ING Poland's Q1 Profit Rises 22% Amid Regulatory Costs and Strategic Shifts

Amid geopolitical uncertainty and rising regulatory costs, ING Bank Śląski, the Polish subsidiary of Dutch banking giant ING Group, reported a 22% year-on-year increase in net profit to 495 million złotys (PLN) in Q1 2025. While net interest income (NII) narrowly missed analyst expectations, the bank’s focus on cost discipline and customer growth has positioned it to navigate Poland’s challenging macroeconomic environment.

Financial Highlights: Cost Management and Customer Growth

The bank’s Q1 results were bolstered by a 12% year-on-year rise in operating income to PLN 1.2 billion, offsetting a 3% decline in operating expenses to PLN 699 million. This optimization contributed to a cost-to-income ratio of 58%, down from 62% in Q1 2024, signaling improved operational efficiency.

Net interest income (NII) increased by 2% to PLN 2.21 billion, though it fell short of the PLN 2.25 billion consensus estimate. The gap was partially offset by strong retail deposit growth, which expanded the bank’s low-cost funding base and reduced reliance on pricier wholesale funding.

Drivers of Growth: Deposits and Digital Expansion

Poland’s role as a key market for ING’s retail strategy is clear. The bank added 174,000 mobile primary customers across its core markets (including Poland) in Q1, with Poland contributing significantly to this growth. These new customers likely fueled deposit inflows, which rose by €22.6 billion (annualized) across ING’s European operations. While Germany led this surge with a €17 billion increase from promotional campaigns, Poland’s participation helped lower funding costs and support NII margins.

The bank’s sustainable finance initiatives also played a role. ING’s €130 billion sustainable finance portfolio (up 23% year-on-year) includes green mortgages and corporate loans, which often command premium pricing. Poland’s growing eco-conscious middle class could be a key beneficiary of this trend, though specific local data remains scarce.

Challenges and Risks

Despite the positive results, ING Poland faces headwinds:
- Regulatory Costs: Mandatory contributions to Poland’s Bank Guarantee Fund resolution fund pushed operating expenses higher.
- Geopolitical Uncertainty: The ongoing Russia-Ukraine conflict and inflationary pressures continue to weigh on consumer and corporate borrowing behavior.
- Profitability Pressures: While NII grew, net commission income dipped to PLN 579 million, underscoring reliance on interest-driven revenue streams.

Strategic Priorities: Digital and Sustainable Banking

The bank’s focus on digital transformation and sustainable finance remains central. Poland’s expanding digital banking adoption rate (now over 80% of customers using mobile platforms) aligns with ING’s goal of reducing branch costs while boosting customer engagement. Meanwhile, the parent company’s €2 billion share buyback program signals confidence in its financial health, with Poland’s results contributing to the group’s overall stability.

Conclusion

ING Bank Śląski’s Q1 performance reflects a resilient core business in Poland’s competitive banking sector. The 22% profit jump and improved cost-to-income ratio highlight effective cost management and customer acquisition strategies. However, the bank must continue to balance regulatory pressures with growth in sustainable lending and digital innovation.

While NII growth remains constrained by macroeconomic headwinds, Poland’s role as a deposit growth engine and its participation in ING’s broader ESG initiatives position it as a stable contributor to the group’s bottom line. Investors should watch for loan portfolio quality and deposit growth trends in Poland as key indicators of future profitability. With a CET1 ratio of 13.6% (well above regulatory targets), the bank is financially equipped to weather volatility—making it a reliable bet in an uncertain European banking landscape.

Final Stat: ING Poland’s 75.8% loans-to-deposits ratio (Q4 2024) underscores a prudent balance sheet, while its book value per share of PLN 132.0 reflects strong capitalization. These metrics, combined with customer growth and digital leadership, suggest the bank is well-positioned for the next phase of Poland’s economic recovery.