ING Groep could head into its third-quarter earnings report with a modest tailwind from interest rates, according to analysts at RBC Capital Markets. The investment bank argues that higher policy rates are still working in the Dutch lender's favor, as long as competition for deposits stays mild in its home market. ING is scheduled to release its results on October 29.
How rates help banks
When central banks raise interest rates, banks typically benefit because the interest they earn on loans—like mortgages and corporate credit—reprices upward faster than the rates they pay out on deposits. That gap, known as the net interest margin, is a key driver of bank profitability. RBC believes ING is still capturing that benefit, pointing to relatively disciplined deposit pricing in the Netherlands and a more targeted approach in Germany, where the bank is using promotions rather than broad rate hikes to attract savers.
RBC raised its estimate for ING's liability margin—the spread between what the bank earns on its assets and what it pays to fund them—to 111 basis points for the third quarter, and to 109 basis points for 2026. A basis point is one-hundredth of a percentage point. The revision reflects the view that funding costs will rise more slowly than loan yields, a dynamic that has been a recurring theme for European banks in the current rate cycle.
The caveats: volumes and competition
The rosier outlook comes with caveats. RBC expects deposit growth to cool from the second quarter, as seasonal factors and promotional campaigns fade. Corporate deposits, in particular, could soften. On the lending side, the bank expects loan margins to hold steady around the second quarter's 124 basis points for the rest of the year, with competition in the Dutch mortgage market and product mix limiting further improvement.
Still, RBC sees a path where stable costs and benign credit losses leave ING with room to keep returning cash to shareholders. The bank has forecast €1.25 billion of share buybacks and a €250 million special dividend in the third quarter, part of a broader capital return program that investors have come to expect from European lenders.
What it means for investors
For shareholders, the key swing factor is not just whether rates stay high, but how much of that benefit gets passed on to depositors. If ING can avoid raising savings rates aggressively to retain customers, its funding costs rise slowly while loan income adjusts faster, supporting the higher margin RBC is modeling. That tailwind could disappear quickly if rivals in the Netherlands start competing harder for deposits, or if the targeted German offers turn into broader price increases.
This dynamic is not unique to ING. Big US banks face a similar earnings test as Treasury yields squeeze deposit costs, and the same forces are playing out across the Atlantic. Investors will be watching ING's October results for signs that deposit competition remains contained, and whether the bank can sustain its capital return plans.
RBC's call also highlights a broader theme in European banking: the balance between rate tailwinds and competitive pressures. Q4 tailwinds are meeting higher yields and AI spending bets in some sectors, but for banks, the focus remains on funding costs and loan growth.
For everyday investors, the takeaway is that ING's earnings could get a small boost from the rate environment, but the durability of that boost depends on deposit pricing discipline. If competition heats up, the margin gains could fade quickly. As always, past performance is not a guarantee of future results, and individual investment decisions should be based on your own financial situation and risk tolerance.
