ING Group closed the year with a strong fourth quarter, seeing a 22% increase in pretax profit and achieving a 13.5% return on tangible equity. The bank raised its guidance, aiming for a 15% ROTE in 2027. Expectations include modest earnings growth, single-digit revenue gains, and a combined yield near 10%.

Net interest income recovery exceeded expectations due to volume growth and interest rate hedging. Credit costs were reduced by management overlay provisions releases despite a slight increase in nonperforming loans. ING’s Belgian operations continue to impact group profitability, with the potential upside of boosting group ROTE by 1% if disposed of.

ING is utilizing significant risk transfer deals to synthetically reduce capital requirements, which may compress revenue margins over time but lead to lower credit costs. Market expectations foresee stable European rates in 2026, with ING well-positioned to outperform in certain scenarios. The stock is currently valued at around 1.5 times tangible book value, reflecting a ROTE of around 15%.

Read more at Morningstar: ING: Modestly Better Guidance; Maintain Fair Value Estimate