Europe’s largest direct bank ING wants to abolish the free current account without preconditions. If you cannot show a monthly payment of at least 700 euros from May of this year, you have to pay 4.90 euros per month for the account. That announced the ING Germany.
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With this, the company apparently wants to take action against the fact that some customers only use their account for money parking. “Our strategy is to get customers to become house bank customers,” said CEO Nick Jue when presenting the balance sheet. An active customer relationship should be established with all customers. “We want to be more than just the free alternative.” According to the current status, the new fee will affect a quarter of ING Germany’s 2.8 million current account customers.
CFO Norman Tambach said there are currently no plans to introduce negative interest rates. Commercial banks currently have to pay 0.5 percent interest when parking excess funds at the European Central Bank (ECB). Even if there are now allowances for certain sums, this remains a billion dollar burden for the industry. The costs are now passed on by more and more financial institutions and customers charge negative interest rates.
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Because of the low interest rates, the direct bank wants to do more business with individual customers – for example via mortgage lending, consumer loans or saving securities. The bank, which was formerly called ING-Diba, now sees itself as a house bank for 1.8 million of its customers.
ING Germany is growing slightly
The bottom line is that the institute, which is active in Germany and Austria, won around 215,000 customers last year and now has 9.5 million clients. Contrary to Jue’s aspiration, the ten million mark has not yet been reached among private customers.
“It will not be easier to grow profitably in this market,” said Jue. After six record years in a row, the upward trend continued in 2019 – but at a slower pace. The pre-tax profit increased by two percent compared to the previous year to almost 1.4 billion euros, the surplus increased by one percent to 898 million euros.
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With its branch in Austria, ING Germany thus contributes about a fifth to the earnings of the Dutch ING group. The major bank ING earned less operationally in 2019 due to significantly higher costs for personnel and regulatory costs. Adjusted for special effects, profit fell by 11 percent to 4.8 billion euros.
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