ING capital ratio dips after buyback; Q2 profit hit by weaker interest income

Investing.com -- ING Group’s (AS:INGA) common equity Tier 1 ratio declined to 13.3% in the second quarter of 2025 from 13.6% in the prior quarter, driven by a €2 billion share buyback and dividend payments, the company said on Thursday.

The drop in capital strength accompanied a 5.9% decrease in quarterly net profit, as lower interest income offset gains in fee revenue and lending.

The Dutch lender reported a net profit of €1.68 billion for the three months ended June 30, down from €1.78 billion a year earlier.

Profit before tax was €2.37 billion, down 7.7% year-on-year. Commercial net interest income fell 3.7% to €3.77 billion due to pressure on lending and deposit margins, along with a €27 million foreign exchange impact.

Fee income, however, rose 12.3% to €1.122 billion, with growth recorded across both Retail and Wholesale Banking.

Retail Banking fee revenue was boosted by higher investment activity and daily banking fees, while Wholesale Banking saw stronger income from Lending and Payments.

Net core lending increased by €15.4 billion during the quarter, led by €11.3 billion in Retail Banking, including €7.2 billion in new mortgages.

Wholesale Banking contributed €4.1 billion, mainly from short-term financing and working capital solutions.

Customer deposits rose by €6.2 billion on a net basis, with all the growth coming from Retail Banking. Deposits in Wholesale Banking declined due to lower balances in the cash pooling business.

Total (EPA:TTEF) income was nearly flat at €5.70 billion, down 0.2% from a year earlier. Operating expenses rose 6.5% to €3.03 billion, including €78 million in regulatory costs and €116 million in incidental charges.

The bank recorded €85 million in restructuring costs related to 230 job cuts in Wholesale Banking.

Loan loss provisions stood at €299 million, unchanged from the same period last year. This equated to 17 basis points of average customer lending. Stage 3 risk costs, which reflect credit-impaired loans, remained stable. Total provisions declined by €94 million from the previous quarter.

ING’s return on equity was 13.9% for the quarter, while the four-quarter rolling average stood at 12.7%. Earnings per share were €0.56, up from €0.54 in the second quarter of 2024.

The bank’s balance sheet expanded by €8 billion to €1.09 trillion, with higher volumes in customer lending and interbank activity.

Customer deposits reached €738.1 billion, and shareholders’ equity declined to €49.1 billion, down from €51.7 billion in March.

An interim dividend of €0.35 per share will be paid on Aug. 11. ING also confirmed that the €2 billion buyback program launched in May is expected to conclude by Oct. 27. The CET1 capital deduction for the buyback has already been accounted for.

The bank’s liquidity coverage ratio was 141%, while the leverage ratio dropped to 4.3%. Total capital ratio declined to 18.2% from 18.4%.