ING (ING) Q2 2026 earnings review
ING raises its two-year profit targets as deposit margins expand
ING grew its loans, deposits and investment accounts while holding operating expenses nearly steady. Total income rose 10% from a year ago, and net profit per share climbed 21% with help from share buybacks. Chief executive Steven van Rijswijk raised the revenue, fee and return targets for both 2026 and 2027, hitting the bank's €5 billion annual fee goal a year early.
| Total income | €6,284M +10.2% from a year ago |
|---|---|
| Commercial net interest income | €4,174M +10.7% from a year ago |
| Net fee and commission income | €1,278M +13.9% from a year ago |
| 2026 and 2027 outlook | Raised 2026 ROTE >15%, 2027 ROTE >16% |
⚖️ Verdict: 🟢 Bullish
The story got better because the profit margin on customer deposits expanded instead of shrinking under competition, lifting the full-year interest income plan by €300 million. At the same time, risk transfers and model updates cut corporate risk-weighted assets while lending grew, shifting capital into higher-return retail banking 18 months ahead of schedule. One caution: the quarter included €65 million of one-off investment gains, and the bank again excluded €46 million of staff restructuring charges from its cost target.
The question now is whether the bank can keep its deposit profit margin near 1.07% once summer savings campaigns end and central bank interest rates move. Either multi-year deposit hedges push the margin above 1.10% next year as management plans, or rival banks force ING to pay more for savings. The third-quarter deposit margin and the October capital return update will tell.
🐂 Bull Case
Deposit Hedges Lift Interest Income and the Outlook
Commercial net interest income — what ING earns on loans and customer deposits after funding costs — is the bank's main revenue stream. Critics worried that competition for savings would squeeze deposit profit margins back toward 1.00%. Instead, finance chief Ida Lerner pointed to a "prolonged hedging tailwind on our replicated deposits", where multi-year interest-rate hedges on customer balances roll into higher yields.
- Commercial net interest income: €4,174 million, up 10.7% from a year ago
- Deposit profit margin (liability margin): 1.07%, up 0.03 percentage points from last quarter
- Loan profit margin (lending margin): 1.24%, down 0.02 percentage points on lower-risk mortgage mix
- Full-year commercial net interest income outlook: raised by €300 million to €16.8–17.0 billion
The higher deposit yield more than paid for promotional savings campaigns in Germany and other countries, so Lerner lifted the full-year deposit margin forecast to the upper half of the 1.00% to 1.10% range. By our math, the new interest income outlook implies second-half growth of 11.8% from a year ago, faster than the first half.
What to watch: the deposit margin in the third quarter, after the summer savings campaigns end. A reading that holds near 1.07% would confirm the hedge benefit is outrunning deposit price competition.
Fee Growth Reaches the 2027 Target a Year Early
The Dutch bank wants fee income from investment accounts, daily banking packages and wealth management to reduce its reliance on interest rates. Lerner said the bank will "reach our EUR 5 billion target 1 year ahead of plan", lifting this year's fee outlook to about €5 billion and next year's to €5.3–5.5 billion.
Net fee and commission income rose 13.9% from a year ago to €1,278 million, as 110,000 more customers opened active investment accounts and total assets under management grew 27% to €322 billion. The lender also bought the rest of Polish asset manager Goldman Sachs TFI, took a 40% stake in Spanish wealth manager Singular Bank, and moved 17 million retail customers onto new tiered monthly subscription packages.
What to watch: second-half fee revenue from the new retail subscription tiers once initial price discounts expire. By our math, the €5 billion full-year plan requires only 4.2% fee growth in the second half, so higher package fees would push results above the target.
Risk Transfers Cut Wholesale Capital While Loans Grow
Wholesale Banking serves large companies, which historically tied up half of the group's regulatory capital for lower returns than retail banking. Chief executive Steven van Rijswijk wants to shift capital toward retail by trimming wholesale risk-weighted assets — the risk-adjusted loan exposures that determine how much capital a bank must hold — through "secondary loan sales, insurance and overall client portfolio optimization".
