ING's Strategic Momentum: Leveraging Customer Growth and Fee Diversification for Long-Term Value Creation

The European banking sector has long grappled with macroeconomic volatility, regulatory complexity, and shifting consumer expectations. Yet, ING Group has emerged as a standout player, leveraging customer-centric innovation and fee diversification to navigate these challenges. As the world transitions into a post-pandemic era, where sustainability and digital transformation define competitive advantage, ING's strategic execution and financial resilience position it as a compelling high-conviction investment.

Operational Execution: A Blueprint for Sustainable Growth

ING's 2024 Annual Report underscores a masterclass in operational execution. The bank added 1.1 million mobile primary customers, bringing its total to 14.4 million—a testament to its digital-first approach. This growth was concentrated in key markets like Germany and the Netherlands, where ING's tailored financial products and seamless digital banking experience have strengthened customer loyalty.

Equally impressive is ING's fee diversification strategy. Fee income surged by 11% year-on-year to €4.1 billion in 2024, driven by expanded asset management offerings, capital markets activity, and digital tools that enhance customer engagement. This shift away from traditional interest income has reduced the bank's exposure to rate volatility, a critical hedge in an environment of uneven economic recovery.

Financial Resilience: A Fortress Capital Position

ING's ability to withstand macroeconomic headwinds is anchored in its robust capital structure. As of Q4 2024, the bank maintained a CET1 ratio of 13.6%, far exceeding its regulatory requirement of 10.87%. This buffer was validated in the 2025 EU stress test, which confirmed a CET1 ratio of 13.3% under adverse scenarios. Such resilience is rare in an industry where undercapitalized peers have struggled to maintain dividends and growth initiatives.

The bank's proactive approach to risk management extends beyond capital. Its integration of ESG principles into lending and investment decisions has not only mitigated regulatory risks but also unlocked new revenue streams. For instance, ING mobilized €130 billion in sustainable financing in 2024—a 13% increase from 2023—positioning itself as a leader in the green finance transition.

Competitive Positioning: A Post-Pandemic Leader

ING's strategic alignment with global trends—digital transformation, ESG integration, and customer empowerment—has fortified its competitive edge. Its “AA” ESG rating from MSCI and a Sustainalytics Risk Rating of 17.2 (Low Risk) reflect its leadership in sustainable finance, a sector expected to grow exponentially as governments and investors prioritize climate action.

Moreover, ING's global footprint—spanning 100 countries—provides geographic diversification that insulates it from regional downturns. Its Wholesale Banking division, for example, capitalized on capital markets issuance deals, driving double-digit fee growth. Meanwhile, Retail Banking's focus on sustainable mortgages and energy-efficient loans has created a virtuous cycle of customer retention and volume growth.

Investment Case: A High-Conviction Play

For investors seeking exposure to a European bank poised to thrive in a sustainability-focused world, ING offers a compelling thesis:
1. Margin Stability: Diversified fee income and a growing sustainable finance portfolio reduce reliance on volatile interest rate environments.
2. Capital Efficiency: A CET1 ratio of 14.3% (as of September 2024) provides flexibility for dividends, share buybacks, and strategic M&A.
3. Regulatory Favor: Strong performance in stress tests and SREP processes ensures alignment with EU banking regulations, reducing compliance risks.

The proposed final dividend of €0.71 per share in 2024 further underscores ING's commitment to shareholder returns, a rarity in an industry where capital conservation often takes precedence over payouts.

Conclusion: A Strategic Bet on the Future of Banking

ING's 2024 performance demonstrates that European banks can innovate and thrive in a post-pandemic world. By prioritizing customer growth, fee diversification, and sustainability, the bank has built a model that balances resilience with growth. As central banks recalibrate monetary policy and ESG investing gains traction, ING's strategic momentum—backed by a fortress balance sheet and a forward-looking vision—makes it a high-conviction play for investors seeking long-term value creation.

In a sector where many peers are playing catch-up, ING is setting the pace. For those with a 3–5 year horizon, the bank's disciplined execution and alignment with global megatrends suggest a compelling opportunity to capitalize on its strategic momentum.