AMSTERDAM, Feb 2 (Reuters) - ING Groep NV on Thursday reported a better-than-expected fourth-quarter net profit of 1.09 billion euros ($1.20 billion) on lower loan loss provisions but shares in the Netherlands' largest bank fell on its 2023 guidance.
Net profit topped the 1.03 billion euros expected by analysts, Refinitiv Eikon data showed, and was up from 945 million a year earlier.
Loan loss provisions were down 22% to 269 million euros from 346 million a year earlier.
Analysts said the earnings were ahead of expectations, but a forecast for 10% income growth in 2023 and improvement of the bank's cost/income ratio to 55% from 60% in 2022 were below expectations.
"We expect low single digit downgrades to 2023 consensus," JPMorgan analysts wrote in note.
ING shares were down 5.0% to 12.72 euros at 0711 GMT. They gained 17% rise in January.
CEO Steven van Rijswijk said the bank's margins should benefit from rising interest rates in 2023, though customers' appetite for borrowing and the bank's appetite to lend are not strong given inflation and economic uncertainty.
"With the current circumstances we want to focus on existing clients, so don't take on too much risk," he said.
"Once the economic cycle improves again, we expect a bit of flatlining in terms of GDP growth in the eurozone for the next 12 months, they will continue to expand."
Its fourth-quarter core lending grew by a modest 3.1 billion euros versus 13.4 billion a year earlier.
ING expects housing prices to fall by 10% from a 2022 peak and demand for mortgages, which make up the lion's share of ING's loanbook, is falling.
Interest margins were 1.36% versus 1.37% a year ago, but Van Rijswijk said they should improve in 2023. "That's what we anticipate now," he said.
($1 = 0.9076 euros)
Reporting by Toby Sterling; editing by Raissa Kasolowsky and Jason Neely
Source: Reuters