Significantly more provisions for Russia risks reduce the profit of ING Germany. But the turnaround in interest rates is inspiring: the board of directors wants to break the ten million mark in the number of customers.
After a drop in profits last year, the direct bank ING is aiming for significantly stronger customer growth again. “At today’s interest rate, any growth is profitable,” said CEO Nick Jue on Friday in Frankfurt. “That’s why an old goal is back: ten million private customers, but now for 2025.”
Jue had already issued this target shortly after taking office on June 1, 2017, but later dropped it because of the low and negative interest rate environment. “We are very confident that we can do it this time,” emphasized the Dutchman. ING Germany also wants to score points with lure offers: “I believe that the German market is still very responsive to good conditions.”
Rate hikes are good for business
After the interest rate turnaround by the European Central Bank, banks have not had to pay interest since July of last year if they park money with the ECB, but are now receiving interest again. In addition, money houses earn, for example, from higher interest rates on loans.
The interest rate hikes in the euro zone have boosted ING Germany’s business in recent months: Higher interest rates and increased customer deposits in the second half of the year caused net interest income to rise by 14 percent year-on-year to around EUR 2.25 billion.
Nevertheless, both the pre-tax result of 1.04 billion euros and the surplus of 709 million euros in 2022 were eleven percent below the previous year’s values. The institute, which is 100 percent owned by the Dutch ING, explained the decline by putting aside four times as much money for possible loan defaults, at EUR 460 million, as it did a year earlier.
No new business with Russia
The bank has historically been involved with companies in Russia that are “strategically responsible for the supply of raw materials and energy in Europe,” explained risk manager Sigrid Kozmiensky. It is mainly export financing. The net portfolio has meanwhile been reduced by around 500 million to around 900 million euros. “We don’t do any new business in Russia anymore,” Kozmisky said.
In Germany, the direct bank had lured customers under the name ING-Diba for years with relatively high interest rates on savings. But deposits cost the institute money in the low interest rates of recent years. For this reason, the management is increasingly focusing on house bank customers who not only park money but also generate income through construction financing, consumer loans or securities savings.
In October, Jue announced that his house wanted to start attracting customers again with higher interest rates on savings. So far, however, the number of private customers has hardly increased: at the end of 2022, ING Germany had just over 9.1 million customers, 11,000 more than a year earlier. The number of those who use at least one other product from the bank in addition to the current account with regular incoming payments increased from 2.26 million to 2.41 million.
Source: Stern
