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ING profits grow, shares fall 5% on 2023 guidance

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AMSTERDAM (RockedBuzz via Reuters) – ING Groep NV on Thursday reported better-than-expected fourth-quarter net income of 1.09 billion euros ($1.20 billion) on lower provisions for loan losses, but shares of the largest Bank of the Netherlands are down from its forecast for 2023.

Net income surpassed the €1.03 billion expected by analysts, data from Refinitiv Eikon showed, and was up from €945 million a year earlier.

Provisions for credit losses decreased by 22% to 269 million euros from 346 million in the previous year.

Analysts said earnings were ahead of expectations, but a forecast of revenue growth of 10% in 2023 and an improvement in the bank’s cost-income ratio to 55% from 60% in 2022 fell short of expectations.

“We expect low-single-digit downgrades to the 2023 consensus,” JPMorgan analysts wrote in a note.

ING shares fell 5.0% to 12.72 euros at 0711 GMT. They earned a 17% increase in January.

CEO Steven van Rijswijk said the bank’s margins should benefit from rising interest rates in 2023, although customers’ appetite for lending and the bank’s appetite for lending are not strong given inflation and economic uncertainty.

“With the current circumstances we want to focus on existing customers, so don’t take too much risk,” he said.

“Once the business cycle improves again, we expect some flattening in terms of GDP growth in the Eurozone over the next 12 months, they will continue to expand.”

Its core loans in the fourth quarter grew by a modest 3.1 billion euros compared to 13.4 billion a year earlier.

ING expects house prices to fall 10% from their 2022 peak and demand for mortgages, which make up the lion’s share of ING’s loan portfolio, is declining.

Interest margins were 1.36% versus 1.37% a year ago, but Van Rijswijk said they should improve in 2023. “This is what we expect now,” he said.

($1 = 0.9076 euros)

(Reporting by Toby Sterling; Editing by Raissa Kasolowsky and Jason Neely)