ING Earnings: Running Comfortably Ahead of Guidance; Buybacks Can Be Greater Than We Expected

Narrow-moat ING reported a net income of EUR 2.2 billion for second-quarter 2023, 83% higher than a year earlier and comfortably ahead of FactSet consensus of EUR 1.7 billion. If ING can maintain the current earnings run rate into the second half of the year, our estimate of EUR 6 billion for fiscal 2023 net income is starting to look light. While management will only update the market on its distribution policy at its third-quarter results, we believe there is a good possibility that ING can step up the pace of share buybacks. We anticipate earnings growth to slow, but we think that a return to positive interest has led to a lasting structural increase in ING's profitability, which is not reflected in its 0.9 times price/tangible book multiple. Given its increased profitability, we believe ING should trade at a premium to its long-term multiple, which is not the case currently. We recently updated our fair value estimate for ING to EUR 19/share.