ING Direct outlines new growth goals
MADRID (Reuters) - ING Direct, the world's largest online bank, aims to double the balance of loans, mortgages and funds held by retail customers in five years, its parent Dutch financial services group ING Groep (ING.AS) said on Friday.
Amsterdam-based ING outlined new goals for its Internet and phone banking business ahead of its investor conference being held in Madrid, projecting 15 percent annual growth in retail balances, which would double the 318 billion euros ($461 billion) in retail balances held by 21 million customers.
As highly leveraged banks and insurers around the world slide into bankruptcy or are bought out, the plain vanilla business of attracting savings and offering loans is back in vogue, ING Direct Chief Executive Dick Harryvan told Reuters.
"Consumers are retracting and looking for a safe place to keep their cash, and this consumer attitude is a positive for us," Harryvan said. "The credit crisis as a whole is not a bad thing for us."
Still, ING Direct holds 18.7 billion euros worth of "Alt-A" residential mortgage-backed securities (RMBS) made to borrowers with a slightly better credit profile than subprime borrowers.
Harryvan said delinquencies were rising but that risk tolerances were still at reasonable levels.
ING, like its European counterparts, has suffered from the credit crunch and subprime crisis but Chief Financial Officer John Hele told analysts on Friday that ING was in "good shape."
"We are carefully managing through the crisis but we are not immune," Hele said.
ING shares were up 13.6 percent at 0820 GMT, in line with a broad rally in banking shares, with Fortis (FOR.BR) up 13.1 percent and the DJ Stoxx Banking index up nearly 15 percent.
ING DIRECT MATURING
As the 11-year old business matures, ING Direct is aiming to diversify profit sources and said it would aim to reduce the contribution from savings accounts to below 50 percent.
Typically, ING Direct grows its customer base by first offering attractive rates on savings and then expanding its offerings to mortgages, investments, payment accounts and loans.
ING Direct is also planning to expand the geographic reach of Interhyp, the German online mortgage brokering busines it bought this year for 416 million euros.
Harryvan said that he expected to expand the online mortgage broker, which offers mortgages from ING Direct as well as competing mortgage originators, to France, Spain and Italy, with Italy likely to be the first area of expansion.
ING also said it would aim for a larger share of profits outside its euro-based markets by aiming for less than 50 percent contribution from those areas.
ING Direct is planning to launch in Japan but that has been delayed as it waits for regulatory approval.
Asked whether ING Direct would seek any further acquisitions after Interhyp, given that the group as a whole has spare leverage of nearly 4 billion euros, Harryvan said the business would stick to its policy of seeking smaller acquisitions.
"We're looking at bolt-on acquisitions," Harryvan said.
(Reporting by Reed Stevenson)