Wholesale risk-weighted assets fell 3.6% from last quarter to €143.9 billion even as the division added €3.0 billion in core loans. A significant risk transfer — a transaction where outside investors insure part of a loan book's credit risk — cut risk-weighted assets by €1.0 billion, while credit model updates freed another €2.8 billion across the group. That shifted 56% of total capital to retail banking, beating the 55% target 18 months early.
What to watch: additional risk-transfer deals in the second half. Van Rijswijk plans 0.15 to 0.20 percentage points of capital relief from these deals for the full year, and only 0.04 points have been booked so far.
AI Tools and Flat Costs Lower the Expense Ratio
Management is using automated software to handle more customer business without adding staff. In the Netherlands, automated mortgage software "brought the time to yes back from 7 days to 5 days" on complex home loans, van Rijswijk said, while Germany launched 30-minute digital mortgage approvals. Across the bank, staff numbers per euro of customer balances fell nearly 7% from a year ago.
Because revenue grew 10.2% while total operating expenses rose only 1.7% to €3,086 million, the cost-to-income ratio — operating costs as a share of revenue — improved by 4.1 percentage points from a year ago to 49.1%. Day-to-day operating expenses excluding bank taxes and regulatory levies fell by 4.0 percentage points of revenue, to 47.9%, absorbing annual pay rises and Polish fund acquisition costs.
What to watch: quarterly operating expenses excluding one-off items in the second half. Holding the full-year €12.6–12.8 billion cost plan while absorbing €30 million of extra costs from the Polish acquisition would keep the cost-to-income ratio near 50%.
🐻 Bear Case
Recurring Restructuring Charges Sit Outside the Cost Plan
Management reiterated its €12.6–12.8 billion operating expense outlook for 2026 and pointed to tight cost control. However, the bank excludes "incidental" restructuring charges booked after the first quarter from that target, and it has now recorded severance provisions in almost every quarter over the past two years.
In the second quarter, the lender booked €46 million of incidental restructuring charges — €19 million for job cuts at German mortgage broker Interhyp, €12 million in the Corporate Line, and €10 million in Dutch retail banking — plus €22 million of legal provisions in other retail markets. Leaving these recurring layoff costs outside the official budget makes the full-year expense target easier to meet on paper than in cash.
What to watch: incidental expense items in the third and fourth quarters. Another round of charges would show that keeping staff numbers down requires continuous cash severance payouts.
War and Economic Uncertainty Shift Into Sector Loan Reserves
Total additions to loan-loss reserves stayed low at €279 million, or 0.15% of average customer loans, below the bank's 0.20% long-term average. Van Rijswijk also noted "consistent demand for financing from our clients" in Wholesale Banking, where core loans grew €3.0 billion.
Beneath the low headline figure, corporate credit quality softened and loan growth slowed from €5.6 billion last quarter. ING released its €94 million first-quarter reserve for Middle East war risks, but replaced it with a worse economic forecast and a new reserve for vulnerable industries because it sees no "credible path to a structural resolution of the conflict". Wholesale loan-loss provisions rose 59.6% from a year ago to €142 million, or 0.27% of loans, while retail provisions fell only because the bank sold bad loans and released a Dutch mortgage reserve.
What to watch: Wholesale Banking Stage 3 provisions — reserves for loans that have already defaulted — in the third quarter. A rise above €142 million would show that weaker European economic growth is causing more corporate defaults.
Risks this quarter didn't answer
Three standing questions around capital buffers, hedging income and fee accounting remained open after the release and call.
- Regulatory capital creep: the minimum Common Equity Tier 1 requirement rose 0.04 percentage points to 11.10% on higher European buffer rules, and Moody's cut ING Bank's senior rating to A2; third-quarter capital return plans will show if this limits buybacks.
- Foreign-exchange hedging drag: Corporate Line income fell to €36 million from €177 million a year ago on lower currency hedge gains, keeping the €2.5–2.7 billion other-income plan unchanged despite €65 million of one-off second-quarter gains.
