clients in Romania, with plans to roll it out in other markets.
Targeting affluent customer base growth with dedicated propositions.
Stepping up engagement with younger generations through new products like an investment fund for Gen Z.
Expanding fee-generating capital light products in Wholesale Banking for sustainable and diversified revenue growth.
Improving operational leverage by scaling processes, people, and technology while maintaining strict cost discipline.
Further utilizing and scaling GenAI to enhance efficiency and reach FTE over customer balances target ahead of schedule.
Investing in value-accretive growth, diversifying income streams, and expanding the loan book in a capital-efficient way.
Considering M&A opportunities that meet strict criteria.
Increasing capital allocated to Retail Banking and optimizing capital uses in Wholesale Banking.
Digitalization and scalability are showing effects in cost management.
Business Banking rollout in Germany is showing good customer growth and deposit inflows.
Financial Guidance and Outlook
Total income for 2026 is expected to be around €24 billion.
Fee income is anticipated to increase by 5% to 10% in 2026.
Total operating expenses (excluding incidentals) for 2026 are projected to be between €12.6 billion and €12.8 billion.
CET1 capital ratio will be managed at around 13%.
Return on equity (ROE) for 2026 is expected to be 14%, with Return on Tangible Equity (ROTE) higher than 14%.
Total income for 2027 is expected to exceed €25 billion.
Fee income for 2027 is expected to exceed €5 billion.
Operating expenses (excluding incidentals) for 2027 are projected to be around €13 billion.
Return on equity for 2027 is expected to be 15%, with Return on Tangible Equity of more than 15%.
Customer balance growth of around 5% per year is assumed.
Liability margin is expected to be at the lower end of the 100 to 110 basis point range.
Lending margin is assumed to remain stable compared to Q4.
All other income is expected to be around €2.8 billion in 2026, excluding incidental items.
Total annual cost (excluding incidental and regulatory costs) is expected to be in the range of €11.6 billion to €11.8 billion.
Positive jaws are expected for 2026 and 2027.
SRTs are expected to have a positive impact on CET1 of 15 to 20 basis points in 2026.
FTE over customer balances ratio is expected to improve by more than 7% since 2023.
The target of a 10% decrease in FTE over balances set for 2027 is now expected to be reached earlier.
Restructuring costs in 2025 are expected to generate approximately €100 million in annualized cost savings.
Risk costs were €365 million in Q4, equivalent to 20 basis points of average customer lending.
Net additions to Stage 3 provision amounted to €389 million in Q4.
Net release of €24 million for Stage 1 and Stage 2 provisions was recorded in Q4.
Risk-weighted assets increased by €4.5 billion in Q4.
Credit risk-weighted assets rose by €1.5 billion (excluding FX impact).
Operational risk-weighted assets increased by €2.2 billion.
Market risk-weighted assets increased by €0.5 billion.
The commercial NII guidance for 2026 is €16.3 billion to €16.5 billion.
The long end of the replication portfolio is expected to contribute positively further into 2026 and 2027.
FTE over balances is expected to fall.
Lending volume growth is expected to be 5%.
Mortgage growth is expected to be a significant driver of loan growth in 2026 and 2027.
Wholesale Banking Lending is expected to be more choppy in terms of growth.
Short-term replication pressure is decreasing.
The benefit of rate cuts is already materializing in the numbers.
55% of replication is long-dated.
Increasing current accounts mean better margins.
€400 million tailwind is driven by decreasing short-end pressure, rate cut benefits, and positive long-end replication.
