ING Direct 2006 Annual Report Download - page 22

Retail Banking had another good year,
despite fl attening yield curves and
lower interest rates, thanks to growth
in core products, such as savings and
mortgages, direct distribution, cost
control and process improvement.
ING has a leading position in its retail
home markets and is well positioned
in Central Europe and Asia where it is
investing in growth.
Underlying profi t before tax from Retail
Banking in 2006 gained 6.4% to
EUR 1,932 million, due especially to volume
growth in savings and mortgages. Total
underlying income rose 4.7% to EUR 6,002
million. Underlying operating expenses rose
2.6% to EUR 3,930 million.
Meeting customer needs
The Netherlands and Belgium are ING’s
attractive wealth accumulation markets.
In 2006, we strengthened our presence,
thanks to a combination of increased
sales in our core products savings and
mortgages, rationalisation of products
and processes, customer satisfaction and
cost leadership.
In the Netherlands, Postbank has grown
to 2.7 million on-line customers and the
internet now accounts for nearly 50%
of its sales, excluding mortgages. The
introduction of innovative products, such
as a budget mortgage, has helped to
attract new customers and to increase our
market share. Postbank has received the
highest customer satisfaction levels in a
national survey. ING Bank has expanded its
branch network and launched initiatives for
small and medium-sized enterprises, such
as the Small Business Facility. In Belgium,
Banking continued
Loyalty
“ Retail Banking is aiming for profi table
growth in both mature and developing
markets by focusing on our customers,
simplifying products and reducing costs.”
Eli Leenaars, Executive Board member responsible for
Retail Banking
Retail Banking Profi t and loss account (underlying)
in EUR million 2006 2005 change
Total income 6,002 5,734 4.7%
Operating expenses 3,930 3,829 2.6%
Additions to loan loss provisions 140 90
Underlying profi t before tax 1,932 1,815 6.4%
Total profi t before tax* 1,932 1,877 2.9%
* Total profi t before tax is defi ned as profi t before tax including divestments and
special items.
Our performance
continued
ING Belgium and Record Bank remain key
players, adding more than 50,000 clients.
Products, processes and sales have been
simplifi ed in Belgium to control costs.
Well positioned in developing markets
In Poland, ING Bank Slaski is reaping the
benefi ts of its increased marketing efforts
and is expanding its distribution network.
In Romania the number of Self’Bank outlets
has grown to 110 serving 274,000 clients.
In India, ING Vysya Bank now has 1.5
million retail customers, giving us a good
starting position in a market with enormous
growth potential. ING also holds a 19.9%
stake in the Bank of Beijing, China’s second-
largest city commercial bank.
Improving cost effi ciency, compliance
ING signed agreements with a number of
different companies in 2006 to outsource
several activities in the Netherlands, Belgium
and Poland. The effi ciency programmes are
expected to produce annual savings of
EUR 230 million, mainly related to retail
banking, starting in 2008. In 2006,
Postbank and ING Bank carried out a
project to ensure compliance with a law
concerning client identifi cation.
ING Private Banking continued to grow
rapidly in 2006 with both assets and
revenues increasing over the year, benefi ting
from continued private wealth creation
worldwide and the consequent increase in
demand for private banking services.
Looking ahead
The ambition for ING’s retail banking
activities in 2007 is to continue with
sustainable and profi table growth in mature
markets, and to expand market share and
profi t in selected developing markets and
private banking. We will continue focusing
on simplifi cation, customer centricity and
cost leadership.
In 2006, Postbank launched a loyalty
programme called ‘interest points’ to reward
customers who keep their savings in their
account for longer periods of time. Participants
get free ‘interest points’ as well as interest.
With ‘interest points,’ customers can buy
products in the Postbank ‘Savings Shop’.
Less than a year after its launch, the
programme has exceeded all expectations.
ING Group Annual Review 200620