ING Direct 2006 Annual Report Download - page 23

In its 10 years of business, ING Direct
has seen its direct banking blossom into
a mass market business of substantial
scale. ING Direct has grown through the
delivery of its effective formula: selling
a limited number of simple banking
products at very low costs to retail
customers in nine major developed
markets. Core products include savings
and mortgages. With 17.5 million
customers, ING Direct is the world’s
leading direct bank.
In 2006, ING Direct showed a robust profi t
performance in a challenging interest rate
environment with rising short-term interest
rates, a fl attening yield curve and increased
competition. Underlying profi t before tax
rose 16.2% to EUR 717 million. This increase
was driven by the continued growth in clients
and assets under management. By focusing
on growth in mortgages and other products,
ING Direct was able to maintain a satisfactory
interest rate margin. Total underlying income
gained 13.1% in 2006, to EUR 2,396 million.
Total operating expenses at ING Direct
increased 14.5% to EUR 1,598 million,
refl ecting the investments that have been
made to support long-term value creation.
ING Direct differentiates itself from other
banks through four key principles: the
customer experience, excellent customer
service and satisfaction; simplicity and
transparency, ensuring simplicity in all
the products, processes, services and
systems; a low-cost operating model,
which is fundamental to continue offering
customers value for money; and the ‘fl eet
of companies concept,’ which gives each
company the ability to capitalise on local
market opportunities while benefi ting
from each other’s experience.
2% discount
“ ING Direct is leading the transformation of
direct banking thanks to our customers who
again reported high levels of satisfaction
and gave us more of their business. Brand
awareness, a key competitive strength,
increased further.”
Dick Harryvan, Executive Board member responsible
for ING Direct
ING Direct Profi t and loss account* (underlying)
in EUR million 2006 2005 change
Total income 2,396 2,119 13.1%
Operating expenses 1,598 1,396 14.5%
Additions to loan loss provisions 81 106
Underlying profi t before tax 717 617 16.2%
Total profi t before tax** 694 617 12.5%
* Including ING Card
** Total profi t before tax is defi ned as profi t before tax including divestments and
special items.
Leading the transformation
of direct banking
ING Direct is the leading direct bank in
all nine countries in which it operates:
Australia, France, Germany, Austria, Italy,
Spain, the UK, Canada and the US.
In 2006, it maintained high levels of
customer satisfaction and achieved a further
increase in brand awareness – two key value
drivers. In 2006, ING Direct recorded almost
three million new customers. Total funds
entrusted grew to EUR 195.9 billion from
EUR 188 billion a year earlier. The residential
mortgage portfolio reached EUR 69.0 billion,
compared with EUR 53.0 billion in 2005.
Achievements
ING Direct celebrated several key
achievements in 2006. The UK became
profi table in the third year of operations
and added mortgages to its product
offering. In the US, Chicago and Atlanta
were added to the ING Direct footprint.
Payment accounts were launched
successfully in the US. Total own-originated
mortgages production reached a record
EUR 20 billion in 2006.
Looking ahead
ING Direct will continue to create value for
its customers by ensuring simplicity in all its
products, processes, services and systems.
Future growth will come from three sources:
increased savings growth in countries where
the business is already active, geographic
expansion, and serving a broader range of
customer needs. At maturity, ING Direct
will have a narrow range of simple products
in each product category with substantial
scale, effi ciency and profi tability. Moving
forward, ING Direct’s four key principles
will be preserved.
ING Direct Spain’s Payment Account,
launched in September 2005, registered
60,000 customers and EUR 120 million in
funds entrusted in just a year, well exceeding
expectations. These customers have saved
more than EUR 6 million in fees because ING
does not charge for various banking services.
Moreover, they also benefi t from a 2% monthly
discount on their bills for electricity, gas,
telephone, mobile and internet use.
ING Group Annual Review 2006 21