ING Belgium profits take a big hit – Companies

ING Belgium’s net profit fell by 44 percent in the first half of this year, from 257 to 143 million euros. Commissions for cutting the agency network and for potentially bad credit is the main explanation.

If income is not growing and costs are increasing by 3 percent, primarily as a result of wage indexation, then you know that profits are under pressure. But at ING Belgium there were still a number of factors at play. For example, the bank takes a one-off provision of 93 million euros to terminate contracts with independent agents.

Of the 390 branches that ING has in Belgium, there will soon be only 150 to 250 left. The number of statutory offices (run by our own staff) will decrease from 80 to 50 by the end of this year. The number of agencies run by independent agents is currently 300 and will also decrease sharply, possibly to a hundred in the longer term, can be deduced from the words of Peter Adams, CEO of ING Belgium.

“We are developing in the statutory network to larger offices, where we pool the expertise of our employees. The same movement must take place in the agent network. The speed at which this happens depends on the behavior of the customers. The aim is to reach a distribution network where a one-third are its own offices and two-thirds are independent agencies,” Adams said.

More remote advice

Is the bank not in danger of losing contact with the customer in this way? “The departments realize six times fewer transactions than ten years ago,” replies the managing director of ING Belgium. “We offer our customers a digital solution for most matters. We increasingly provide advice from a distance, for example via a video call. Customers prefer this to a visit to the office, and they give us high satisfaction scores for it.”

ING Belgium recently launched Instant Business Lending, which allows business customers to apply for a credit of up to 100,000 euros digitally. They will receive a response within five to ten minutes. If the decision is positive, the money is in the account the next business day.

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No problems with repayment

ING Belgium’s profit also falls because the bank takes extra credit commissions for 155 million euros. Half of these are linked to individual credit files, the other half take into account the deteriorating economic context. This does not mean that ING will be confronted with more customers with repayment problems.

“On the contrary,” says CFO Hans De Munck. “Despite skyrocketing inflation, we see no repayment problems among private individuals with a mortgage loan. This may be due to indexation of wages and government measures to curb rising energy costs. The number of high-risk cases on our watch list among companies has even decreased. We are not getting any signals that we have to worry about our customers’ repayment capacity in the short term.”

ING Belgium’s revenue stagnated in the first half of 2022 at around 1.54 billion euros. Commission income rose slightly, but from investment products fell. According to De Munck, it was not because the customers sold shares en masse, but primarily because the stock market was affected, and the administration commission is calculated from the total assets under management.

The savings rate does not increase

The good news for ING Belgium is that interest income, which fell slightly, has bottomed out: “We assume that the European Central Bank’s interest rate hikes will lead to a better interest margin and higher interest income for the bank,” De Munck said.

There are no plans to raise the interest rate on savings in the short term. “We have given up the ambition to be a price breaker,” says Peter Adams. “We will always offer our customers proper compensation, but we have better assets to play with than an above-average savings rate or a free current account. Our staff’s advice and expertise should make a difference.”

If income is not growing and costs are increasing by 3 percent, primarily as a result of wage indexation, then you know that profits are under pressure. But at ING Belgium there were still a number of factors at play. For example, the bank is taking a one-off grant of 93 million euros to terminate contracts with independent agents. Of the 390 branches that ING has in Belgium, there will soon be only 150 to 250 left. The number of statutory offices (run by our own staff) will decrease from 80 to 50 by the end of this year. The number of branches operated by independent agents is currently 300 and will also decrease sharply, possibly to a hundred in the long term, can be deduced from the words of Peter Adams, CEO of ING Belgium. “We are developing in the statutory network in the direction of larger branches, where we gather the expertise of our employees The same movement must take place in the agent network How quickly this happens depends on the customers’ behavior The goal is to reach a distribution network that consists of a third of our own offices and two-thirds of which are independent agencies,” says Adams. Isn’t the bank in danger of losing contact with the customer that way? “The departments realize six times fewer transactions than ten years ago,” replies the managing director of ING Belgium. “We offer our customers a digital solution for most questions. We increasingly provide advice remotely, for example via a video call. Customers prefer this to a visit to the office, and they give us high satisfaction scores.” ING Belgium has just launched Instant Business Loan, which allows business customers to request a credit of up to 100,000 euros digitally. They will receive a response within five to ten minutes. If the decision is positive, the money is in the account the next business day. Half of these are linked to individual credit files, the other half take into account the deteriorating economic context. This does not mean that ING will be confronted with more customers with repayment problems “On the contrary,” says CFO Hans De Munck. “Despite the sky-high inflation, we do not see any repayment problems among private individuals with a mortgage loan. This may be due to index regulation of wages and government measures to slow the rising energy costs. The number of high-risk cases on our watch list among companies is We are not getting any signals that we have to worry about our customers’ repayment capacity in the short term.” ING Belgium’s revenue stagnated in the first half of 2022 at around 1.54 billion euros. Commission income rose slightly, but from investment products fell. According to De Munck, this was not because customers sold shares en masse, but mainly because the stock market took a hit, and the administration commission is calculated on the total assets under management. The good news for ING Belgium is that interest income, which fell slightly, has reached bottom line: “We assume that the European Central Bank’s rate hikes will lead to a better interest margin and higher interest income for the bank,” says De Munck. There are no plans to raise the savings rate in the short term. “We have given up the ambition to be a price breaker,” says Peter Adams. “We will always offer our customers proper compensation, but we have better assets to play with than an above-average savings rate or a free current account. Our staff’s advice and expertise should make a difference.”

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