ING GROEP NV (ING): what the price assumes

In the published model solve dated 2026-Q2, anchored at $35.92, ING GROEP NV (ING) is priced for more than 14.1% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-08-08.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/ING

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The implied return on book is non-physical at this price-to-book and is suppressed as misleading. The price sits beyond a 11.7% return on equity sustained for 40 years and is not resolvable as a sustainable-ROE point. The rarity read below is the honest signal.

Solve inputs: computed at a 9.7% cost of equity; ROE searched up to the 11.7% ROE ceiling.

How unusual the bet is: n/a

Valuation X-Ray

The price is supported by asset-based and earnings-power and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.1%); the inversion above states its own rate.

Per-Model Detail (n=5)

Solvency

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

• Eurozone rates have been coming down, and ING's net interest income still rose 14% to EUR 8,181 million in the first half of 2026, because lending and deposit volumes grew faster than margins gave way.
• The main risk is that same mechanism running in reverse, and the credit charge is starting from a favourable place rather than a normal one: the FY2025 annual report states Risk costs for 2025 were equivalent to 19 basis points of average customer lending, remaining below our through-the-cycle average of 20 basis points.
• The next visible event is cash leaving the building: an interim dividend of EUR 0.40 a share is paid on 10 August 2026 in Amsterdam and 17 August 2026 in New York, with a further distribution of up to EUR 1,000 million announced in April 2026 still running.

Bull Case

The consensus story about European banks in 2026 is that the rate windfall has ended. Deposit margins carried earnings through the tightening cycle, the central bank has been easing since, and the arithmetic says the engine cools. ING's first half of 2026 did not read that way. Net interest income rose 14% to EUR 8,181 million, fee and commission income rose 13% to EUR 2,514 million, and total income reached EUR 12,107 million, up 6.8% on the year.

Volume did the work that margin used to do. Net core lending grew by EUR 30.2 billion in six months against EUR 22.2 billion in the same half of 2025, and customer deposits grew by EUR 23.1 billion, of which EUR 21.1 billion came from retail savers. That is the part of a bank that is genuinely hard to replicate. A direct bank with a large retail deposit base does not have to win a rate auction every quarter; it wins on distribution, on being the account that salary lands in. Operating expenses rose 1% over the same half. Income up almost seven, costs up one: the gap between those two lines is where a bank's operating leverage actually shows up, and it does not require a single assumption about the future to see.

Credit is behaving. Net additions to loan loss provisions were EUR 625 million in the first half, and the bank puts that at an annualised 17 basis points of average customer lending against a through-the-cycle historical average of 20 basis points. The equivalent full-year figure was 19 basis points. A loan book charging below its own long-run average is not proof of underwriting quality on its own, but combined with lending growth of that size it does say the growth is not being bought with credit standards.

Capital is the engine behind everything shareholders actually receive. The CET1 ratio stood at 13.1% at the end of June 2026, against a requirement including buffers of 11.10%, a gap of roughly 190 basis points. The supervisor's own read on ING's residual risk is comparably light: the European Central Bank set a Pillar 2 add-on for ING of 0.93% of risk-weighted assets, essentially the same as the 0.96% CET1 portion of the 1.62% Pillar 2 requirement it left in place for BBVA from January 2026. Capital that sits above the requirement is capital the bank is allowed to hand back, and the policy is explicit: the annual report states ING's distribution policy is a pay-out ratio of 50% of resilient net profit and additional distributions in case of structural excess capital.

The handing back is not theoretical. One completed programme retired 101 million shares at an average effective price of EUR 19.76, cancelled in January 2026, and a EUR 1,100 million programme running from 30 October 2025 had bought 18 million shares at an average of EUR 22.62 by the year end. The cumulative effect shows up where it cannot be dressed up: the share count has shrunk by about 6.4% a year over the four years to the end of 2025. Compound that and the same bank, doing nothing new, delivers a growing claim per share on the same profit pool.

Bear Case

Two of the three lines carrying ING's earnings are sitting at a friendly point in a cycle, and neither is a structural feature of the bank.

Start with credit, because it is the one most people read backwards. The FY2025 report states Risk costs for 2025 were equivalent to 19 basis points of average customer lending, remaining below our through-the-cycle average of 20 basis points. The first half of 2026 ran at 17 basis points. The bank is telling you, in its own words, that the provisioning charge is below where it expects to sit across a cycle. A return to normal is not a credit event. It is simply what the middle of the cycle looks like, and it lands straight on pre-tax profit. The composition underneath has already begun to move: forward-looking Stage 1 and 2 charges fell to EUR 58 million from EUR 177 million a year earlier, helped by a partial release of the management overlay on Dutch interest-only mortgages, while net additions on Stage 3 loans, the ones that have actually deteriorated, rose to EUR 567 million from EUR 436 million. The headline improved while the part tied to realised losses got worse. That is a release doing the flattering, not a book getting better.

