Citi Research says Dutch and Belgian lenders have the capacity to absorb downside credit-loss scenarios without severe damage to near-term earnings, and singles out ABN AMRO as its preferred Benelux exposure as rising oil prices and shifting rate expectations alter the regional banking landscape.
The research note highlights recent market moves connected to geopolitical tensions - notably a conflict between the United States and Iran - which pushed Brent crude as high as $115 per barrel, and coincided with market pricing for two 25-basis-point European Central Bank rate increases.
Equity performance since the escalation of hostilities on Feb. 27 has varied across the main regional lenders. ABN AMRO shares have outperformed by roughly 5%, KBC by about 2%, while ING's stock has traded broadly in line with the market index, according to LSEG data cited in the note.
Credit-loss sensitivity
Citi calculates the incremental provisions that would arise if banks moved their expected credit loss (ECL) scenarios fully to the downside. For ABN AMRO, the firm estimates an incremental provision of about 61 million, equivalent to roughly 2% of the bank's projected 2025 pre-tax profit. For ING, across all geographies, the figure is approximately 22 million - around 4-5% of 2025 pre-tax profit. KBC's estimated incremental provisions would be about 0 million, roughly 0-1% of 2025 pre-tax profit, based on company annual reports.
Citi characterises these levels as manageable, noting that they would come against a backdrop of supportive effects from the banks' replicating portfolios and otherwise strong profitability.
Rate-repricing and replicating portfolios
Both ABN AMRO and ING have a substantial portion of their replicating portfolios maturing within one year. Citi cites approximately 40-45% of ABN's replicating portfolio and 45% of ING's maturing inside a 12-month window. Using a 50-basis-point rate increase applied at rollover, Citi estimates a 4-5% uplift to ABN's 2025 net interest income (NII) and a 6-7% uplift at ING, before taking into account any offsetting deposit-cost increases. These calculations rely on company disclosures.
Citi prefers ABN as the cleaner exposure in the group, in part because consensus expectations for commercial NII growth appear more conservative for ABN - 5-6% - versus ING's consensus of 7% for 2026-2027, per Visible Alpha data referenced in the research note. Citi also points to a lower expected deposit beta for ABN given an estimated system deposit beta of about 30% during the Netherlands' most recent hiking cycle.
Balance-sheet composition and mortgage exposure
The research further notes that ABN's loan book is more concentrated in retail mortgages, which Citi treats as a defensive feature. Per EBA data included in the note, retail mortgages account for 54% of ABN's total loans, versus 46% at ING and 40% at KBC. ABN's mortgage cost of risk was approximately -2 basis points in the fourth quarter of 2025, according to company reports cited by Citi.
Valuation targets and expected returns
Citi sets a 12-month target price of 6.60 for ABN AMRO, implying an expected total return of 36% from Wednesday's close of 7.85. The bank's target for ING is 9.30, representing a 33.5% expected total return from 2.89. KBC is rated "neutral" with a target price of 19 and an expected total return of 14% from 07.95.
Overall, Citi's research presents a view that the primary Benelux lenders named in the note have resilience to downside credit scenarios, while differing in how much they could benefit from near-term rate uplifts and in the conservatism of consensus NII expectations.