ING Direct 2002 Annual Report Download - page 35

Annual Report 2002 · ING Group32
Report of the Executive Board
 
Clear client segmentation
for Dutch retail businesses:
Retail, Wholesale,
Intermediaries and
Operations/IT
—
ING BHF-Bank restructures
lending process
—
First private pension fund
launched in Russia
—
Countering low growth
with expense reduction
and quality improvement
market with personal advice. CenE Bankiers and
ING Bank Private Banking focus on the high-net-
worth market.
In Wholesale, relationship management of
the Dutch business units was integrated,
resulting in improved co-operation between the
business units. The Corporate Clients department
has been emphasising the overall relationship
with core clients, which led to a substantially
higher contribution to the overall ING Wholesale
result. The Mid-Corporate Clients department
increased market share and profits due to its
successful sector approach and good risk
management.
The Intermediaries division also earned
special attention during the year. The
independent intermediaries constitute a crucial
distribution channel in the Netherlands.
Nationale-Nederlanden is currently making
substantial investments in order to enhance its
service to the intermediaries it co-operates with.
The measures will eliminate backlogs and
improve the quality of both front-office and
back-office services.
South West Europe
Retail activities were affected most by the
difficult economic environment but Wholesale
managed to almost compensate the resulting
difference. Within Wholesale, Financial Markets
made particularly good progress thanks to
advances in derivatives and steady progress in
other activities.
The year 2002 saw ongoing business
integration in order to further lower the cost
base. In Belgium, Private Kas Bank was
integrated into BBL, and the four separate
insurance companies were integrated into ING
Insurance Belgium. The private banking units in
Switzerland were merged to form ING BBL
(Suisse). In Luxembourg, the private banking
activities of Crédit Européen Luxembourg and
ING Bank Luxembourg are also being merged.
By the end of April 2003, the ING brand will
replace the BBL name.
In the field of operations/IT, several
projects were initiated in order to develop
common solutions for Europe-wide use at ING.
An example is Triple’A, an advanced portfolio
management application developed for private
banking. First rolled out in Belgium, Luxembourg
and Switzerland, Triple’A is now also being used
in the Netherlands and business units in Italy
and Central Europe are about to follow suit.
Other IT projects also succeeded in creating more
synergy between business units. For example,
the automated branches of BBL are now also
accessible to clients of other ING business units
in Belgium, and all BBL trades on Euronext Paris
are now channelled through the brokerage ING
Ferri in France.
Germany
While the direct banking business of majority-
owned DiBa had a record year (see ING Direct
chapter), ING BHF-Bank disappointed with a
substantial loss in 2002. Sharply higher loan
losses led to a strong increase in risk costs and an
increase in non-performing loans depressed the
interest result. ING responded by adjusting
capacity and significantly reducing personnel
and overhead expenses in the second half. The
credit risk and lending process is being
restructured. Highly selective risk-oriented and
margin-oriented client strategies have been
adopted to boost results.
Central Europe
Central Europe reported a strong growth in
profits. Income exceeded EUR 2 billion and pre-
tax profit amounted to more than EUR 200
million. ING now has six million clients in the
region and confirmed its positions as the
number one life insurer and number one pension
fund provider. The ING Nationale-Nederlanden
Pension Fund in Poland is very successful in
attracting and retaining clients: almost one third
of those entering the labour market joined the
ING pension fund. The fund ended the year with
more than 1.8 million clients. With average
monthly inflow into the fund of about EUR 45
million, assets under management have increased
by almost 50% to EUR 1.75 billion. ING Bank
Slaski benefited from the merger with ING Bank
Warsaw, with profits rising modestly and
provisions further strengthened.
The life insurance businesses in Poland, the
Czech Republic, Hungary, Slovak Republic and
Romania all reported strong profit growth. The
ING strategy to introduce employee benefits in
Central Europe met with considerable success
across the region. A case in point is the employee
benefits contract signed with the Czech Railways
Company, the largest private sector employer in
the country. At year-end 2002, the contract
already covered 50,000 of the company’s over
70,000 employees.
In Russia, ING launched a private pension
fund, the first to receive a licence in Russia. ING’s
fund, modelled after similar ING funds in
Western markets, will focus on providing tailor-
made pension solutions to international and
local corporate clients with individual employee
pension accounts.