Rates are the second. ING's own risk disclosure spells out what a sustained decline does to it, and the list is not short: net interest margins compress as loans reprice down, investment portfolios earn less as they roll into lower yields, and mortgage prepayment and redemption pick up. The half just reported grew net interest income through volume, which works until the loan book stops growing at EUR 30 billion a half. For context on the trend line before this acceleration, full-year 2025 total income rose 1.9%. The bank is not compounding at 7% through the cycle; it did so in one half against an easy comparative.

Set that against what the price asks for. The market is paying close to 1.8 times ING's book equity, and the return on equity that would justify that number is above the top of the range this framework will credit as sustainable, held without fade. If the return the price needs does not turn up, the multiple it supports compresses, and for a bank the compression is mechanical rather than gradual. A book-value multiple is the market's opinion of a return, and opinions of returns are revised in one print.

There is a governance beat here too, and it cuts against the buyback enthusiasm. Repurchases executed at EUR 19.76 and EUR 22.62 a share are being made well above the book value the shares carry. That lifts earnings per remaining share and reduces book value per remaining share at the same time. Both effects are real, they point in opposite directions, and only the first one gets into the presentation.

The credible bull answer to all of this is that ING's fee income, up 13% in the half, is genuinely rate-independent, and that a bank holding a 13.1% CET1 ratio has room to absorb a normal credit cycle without touching the distribution. Both are true. Neither of them makes the return the price requires any easier to sustain.

Valuation

A bank is worth the return it earns on the capital it holds, so the lens here is book value rather than an operating multiple. The market is paying about 1.8 times ING's book equity. Run that backwards and ask what sustained return on equity would justify it, and the answer does not resolve to a point. The requirement sits past the 11.7% level this framework treats as the durable ceiling for a return on equity, held without fade for as long as the model will look. So what comes back is a boundary rather than a figure: the price implies more than this framework can put a number on. That is a statement about the reach of the method, not a verdict on the bank.

The map of methods behind that is unusually thin, and honestly so, because most standard valuation approaches simply do not apply to a deposit-funded balance sheet. Only the book-value-and-profitability group has more than one applicable method behind it. Those three bracket today's price: one lands just under it, two above it, and the middle of them sits slightly above. The earnings-power read is a single method, and the price sits about 10% above where the earnings-power estimate lands. It gets there by capitalising trailing earnings at a required return of 9.3%, built from a 4.3% risk-free rate and a 5% equity risk premium. The one forward method that applies lands well above today's level, and its own note explains why: it carries dividend growth of 20% a year through the first stage before fading to 3.5% in perpetuity. That assumption is doing the work.

So there is no family here calling the shares expensive, and the base rate is not hostile either. Roughly two in three firms earning this kind of return on equity were still earning it about a decade later. What the thinness of the map means is that the reader is leaning on fewer independent checks than usual, and that the one method reaching furthest above is also the one carrying the most aggressive assumption.

The capital position is the floor under all of this, and for a bank it is the only floor that matters. The CET1 ratio was 13.1% in June 2026 against an 11.10% requirement including buffers. That surplus is what the distribution policy converts into cash and cancelled shares, and it has been running steadily: an interim dividend of EUR 0.40 a share for the first half of 2026, a EUR 1,600 million additional distribution completed on 27 April 2026, and a further EUR 1,000 million announced in April 2026 and still ongoing.

One thing about those repurchases is worth holding onto. They are being executed at prices well above the book value the shares carry, which is the arithmetic consequence of buying back stock priced near 1.8 times book. Earnings per remaining share rise; book value per remaining share does not. Whether that is a good use of surplus capital depends entirely on whether the returns behind the multiple hold, which is the same question the price is already asking.

Catalysts

The nearest event is a payment. An interim dividend over the first six months of 2026 of EUR 0.40 a share is scheduled for 10 August 2026 on Euronext Amsterdam and 17 August 2026 on the New York Stock Exchange. The final dividend over 2025, EUR 0.736 a share, was already paid in April 2026. Together those establish the run rate under a stated policy of paying out half of resilient net profit, with anything above that treated as a separate decision on surplus capital.

The surplus-capital decisions are the ones worth tracking, because they are discretionary and they have been recurring. The additional shareholder distribution of up to EUR 1,600 million announced on 30 October 2025 was completed on 27 April 2026, including EUR 500 million paid in cash at EUR 0.172 a share on 15 January 2026. A further additional distribution of up to EUR 1,000 million was announced in April 2026 and is ongoing. Each of these is agreed against a CET1 ratio the bank manages around a 13% target, so the pace of future announcements is a direct read on how much capital keeps piling up above that level.

