ING Germany posts solid annual profit and launches unique securities offering
- Earnings before taxes at EUR 1.042 billion (2019: EUR 1.352 billion), risk costs at EUR -264 million (2019: EUR +40 million)
- Number of primary customers grows by 335,000 to 2.15 million (2019: 1.82 million)
- Growth in all retail products, especially in securities business
- ING to offer all ETF savings plans without purchase fees as of April: “We are making regular, long-term and broadly diversified investment in securities as easy as the instant access saving account”, says Nick Jue.
Frankfurt am Main – ING Germany has shown itself to be crisis-proof in a financial year marked by the Corona pandemic and has further strengthened its foundations for profitable growth. The number of customers who use at least one other product of the bank in addition to the current account with regular cash inflows increased by 335,000 to 2.15 million (2019: 1.82 million). In total, ING Germany had some 9.53 million customers at the end of 2020 (2019: 9.52 million), gross growth was 512,000 (2019: 595,000).
Pre-tax results were at EUR 1.042 billion following the previous year’s EUR 1.352 billion, whereby the risk costs amounted to EUR -264 million (2019: EUR +40 million). Net commission income increased thanks to strong securities business by 48 percent to EUR 479 million (2019: EUR 325 million). Net interest income was just below the previous year’s level at EUR 2.041 billion (2019: EUR 2.078 billion).
Including Interhyp and Lendico, ING employed 6,244 people (2019: 5,676) in Germany and Austria at the end of 2020.
“We achieved a very decent result in an agitated financial year and showed that our business model is resilient and very well positioned for a digital future,” says Nick Jue, CEO of ING Germany and Head of Region Germany. “More and more customers trust us with a range of different financial matters and that encourages us to build up profitable growth on the basis of a comprehensive, digital offering.”
Securities saving is new entry-level product – all ETF savings plans without purchase fees
The number of securities transactions reached a record 26.9 million in 2020 (2019: 11.5 million). The number of securities savings plans also developed positively, increasing by 60 percent to 573,000 (2019: 352,000). The volume of securities accounts increased to EUR 57.3 billion in the reporting period (2019: EUR 45.8 billion), the number of securities accounts rose by 287,000 to 1.7 million (2019: 1.4 million).
In order to supplement the traditional savings business, the bank plans to further lower the barriers for entry into securities saving. To this end, ING Germany will offer all its ETF savings plans without purchase fees in 2021. Combined with the free securities accounts and the possibility of investing in securities savings plans starting from as little as one euro, this creates an offer that is unique in the German market. The free purchase of the approximately 800 ETF savings plans will be possible from 01 April 2021.
“We are making regular, long-term and broadly diversified investment in securities as easy as the instant access saving account,” says Nick Jue. “We are supplementing our savings offer in a sensible way without ignoring the fact that there are risks involved in investing in securities. This low-threshold offer builds on our tradition as a savings bank in Germany.”
For those who need more assistance when investing in securities, the bank will be offering an additional service: the comfort investment plan (“Komfortanlage”) will provide customers with investment recommendations that correspond to their risk tolerance, financial situation and investment horizon – in a digital format and requiring just a few steps. The investment recommendations are underpinned by seven globally diversified ING funds, which are based on a total of 20 ETF and index funds. The range covers over 10,000 shares and bonds from 50 different countries. Where possible, MSCI SRI standards are used so as to invest only in those companies that belong to the top 25 percent of the respective industry in terms of ESG criteria.
The digital comfort investment plan is available to all ING customers. At first, a limited number of customers will also be offered the support of a coach who can be consulted by video conference. The charges for the offer amount to 0.99 % of the average market value; there are no custody and transaction costs. The comfort investment plan is currently in its final test phase and will be launched in the second quarter of 2021.
Nick Jue: “Our customers have always appreciated our intelligent yet simple offer: digital – but personal – banking at a good price. With our new offers in the securities business, we want to continue fulfilling this promise in the future. Customers who want to make securities a part of their finances should be able to do it without effort or worries.”