- German fee reclassification: management did not disclose how much of the 13.9% fee growth came from shifting German brokerage costs into interest expense late last year; fourth-quarter results will lap that change.
💲 Other KPIs
Core loans — customer lending adjusted for currency swings and treasury portfolios — grew at an 8.1% annual pace, matching the €15.0 billion added last quarter and €15.4 billion a year ago. Retail mortgages supplied €7.1 billion of the increase, lifting the total residential mortgage book to €389.1 billion.
Customer deposit inflows more than doubled from €7.2 billion last quarter and €6.2 billion a year ago, growing at an 8.5% annual pace. Retail banking brought in €16.7 billion, led by €7.8 billion from a targeted savings campaign for existing customers in Germany and €5.2 billion in the Netherlands from seasonal holiday wage payments.
Average shares fell 4.8% from 3,012.5 million a year ago as the bank bought back stock. Because of the smaller share count, profit per share rose 21.4% to €0.68 even though net profit grew 16.2% to €1,947 million. ING has spent €350 million of its current €1.0 billion buyback and declared a €0.40 interim dividend.
🔮 Guidance
Raised. Management lifted the full-year revenue floor by €500 million, which implies at least 6.4% growth over 2025. By our math, after generating €12,107 million in the first half, the bank needs €12,393 million in the second half, or 6.0% growth from a year ago, down from 10.2% in the second quarter.
Raised. The middle of the range moved up €300 million on stronger deposit volumes and hedging yields, pointing to 10.3% growth for the year. By our math, that leaves €8,667 million for the second half at the middle of the range, or 11.8% growth from a year ago. The deposit profit margin is now expected in the upper half of 1.00–1.10%.
Raised. The bank locked in the top end of its prior growth range, equal to 8.6% growth for the year, hitting its 2027 goal twelve months early. By our math, after €2,514 million in the first half, the outlook leaves €2,486 million for the second half, or just 4.2% growth from a year ago.
Unchanged. The middle of the range represents a 0.9% increase over 2025 total operating expenses. The budget absorbs €30 million of first-quarter restructuring costs and €30 million of extra operating costs from the newly acquired Polish asset manager, but excludes the €46 million of second-quarter restructuring charges and any future severance items.
Raised. The full-year return target moved up 1 percentage point after second-quarter return on tangible equity — net profit as a percentage of tangible shareholder equity — reached 17.0% and the four-quarter rolling average hit 14.5%. The first half averaged 15.3%.
Unchanged. ING ended the quarter at 13.1%, up 0.08 percentage points from March, even after setting aside 100% of first-half net profit outside regulatory capital to cover dividends and future share buybacks. Management will announce its next semi-annual capital return update with third-quarter results.
Raised. Management lifted its 2027 revenue floor by €1 billion, its fee target by €300–500 million, and its return on tangible equity floor by 1 percentage point, while keeping its 2027 operating cost plan at about €13 billion and its capital ratio target near 13%.
❓ Key Questions
What happens to the Russian unit after the blocked sale?
ING cancelled the sale of its Russian subsidiary in April 2026 because regulators blocked the buyer, leaving €568 million of local credit exposure and €0.4 billion booked offshore. Investors need to know whether the bank will wind the unit down or seek another buyer.
Which industries carry the new loan-loss reserve overlay?
Management replaced its €94 million Middle East war reserve with a new sector-based overlay and booked €142 million in Wholesale loan-loss provisions. Naming the specific industries and the size of the new overlay would show where corporate defaults are building.
How much of the €2.8 billion model relief repeats?
Updates to credit risk models reduced risk-weighted assets by €2.8 billion this quarter, nearly three times the €1.0 billion saved by the risk-transfer transaction. Lerner noted that ongoing European Central Bank model reviews can either add or subtract capital in future quarters.
How much did the German fee reclassification add to growth?
Late last year, ING moved €66 million of German brokerage costs out of the fee line and into interest expense. Management still has not said how many percentage points that accounting change added to the 13.9% second-quarter fee growth.