ING Direct 2002 Annual Report Download - page 50

amounted to EUR 55.2 billion (+ 130%) at the
end of 2002. Due to effective marketing
techniques, ING Direct also managed to lower
the client acquisition costs to a level below
EUR 100 per account.
Expanding market positions in 2002
ING Direct Canada acquired First Marathon
Mortgage Corporation (a mortgage broker) and
started advertising in the Quebec market with a
bi-lingual call centre in Ottawa.
ING Direct acquired an additional 21% stake
in DiBa (Germany), increasing its participation to
70%.
DiBa bought the Degussa Bank (an employee
benefits and mortgage bank in Germany), with
60,000 clients and EUR 2.4 billion in retail
balances.
ING Direct USA extended its market foot-
print north from New York to include Boston. In
January 2003, expansion started in California.
Operational efficiency
Operational efficiency, one of the important value
drivers of ING Direct, improved substantially.
The operational cost/asset ratio improved by 38%
to 60 basis points and this decreasing trend
is expected to continue. This represents a real
sustainable competitive advantage to existing
branch banks that have normally a ratio of
approximately 250 basis points.
Risk management
Very strict risk management controls the strong
growth of ING Direct. In 2002, high priority was
given to market, credit, operational and
reputation risk management. Several scenarios
were developed to test the interest rate risk and
liquidity risk. The tests concluded that ING Direct
is flexible and resilient and able to cope with
strong interest changes.
The savings deposits are invested in the
following broad, fixed-income, investment
categories: retail mortgaged and mortgage-backed
securities (54%), government and government-
related bonds (19%), internal deposits within
ING Group (14%), financial institutions (6%),
corporate bonds (5%) and other investments
(2%). The average credit rating of the fixed-
income investment securities is AA–.
Brand awareness
Brand awareness has a direct effect among other
things on the acquisition costs, cross-selling
potential and retention rates. The brand has
been introduced in six countries and has created
strong brand awareness. The aided brand
awareness numbers for the six business units
range between 50 and 80%. The target is to
achieve an aided brand awareness of at least
70% in every country three years after launch.
Outlook
ING Direct will focus on growing all the business
units to the necessary scale in savings and
bringing all the business units in profit mode.
The market circumstances are expected to
remain in favour of ING Direct’s savings product
positioning and subsequent cross-selling of
other products, although competition in all
markets remains fierce. ING Direct expects to
achieve a profit in 2003, including start-up losses
of the newer business units.
Annual Report 2002 · ING Group 47
ING Direct
RAPID GROWTH OF ING DIRECT
clients in thousands, funds entrusted in billions of euros
TOTAL CLIENTS TOTAL FUNDS ENTRUSTED
YEAR-END YEAR-END YEAR-END YEAR-END
2002 2001 2002 2001
Canada (05-’97) 684 480 5.1 3.4
Germany (06-’98) 1,894 827 20.3 6.2
Spain (05-’99) 610 397 6.0 3.8
Australia (08-’99) 475 278 4.1 2.9
France (03-’00) 270 181 6.3 3.2
USA (09-’00) 864 338 8.9 3.3
Italy (04-’01) 244 75 4.5 1.2
Total 5,041 2,576 55.2 24.0
 
Stake in DiBa increased to
70%
—
DiBa acquired Degussa Bank
with 60,000 clients
—
ING Direct USA expanded to
California
—
Operational cost/asset ratio
of 60 basis points
—
Average quality of fixed
income securities rated
at AA–
—
Aided brand awareness in
50-80% range
HOMEPAGE
WWW.INGDIRECT.IT