ING Direct 2011 Annual Report Download - page 38

36 ING Group Annual Report 2011
Retail Banking continued
Record Bank
Retail BE includes Record Bank, the third largest retail savings
institution in the country, with close to 800,000 customers. Its
strength is the personal approach taken by its network of 1,500
independent agents, credit brokers and vendors. This network
achieved an 8.1% growth in deposit volumes in 2011 compared
with 2010. In 2011, Record Bank also increased the volume of its
loan book by 17.5% compared to 2010.
ING Luxembourg
ING Luxembourg is a full universal bank with three business lines:
domestic retail banking, private banking and commercial banking.
The Bank serves private individuals, SMEs, large companies and
financial institutions. It ranks fifth in retail banking, serving around
70,000 customers, and has 16 branches. It is number four in the
Mid-Corporate segment and number three in the Corporate
segment.
The retail activities (private customers and retail companies)
performed well in 2011, despite adverse market conditions. Assets
under management increased from EUR 1.68 billion in 2010 to
EUR 1.77 billion at year-end 2011. Lending volumes also rose.
As part of its drive towards greater customer centricity, ING
Luxembourg launched an online product called Orange Account
early in the year, which was successfully received. More than 1,700
people signed up for the account (27% of all new retail customers
acquired in 2011), mainly through a digital marketing campaign
using Google’s advertising network and social networks in
Luxembourg and neighbouring regions.
ING Luxembourg adopted the NPS method for measuring customer
loyalty in late 2010 and used it in several customer interaction areas
in 2011.
ING Luxembourg won second place in the Great Place to Work
ranking, a national award, which recognises a positive work culture
and good management/staff communications. It also rolled out
‘mobile working’ for all eligible employees in the retail segment,
a programme that helps them work from home, or while travelling
on business. The Bank continued to reinforce its front office
capabilities by employing additional staff in 2011.
ING DIRECT
FINANCIAL DEVELOPMENTS
The underlying result before tax of ING Direct declined 31.1% to
EUR 999 million compared to EUR 1,450 million in 2010.
The decrease was due to EUR 326 million higher impairments on
debt securities (including EUR 346 million of impairments on Greek
government bonds) and EUR 181 million of losses from the selective
sale of mainly unsecured and ABS exposures in the investment
portfolio. Underlying income decreased to EUR 3,423 million from
EUR 3,782 million in 2010, fully due to the above mentioned
impairments and losses. The interest result increased by 2.4%, or
EUR 91 million, driven by higher volumes while the interest margin
remained stable at 1.24%. The interest result in the US continued
to benefit from the IFRS treatment on previously impaired bonds,
which had a positive impact of EUR 168 million in 2011, down from
EUR 230 million in 2010.
The total net production in mortgages was EUR 12.4 billion while
funds entrusted reported a net inflow of EUR 13.7 billion.
Operating expenses increased by 4.0%, reflecting higher marketing
expenses (particularly in Germany, Italy, France and Spain) and
higher costs to set up a limited number of branches in Spain and
further roll out of payment accounts in France, Italy and Canada.
The addition to loan loss provisions increased to EUR 462 million, or
61 basis points of average risk-weighted assets, from EUR 446
million in 2010 (or 59 basis points of average risk-weighted assets).
The increase was driven by the lower anticipated recovery rates in
the US, partially offset by lower risk costs in Germany.
BUSINESS DEVELOPMENTS
ING Direct offers a range of easy-to-understand financial products
– savings, mortgages, retail investment products, payment accounts
and consumer lending products – primarily through direct channels.
Its business model is based on low-cost, simplicity, transparency
and offering a superior customer service. It has leading market
positions in most markets in which it operates – Canada, Spain,
Australia, France, Italy, Germany, Austria and the UK.
In mid-June, ING Group announced the sale of ING Direct USA to
Capital One Financial Corporation. The sale was part of ING’s
restructuring plan filed with the European Commission in 2009 in
order for the EC to approve Dutch state aid given to ING. The sale
closed on 17 February 2012. Following the sale, ING Direct has 16.7
million customers worldwide.
Becoming a complete bank
ING Direct continued to work towards becoming a complete retail
bank, but one which continues to maintain a different approach
from its competitors. ING Direct remained at the cutting edge of
internet and mobile banking in 2011, while broadening its product
base to achieve greater income diversification. It took further
initiatives to optimise its distribution mix, introduced more branches
and invested more in cross-buying.
In some countries, ING Direct plans to move towards a full bank
model. Implementation of this model began in 2011 with the
integration of the commercial banking business in Germany with
ING-DiBa, the direct retail banking business in Germany. The
creation of One Bank in Germany optimises the banking businesses
and their customer services by making more efficient use of capital
and liquidity. ING-DiBa in Germany has been very successful in
growing its business in Europe’s largest market and the integration
is designed to take advantage of further opportunities in this large
and attractive market.
In Spain, ING Direct is already well known for its direct banking
operations, but to broaden its reach and to establish closer contact
with customers, it opened 21 branches in 2011, including a flagship
branch in Barcelona, bringing the total number of branches to 27
atthe end of 2011, which includes four ING Direct cafes. They form
an important part of ING Direct’s growth strategy to become a
complete retail bank and provide many cross-buying opportunities.
ING Direct in Spain entered the life insurance market, launching
twonew products in February 2011 – a basic cover and extra cover
product. The expanded branch presence in Spain is part of ING
Bank’s strategy of converging its retail and direct banking operations.
In Italy, ING Direct opened its first bank shop in September 2011
and by the end of the year opened a further six shops. It was an
important milestone in building the most preferred consumer bank
in the country.