ING Group, the largest Dutch bank by assets, has today forecast lower total income for 2024 after missing net interest income estimates in the fourth quarter, and with the European Central Bank expected to start cutting interest rates later this year.
Shares were down more than 6% this morning.
The banking sector has been one of the main beneficiaries of rising rates over the last three years, but investors say these profits have likely peaked as central banks see the end of this cycle of monetary tightening.
The European Central Bank held interest rates last week and said it was premature to discuss cuts.
ING reported fourth-quarter net interest income (NII), a key measure of earnings on loans minus deposit costs, of €3.88 billion, missing analysts' estimate of €3.98 billion.
Chief executive Steven van Rijswijk said he expects NII to drop to between €15 billion and €15.5 billion in 2024, from €16 billion in 2023.
"So still good, and still a lot higher than we've seen in 2022, and also the years before. But there will be some impact on the global liability income, potentially countered by a higher income of lending," he said.
The bank also said it expected total income in 2024 to remain strong, but somewhat lower than the €22.58 billion of 2023.
However, the bank's net profit jumped 43.1% to €1.56 billion in the October-December period, just ahead of the €1.54 billion average estimate from analysts polled by the company.
For the whole of 2023, ING reported net profit of €7.29 billion, up from €3.67 billion a year earlier.
Its CET1 ratio, a key measure of financial strength, is expected to converge towards its target of around 12.5% by 2025 from 14.7% at the end of 2023.
The group also sees more appetite for lending, both on the mortgage side and in business banking and wholesale banking, van Rijswijk added.
