ING Direct 2013 Annual Report Download - page 35

average risk-weighted assets remained stable. In 2013, however,
total risk-weighted assets increased by EUR 9 billion to EUR 152
billion at year-end, mainly caused by adjusted parameters to reflect
the ongoing weakness of the Dutch economy and its impact on the
mortgage and business lending portfolio, and despite early signs of
an improvement in the Dutch housing market in the last quarter.
RETAIL BANKING
BUSINESS DEVELOPMENTS
In a rapidly changing banking environment, both from a consumer,
regulatory and technology point of view, our customers remain at
the heart of what we do. We maintain a dialogue with them and
are constantly adapting and improving our products, services and
processes. Everything is geared to achieving our goal: to be the
preferred bank for our customers, a goal that is driven by customer
centricity, operational excellence, balance sheet optimisation and
being a top employer. We can only be successful when we respond
to our customers.
ING’s retail banks have different roots: some have their origins in
traditional, universal banks, while others were set up as new
businesses, such as the former ING Direct units. In 2013, ING
continued to combine these two retail models, with all business
units following the same strategy and converging to the same
model: easy and fair, and at low costs. The product and service
range is thereby tailored to local customers and circumstances, with
a focus on “digital first”. Around the world, customers are
increasingly interacting with ING through digital channels, with
mobile taking the lead. We think that mobile banking is the future
of retail banking. Therefore, we are sharing mobile banking best
practices across business units, so we can respond quickly to
changing needs and bring new solutions to our customers as fast
as possible, shorten the time to market and be more efficient.
Consumers worldwide are also increasingly self-directed and
empowered. They look for fair pricing and transparent terms and
conditions from their bank and compare these with what other
banks offer. They also want a seamless experience, whether they
use a mobile, tablet, PC, phone or visit a branch. All business units
therefore continued to invest in IT in order to respond rapidly to
recent innovations.
In each of the sections below, we outline some of the main social,
economic and regulatory developments of 2013, and show
howweresponded to them to help customers make the right
financial decisions.
The overall approach is driven by our Retail Standards Board, which
is composed of the most senior leaders in the Retail Banking
organisation. It sets standards in retail banking, creating and
nurturing a sustainable knowledge-sharing culture throughout the
Bank. Its priorities in 2013 were device-independent online
banking, security and fighting cybercrime, social media and
business/customer intelligence.
Our customer-centric focus has resulted in most countries achieving
first or second place in Net Promoter Scores (NPS) compared with
competitors. ING applies the NPS methodology in nearly all
countries to measure customer engagement and the results are
used to improve customer services and internal processes.
To achieve our vision of becoming the preferred bank for our
customers, we must have employees who are committed and
motivated. A Top Employer programme was launched in 2011
andsince then Top Employer teams in every country where we
operate have been steadily working to meet common standards.
The programme will be continued in 2014.
As for sustainability, we are meeting the increasing demand for
products and services that not only generate good financial returns,
but also meet clear social, environmental and ethical objectives.
Furthermore, we aim to offer our product offering to all society
segments, including young people, the physically challenged and
the economically disadvantaged. That is why we offer micro
finance to entrepreneurs and proactive assistance to mortgage
holders in financial distress. We are increasing the number of
branches that have barrier-free access and are reaching out to
“under-banked”communities in India. In 2013, many of our
business units offered products and services to people with special
needs. Our sustainable activities are embedded in the activities of
all our business units.
RETAIL NETHERLANDS
FINANCIAL DEVELOPMENTS
The underlying result before tax of Retail Netherlands decreased
11.3% to EUR 872 million in 2013 compared with EUR 983 million
in 2012, due to additional restructuring charges and an increase in
risk costs.
Underlying income rose 4.7% to EUR 4,079 million in 2013,
reflecting higher interest results on lending and savings due to an
improvement in margins, supported by a reduction in customer
savings rates. These improvements were partly offset by lower
volumes following the transfer and sale of EUR 8.3 billion of assets
and EUR 3.7 billion of liabilities from WestlandUtrecht Bank (WUB)
to NN Group, together with the sale of another EUR 2.2 billion of
mortgages. Excluding these sales and transfers, net production of
mortgages was EUR -0.4 billion in 2013, while other lending, mainly
business lending, decreased by EUR 2.2 billion. Net production in
funds entrusted was nil, mainly caused by new legislation for local
governments to place surplus cash at the National Treasury and an
acceleration of redemptions on mortgages.
Operating expenses increased 3.6% to EUR 2,330 million in 2013,
including EUR 97 million of additional restructuring charges taken
in the second half of the year, which were part of an extension of
the efficiency programmes currently running. Excluding the
restructuring charges, expenses decreased 0.7% from 2012, despite
higher pension costs, reflecting the benefits of the efficiency
programmes and the transfer of WUB staff to Nationale-
Nederlanden Bank as from mid-2013. Net additions to loan loss
provisions rose to EUR 877 million from EUR 665 million in 2012,
mainly due to higher risk costs on mortgages and to a lesser
extentbusiness lending, reflecting the continued weakness in the
Dutch economy.
BUSINESS DEVELOPMENTS
As was the case in most European countries, the Netherlands had
to cope with strong economic headwinds in 2013. There was a
sharp increase in unemployment in the Netherlands, particularly in
the first half of 2013, and a record high in corporate bankruptcies.
The housing market remained weak but began to stabilise in the
second half of the year, with house prices declining at a less rapid
rate and demand picking up. In the course of 2013, the economy
began to show signs of improvement as the country emerged from
33ING Group Annual Report 2013
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information