ING quarterly profit miss takes shine off fresh buyback plan

By Jakob Van Calster

Oct 29 (Reuters) - Dutch lender ING on Thursday missed third-quarter profit expectations as higher loan-loss charges, weaker treasury income and slightly higher costs weighed on earnings.

The bank's third-quarter net profit rose 3.5% from a year earlier to €1.85 billion ($2.06 billion), below analysts' consensus forecast of €1.97 billion, with total income also missing consensus.

Days after completing its previous programme, ING also announced a fresh share buyback of €1.65 billion, coupled with an additional €250 million cash distribution in January 2027.

ING shares were down around 1.4% in afternoon trading. KBC Securities said that "slightly too ambitious" expectations had not been met.

NET-INTEREST INCOME

ING Chief Executive Steven van Rijswijk told Reuters he expected a slowdown in mortgage demand, already visible in Germany and Belgium in the third quarter, to spread across ING's markets as persistently elevated interest rates curb borrowing.

Even so, he said ING expects net interest income (NII) to continue growing through 2028, despite rising competition for deposits from neobanks such as Revolut and investor concerns over margin pressure that have recently weighed on lenders including HSBC and Lloyds.

Euro zone lending has so far remained relatively resilient despite higher borrowing costs, though recent surveys have pointed to weaker loan demand ahead.LOAN-LOSS HIGHER, OTHER INCOME LOWER, CAPITAL STRENGTH

Andrea Cesaroni, ING's chief risk officer, told reporters that the main driver of the higher loan-loss charges was a €111 million management overlay taken in anticipation of an accounting model update, rather than a deterioration in underlying credit quality.

"Excluding these effects, our risk costs would have been broadly stable and in line with previous quarters," he noted.

Higher bond yields reduced other income by several hundred million euros through accounting-related losses on derivatives, van Rijswijk said. He added that the direct impact on ING's €125 billion securities portfolio was limited because the bank has largely hedged its exposure to interest-rate movements.

ING's CET1 ratio, a key measure of capital strength, came in at 13.3%, above analyst expectations, helped in part by two significant risk transfers that reduced the amount of capital it needed to hold against certain loans.

Holding over a trillion euros in assets with large retail and commercial banking operations across Europe, ING is seen as a bellwether for the banking sector, offering investors a gauge of how euro zone interest rates are affecting lending margins, loan demand and capital returns.

The bank also announced a reorganisation of its wholesale banking division that it expects will result in around 400 job cuts globally.

ING joined other European lenders reporting earnings this week, though unlike several peers it missed market expectations.

($1 = 0.8959 euros)

(Reporting by Jakob Van Calster; Editing by Matt Scuffham)