The banking sector has been one of the main beneficiaries of rising rates over the last three years, but investors say these profits have likely peaked as central banks see the end of this cycle of monetary tightening.

ING said its net profit jumped 43.1% to 1.56 billion euros ($1.69 billion) in the October-December period, just ahead of the 1.54 billion euro average estimate from analysts polled by the company.

For the whole of 2023, ING reported net profit of 7.29 billion euros, up from 3.67 billion a year earlier.

The bank said it expected total income in 2024 to remain strong, but somewhat lower than the 22.58 billion euros in 2023.

Its CET1 ratio, a key measure of financial strength, is expected to converge towards its target of around 12.5% by 2025 from 14.7% at the end of 2023.

However, ING reported fourth-quarter net interest income (NII), a key measure of earnings on loans minus deposit costs, of 3.88 billion euros, missing analysts' estimate of 3.98 billion.

Chief Executive Steven van Rijswijk sees NII coming down to between 15 billion and 15.5 billion euros in 2024, from 16 billion euros in 2023.

"So still good, and still a lot higher than we've seen in 2022, and also the years before. But there will be some impact on the global liability income, potentially countered by a higher income of lending," he said.

The group also sees more appetite for lending, both on the mortgage side and in business banking and wholesale banking, van Rijswijk added.

The European Central Bank held interest rates last week and said it was premature to discuss cuts.

($1 = 0.9258 euros)

(Reporting by Diana Mandiá and Matteo Allievi; Editing by Rashmi Aich and Mark Potter)

By Matteo Allievi and Diana Mandia