On the business side, ING announced on 6 July 2026 the acquisition of a non-controlling stake of approximately 40% in Singular Bank, a Spanish independent private bank with around EUR 19 billion of client invested assets. Closing is expected in the first quarter of 2027, subject to customary regulatory approvals. A minority stake in a wealth manager is small against a balance sheet this size, but the direction is the one that matters for the fee line: wealth and investment fees do not depend on the rate cycle, and fee and commission income was the fastest-growing income line in the half just reported.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• BCS (BCS)
• FY2025 20-F: …be similarly affected by changes in economic or other conditions. The Group implements limits on concentrations in order to mitigate the risk. The table below presents an industry credit risk concentration analysis of loans and advances at amortised cost net of impairment allowance including breakdown by geographical…
• FY2025 20-F: …and advances, including debt securities at amortised cost, increased by £15.7 bn to £435.3 bn ( 2024 : £419.6 bn) principally driven by growth in UK Mortgages ( £9.2 bn), UK Corporate Banking ( £4.4 bn), UK Cards ( £1.4 bn), IB ( £1.1 bn), and a £0.9 bn increase in USCB from the partnership with GM. Offsets included…
• RY (RY)
• FY2025 40-F: …governance practices required to be followed by U.S. Domestic Companies under the New York Stock Exchange's listing standards (disclosure required by section 303A.11 of the NYSE Listed Company Manual) is available on the Registrant's corporate governance website at rbc.com/governance. DISCLOSURE PURSUANT TO SECTION…
• FY2025 40-F: 40-F false FY 0001000275 IFRS NY Z4 Total assets of unconsolidated structured entities represent the maximum assets that may have to be purchased by the conduits under purchase commitments outstanding. Of the purchase commitments outstanding, the conduits have purchased financial assets totalling $ million as at…
• SHG (Shinhan Financial Group Co., Ltd.)
• FY2025 20-F: …and will continue to affect our business, results of operations and financial 7 Table of Contents condition." Furthermore, if competing financial institutions seek to expand market share by lowering their lending rates, Shinhan Bank may suffer customer loss, especially among customers who select their lenders…
• FY2025 20-F: …See Note 8 to the consolidated financial statements included in this annual report for further details on segment information, including the related components of income and expense. Operating Income by Principal Business Segment The table below provides the income statement data for our principal business segments…
• BBVA (BBVA)
• FY2025 20-F: …talent attraction compared to their competitors. Existing loopholes in the regulatory framework are another cause of an uneven playing field between banks and non-bank players. Some new services or business models are not yet subject to existing regulations. In such cases, not only are potential risks to financial…
• FY2025 20-F: …pace across regions and it is possible that such policies could be accelerated or reversed based on various factors, such as inflation, economic growth or financial stability concerns among other considerations. As a result of the foregoing, the evolution of interest rates could have a material adverse effect on the…
• MFG (MFG)
• (no filing in the citation store)
• COF (CAPITAL ONE FINANCIAL CORP)
• FY2025 10-K: …primary sources of revenue for our Commercial Banking business are net interest income from loans and deposits and non-interest income earned from products and services provided to our clients such as capital markets, advisory services, net interchange and treasury management. Because our Commercial Banking business…
• FY2025 10-K: Total net revenue margin is calculated based on total net revenue for the period divided by average loans during the period. (4) Charge-offs exclude $18.0 billion of Discover loans acquired in the second quarter of 2025 that were fully charged-off, with expected recoveries of $3.1 billion included as a benefit to the…
• NWG (NWG)
• FY2025 20-F: A remain key themes with fee pressure ongoing, in response to Consumer Duty and market competition. Commercial & Institutional Commercial & Institutional consists of customer businesses reported under Business Banking, Commercial Mid-market and Corporate & Institutions to support our customers across the full…
• FY2025 20-F: …​ 7bps ​ 7bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ Variance Capital and balance sheet ​ ​ ​ £bn ​ ​ ​ £bn ​ ​ ​ £bn ​ ​ ​ % Loans to customers (amortised cost) ​ ​ ​ ​ ​ ​ ​ ​ ​ - Business Banking 3.5 3.6 ​ (0.1) (2.8) % - Commercial Mid-market ​ 77.7 ​ 74.0 ​ 3.7 ​ 5.0 % - Corporate & Institutions ​ 74.6 ​…
• ITUB (ITUB)
• FY2025 20-F: …3) In "Brazil" geographic region the companies headquartered in the country and "Abroad" are considered; the other companies, the amounts consider the already eliminated values Competition The last several years have been characterized by increased competition and consolidation in the financial services industry in…
• FY2025 20-F: …on capital. The difference between the income tax amount determined for each segment and the effective income tax amount, as stated in our consolidated financial statements, is recorded under the Activities with the Market + Corporation segment. As discussed above, our current and deferred income and social…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.