Number of current accounts increases, deposits slightly above previous year
At the end of 2020, the bank managed 2.88 million current accounts, which is some 60,000 more than in the previous year (2019: 2.82 million). In gross terms, around 286,000 new current accounts were added in 2020 (2019: 431,000). The current account was again the most important entry-level product in 2020, at the same time, the free securities account became increasingly significant in terms of customer acquisition. Deposits in savings and current accounts rose to EUR 144.3 billion in 2020 (2019: EUR 138.5 billion).
Consumer loans and mortgages at record levels
Loans to consumers grew by 4 percent in 2020 to a high point of around EUR 9.2 billion (2019: EUR 8.9 billion). The volume of mortgage loans increased by around 6 percent to a record value of EUR 79.4 billion (2019: EUR 75.3 billion). In gross terms, ING funded mortgages with a volume of EUR 13.2 billion in 2020, around 45% more than in 2019 (EUR 9.1 billion). The brokered mortgage volume of Interhyp AG, Germany’s largest intermediary for residential mortgages, rose by 17 percent to around EUR 28.8 billion (2019: EUR 24.5 billion).
New business areas of Business Banking and Insurance show positive trends
The total portfolio volume in the Business Banking segment increased to EUR 133 million at the end of 2020 (2019: EUR 101 million). New business in digital lending to small and medium-sized enterprises amounted to EUR 75 million (2019: EUR 95 million). In the context of the Corona pandemic, a more selective approach to lending to business customers was noticeable. The cooperation with Amazon is still in its launch phase and has developed positively overall: Since the beginning of the cooperation in mid-2020, the first loans have been advanced to Amazon sellers.
The cooperation between ING and the French insurance group AXA also developed positively. In the 2020 financial year, several thousand ING customers took out insurance cover in the areas of civil liability, household, buildings and credit protection. New, jointly developed products in the areas of cyber security, for example against data theft, and motor vehicles will follow in 2021.
“We see positive developments and potential in our new business areas. That is why we are investing in them and giving them time to develop so we can optimise the offering,” says Norman Tambach, CFO of ING Germany. “We saw in 2020 that our financial strength depends on an efficient, broad product portfolio. We are ready to break new ground in order to keep it that way in the future.”
Wholesale Banking with higher risk costs – focus on core banking clients and sustainable financing
The lending volume in Wholesale Banking amounted to EUR 31.5 billion in 2020 (2019: EUR 35,0 billion). This development is due to a decline in international business outside Germany in particular. Open loan commitments to companies increased by EUR 1.7 billion or 15 percent to just under EUR 13 billion in 2020 (2019: EUR 11.3 billion) and were almost exclusively attributable to large German companies. Income amounted to EUR 521 million (2019: EUR 588 million). Profit before tax was EUR 151 million (2019: EUR 431 million) and was affected by increased risk costs, especially in the second quarter.
ING Germany sees opportunities to further deepen the business relationship with its corporate customers especially in its role as advisor for sustainable financing.
As a “green advisor”, ING Germany gave counsel to BASF, Dürr and Schaeffler, among other public limited companies. In 2020, ING Group was one of the largest banks for ESG-linked financing.
Income statement (IFRS)
Disclaimer: All the information about ING Germany provided here is based on the preliminary IFRS-consolidated financial statements of ING Holding Deutschland GmbH, Frankfurt am Main, which are yet to be audited. Figures in tables are rounded. The totals as well as changes compared to the previous period are based on the exact values and may therefore differ. Deviations from the information published by ING Group N.V. about the German region are mainly the result of ING Group’s internal charges. Forecasts or expectations expressed in this publication entail uncertainties. The announcement reflects the status at the time of publication. Forward-looking statements relate only to the date on which they are made. We assume no obligation to update such statements in light of new information or future events.