ING sees first homebuyer opportunity in falling housing market

ING has shrugged off a falling housing market and a “difficult year” for the banking industry to post a 15 per cent increase in profit to $401 million.

ING has shrugged off a falling housing market and a “difficult year” for the banking industry to post a 15 per cent increase in profit to $401 million.

The Australian arm of the Dutch lender, which escaped largely unscathed from the banking royal commission fallout, added more than 400,000 new customers in the year to December 31 to top two million for the first time.

ING says 645,000 customers now use it as their “primary” bank, a 57 per cent year-on-year increase. Deposits were up 9 per cent to $43.4 billion, loans were up 11 per cent to $58 billion, business loans were up 11 per cent to $4.5 billion and wholesale banking was up 36 per cent to $4.9 billion.

“It’s been a good year, one of the key highlights really was the continued momentum we’re seeing in our customer growth,” said ING Australia chief executive Uday Sareen.

“I think it’s fair to say when we launched in 1999 we pretty much pioneered online savings products. The strategy we embarked on over the past four or five years was really driving towards trying to be the main bank account of our customers.”

Mr Sareen said ING, which was recently named Australia’s sixth most trusted brand by Roy Morgan, only one of two banks in the list, was “in some way” a beneficiary of the royal commission but he couldn’t “put a finger on that” as the sole reason.

“We’ve had good customer momentum now for a few years,” he said. “Trust and advocacy continue to be a key driver. Even today more than a third of our new customer acquisition is really driven by referrals from friends and family.”

The other big factor is mobile. Ninety-nine per cent of ING’s customer interactions are digital, with the other 1 per cent being the 5000-6000 phone calls to the bank’s local contact centre. Even of those phone calls, more than half are from mobile phones.

“These numbers used to be 50 per cent even a few years back,” Mr Sareen said.

Despite growing headwinds for the housing market — figures from the ABS on Tuesday showed a dramatic collapse in investor lending — Mr Sareen said ING was largely unfazed due to its tiny mortgage market share of just 3 per cent.

While most banks typically have a roughly 60-40 split of owner-occupier to investor loans, ING’s split is “more like 80-20”. Mr Sareen said ING’s residential mortgage book grew close to 9 per cent last year, compared with the overall industry at 5 per cent.

“We’re seeing renewed focus on certain segments like first homebuyers, we’ve come up with some good offers there and are seeing some good traction,” he said. “I don’t worry because it’s coming off a low base. It’s an opportunity for us to grow our market share.”

In January, ING joined the rest of the big four in raising its interest rates out of cycle with the Reserve Bank as overseas funding costs rise, slugging borrowers with a 15 basis point increase.

Mr Sareen couldn’t say whether borrowers should expect further rate hikes this year.

“We’re obviously part of the industry, we’re focused in terms of what is our cost of funds and how that plays out,” he said.

“We’re watching it closely. We want to be competitive, and when I look at our mortgage rates they are extremely competitive compared to the market, but at the end of the day it’s a function of what those funding costs are. If they move up or down, the variable products do reflect that.”

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Originally published as ING sees first homebuyer opportunity in falling housing market