Mith high interest rates on overnight money, the German branch of the Dutch financial group ING once grew. In this respect, it is not surprising that price-sensitive customers reacted quickly to the introduction of negative interest rates by the former price breaker. The bank introduced negative interest for the first time in the summer, and customer deposits had already fallen by 3 billion euros in the second half of 2021, as CEO Nick Jue said on Thursday when the annual figures were presented. A good 370,000 private customers left the bank last year, but the bottom line is that ING was still able to win 130,000 new customers.
From Jue’s point of view, this growth is still pleasing. And the decline in deposits also went according to plan. After all, customers should rather invest their money in securities than leave it in a savings account. And they have invested: securities transactions rose to a record 34 million, after 26.9 million in the previous year. The number of securities savings plans increased even more, more than doubling to 1.32 million. For the first time, customers managed more than 2 million custody accounts with ING. The custody account volume also increased significantly from 57 billion euros in 2020 to 79 billion euros last year.
Account termination as a last option
Despite the stock market boom, the total income of ING in Germany remained almost constant at 2.63 billion euros. That’s because the bank still gets most of its income from interest business, which continues to decline due to low interest rates. ING still has to obtain permission from many customers to charge negative interest, so-called custody fees, from 50,000 euros. ING sent out the letters two months ago together with the changes to the General Terms and Conditions (GTC), which had become necessary after a ruling by the Federal Court of Justice. So far, “the vast majority” of customers have agreed to the new terms and conditions. It will only be known in a few months how many there will be in total. Account terminations should be the very last option, Jue said. The custody fees from 50,000 euros are to be calculated from March 1st. Currently, the exempt amount at the ING is 100,000 euros.
While the largest Dutch bank continues to serve its customers in Germany, number two, Rabobank, has just withdrawn: its online savings accounts under the name Rabodirect were popular in Germany because they offered slightly above-average interest rates for a long time. But at the end of the year, Rabobank unilaterally closed the local accounts because of the ECB’s zero interest rate policy. A “combination of high savings, cheap financing from the European Central Bank and low interest rates” has a negative effect, the bank informed its customers.
ING withdraws from several countries
Similarly, ING justified its own withdrawal from some European markets. ING Germany had already sold its private customer business in Austria in the summer. The customers mainly had savings products, which simply isn’t profitable in times of negative interest rates, said Jue. “We prefer to invest the money that we would have had to invest there in Germany.” In addition, ING is withdrawing from the private customer market after a good two decades in France.
Overall, the ING Groep benefited from the fact that the risk of loan defaults had fallen – after the full outbreak of the Corona crisis in 2020, ING and its competitors were more concerned about loan defaults. Last year, ING only saved 516 million euros – a fifth of the previous year’s figure. Growth in the securities business and strong demand for credit boosted business. The group’s net profit almost doubled last year to 4.8 billion euros. The pre-tax profit rose from one billion euros in 2020 to almost 1.17 billion euros. Nevertheless, the share came under pressure. The paper was listed around noon 6 percent below the previous day’s close. Analysts noted that the dividend was below expectations and lacked information on new share buybacks.
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