ING (ENXTAM:INGA) Net Profit Margin Jumps to 25%, Reinforcing Bullish Earnings Narrative

ING Groep (ENXTAM:INGA) delivered a strong performance, reporting current net profit margins of 25%, rising from 21.2% a year ago, and notching 37.3% annual earnings growth that outpaced its five-year average of 4.8% per year. Looking ahead, analysts forecast annual earnings growth of 11.5% and revenue growth of 7.5%, just below the 7.8% expected for the broader Dutch market. Earnings quality remains high, with only minor risks flagged, setting a constructive backdrop for the headline results in this earnings cycle.

See our full analysis for ING Groep.

The next step is to see how these headline numbers measure up to the key narratives in the market. Some may ring true, while others could be in for a reality check.

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Digitalization Lifts Margins and Resilience

• Cost efficiencies from ING's digitalization and market trends have kept expense growth under control, underpinning a net profit margin of 25%, which is materially above last year's 21.2%. This translates directly to stronger net income for shareholders.
• According to analysts' consensus view, investments in mobile banking and sustainable finance are diversifying ING's revenues and driving higher customer engagement.
  • Momentum continues from a 19% year-over-year increase in sustainable finance volumes, supporting higher long-term loan growth.
  • Digital platform expansion positions ING for above-market gains in customer revenues and improved operating margins over time.

Profit Expansion Outpaces Industry Forecasts

• Over the next three years, analysts expect ING Groep's revenue to grow by 8.3% per year and profit margins to climb from 24.5% to 26.5%. This outstrips the Dutch market's 7.8% annual revenue growth forecast.
• Building on this, the consensus narrative notes that ING's largest source of growth is retail lending, especially mortgages and customer deposits. This is supported by demographic tailwinds and increased affluence, though margin pressures in core lending products remain a watch-point.
  • Volume growth in core segments is offsetting some pressure on net interest margins, helping to stabilize earnings quality and return on equity.
  • Analysts still flag persistent economic and regulatory headwinds as factors that could limit upside, with ongoing monitoring required as ING pursues resilience-focused growth strategies.

Value Case: Discounted to DCF But Premium to Peers

• While ING Groep trades below DCF fair value (€21.72 per share vs. €44.26 DCF fair value), its price-to-earnings ratio of 12.6x is notably higher than both its peer group average (9.1x) and the European banks industry (9.9x). This highlights an unusual valuation tension.
• Consensus narrative points to this as a mixed signal. Analysts' price target of €22.63 suggests only modest upside from here, reflecting high quality earnings and profit growth momentum, balanced by relative valuation headwinds in the broader banking sector.
  • The share price's limited gap to consensus target indicates that much of the positive outlook is already priced in, so further rerating may require stronger earnings beats or industry-wide revaluation.
  • DCF fair value suggests deeper long-term upside potential, but near-term multiples signal caution compared to peers with lower price-to-earnings ratios.
  To see how the Narrative stacks up against analyst forecasts and valuation, see the balanced view from bulls and bears in the full Consensus Narrative.📊 Read the full ING Groep Consensus Narrative.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for ING Groep on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your ING Groep research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

See What Else Is Out There

Despite ING Groep’s quality earnings and digital progress, its valuation sits at a notable premium to peers. This suggests limited near-term upside.

If you seek more attractive opportunities, uncover better-priced companies with strong fundamentals by checking out these 832 undervalued stocks based on cash flows right now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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