ING Group (ING) Q1 2026 earnings review
Core Commercial Growth Offsets Market Volatility
ING delivered a resilient 1Q2026, pushing Net Income up 7% YoY to €1.56 billion. The bank successfully absorbed a sharp drop in Treasury revenues—triggered by Middle East market volatility—by accelerating its fee income engine (+13% YoY) and driving €15.0 billion in net core lending growth. Cost discipline kept operating expenses broadly stable year-on-year, improving the cost-to-income ratio to 55.3%. While regulatory reserving rules shaved 23 basis points off the CET1 ratio, it remains exactly at the ~13.0% target, enabling a fresh €1.0 billion share buyback program. Management reaffirmed their FY26 outlook for ~€24 billion in total income.
🐂 Bull Case
Net fee and commission income surged 13% YoY to €1.24 billion. Both Retail (+13.4%) and Wholesale (+10.7%) segments are driving structural top-line growth outside of interest rate dependency.
Net core lending grew by an impressive €15.0 billion in a single quarter (+8.3% annualized), led by Retail mortgages (€5.9 billion) and Wholesale Lending (€5.6 billion), showing strong market demand.
🐻 Bear Case
Risk costs climbed to €346 million. This included a €94 million management overlay addressing energy prices and Middle East conflict risks, signaling management's caution regarding macro stability.
Other income collapsed 41% YoY and 29% sequentially to €526 million. The decline highlights how quickly hedge ineffectiveness and market volatility can erode banking profits.
⚖️ Verdict: 🟢
Bullish. ING is executing perfectly on the metrics it can control (lending volumes, fee generation, operating expenses) while returning excess capital, more than compensating for unpredictable market-driven treasury adjustments.
Key Themes
Retail Customer and Deposit Momentum
The core franchise continues a stable growth path. ING added 125,000 mobile primary customers in the quarter, directly fueling a €4.3 billion expansion in Retail core deposits and a 13.4% YoY jump in Retail fee income. Cross-selling effectiveness is evident as active investment product customers grew by 116,000.
Wholesale Lending Reversing the Trend
Wholesale Banking delivered a €7.8 billion net inflow in pure Lending (partially offset by working capital repayments, netting to €5.6 billion). This is a strong positive reversal indicating robust deal flow in Capital Markets and Corporate Finance, which historically commands higher margins.
Agentic AI and Wero Digital Payments
Technology integration is accelerating. ING launched 'Wero', Europe's new digital account-to-account payment solution, in the Netherlands (following Belgium/Germany). Furthermore, they successfully piloted 'Agentic AI' in the Dutch mortgage business to cut friction and shorten time-to-decision, proving AI is moving from back-office theory to front-office execution.
Treasury Hedging Volatility
While the overall narrative champions income growth, the underlying data reveals a sharp vulnerability: 'Other Income' dropped 41% YoY to €526 million. Management explicitly blamed heightened market volatility related to Middle East developments, triggering negative derivative valuations and hedge ineffectiveness. This contradicts the stability of the commercial NII.
Macro Risk Drives Defensive Reserving
Stage 1 and 2 risk costs included a substantial €94 million management overlay directly tied to higher energy prices and broader economic fallout from the war in the Middle East. While total risk costs of 19 bps remain below the 20 bps through-the-cycle average, this specific forward-looking provision indicates rising macroeconomic anxiety.
Dividend Reserving Technical Drag
The CET1 ratio fell 9 basis points sequentially to 13.0%. A significant portion of this was structural: ING updated its dividend reserving approach to comply with EBA Q&A guidance, automatically reserving 100% of 1Q2026's €1.56 billion net profit upfront. This accounting shift depressed the CET1 ratio by 23 basis points.
Restructuring Drag and Luxembourg Exit
Incidental expense items hit €30 million, with €25 million dedicated to restructuring provisions for FTE reductions in Wholesale Banking and Retail Belgium. Concurrently, ING is gradually phasing out its Luxembourg retail and business banking operations. Both point to ongoing struggles to rationalize efficiency in legacy European markets.
Other KPIs
Accelerating from 12.3% a year ago and 12.2% in 25Q4. On a four-quarter rolling average, ROTE hit 13.9%, clearly demonstrating that ING's capital velocity is improving despite the sequential decline in the CET1 ratio.
Stable sequentially (-2.7% vs 25Q4) and showing only slight 2.0% YoY inflation. Cost discipline and savings from prior restructurings continue to neutralize wage inflation, driving the cost-to-income ratio down to 55.3%.
Accelerating significantly. Germany delivered a 7% YoY increase in total income, bolstered by strong mortgage and consumer lending volume (€1.9 billion net core lending growth). Regulatory costs declined, driving a stronger pre-tax result of €431 million.
Guidance
Stable. The reaffirmation of the ~€24 billion target implies an average quarterly run-rate of €6 billion for the rest of the year. Given 1Q2026 delivered €5.82 billion, this expects a mild acceleration in subsequent quarters, likely banking on seasonal volume upswings and sustained fee momentum.
Decelerating versus the current quarter. Q1 posted massive 13% YoY growth. Management's 5-10% full-year target leaves room for base effects to toughen in the second half of the year, or represents a classic under-promise/over-deliver scenario.
Stable. Annualizing the 1Q2026 base expenses (ex-regulatory) tracks very closely to the €11.6 billion non-regulatory run rate, which aligns perfectly with this overall total expense guide when annual regulatory taxes are factored into Q1 and Q4.
Accelerating relative to Q1's 13.6% standalone print. Hitting this target will heavily rely on the execution of the just-announced €1.0 billion share buyback, which will compress the equity denominator.
Key Questions
Hedge Ineffectiveness Outlook
Other income collapsed by 41% due to treasury hedge ineffectiveness tied to Middle East volatility. What specific risk limits or derivative strategies are being altered to prevent this from repeating if geopolitical tensions escalate further?
Margin Sustainability
With commercial net interest margin flat at 2.26%, how resilient is the liability margin specifically if the ECB embarks on an aggressive rate-cutting cycle in H2 2026?
Restructuring Horizon
You booked €25 million in restructuring provisions this quarter on the heels of €104 million in Q4. At what point does the stream of 'incidental' FTE reduction costs conclude and transition into pure operating leverage?
Duration of Macro Overlays
You added €94 million in management overlays for Middle East and energy risks. What specific macroeconomic triggers or commodity price levels would give you the confidence to release these provisions?