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ING Pays To Play
Savings account builders looking for higher yields than the anemic rates offered by most traditional banks have turned to the Dutch financial banking house known as International Nederlanden Group (ING) for relief.
ING has drawn the attention of web savvy banking customers by offering promotion rates as high as 4.75% on savings accounts along with its new age Cafe's in trendy cities like Philadelphia. A closer look at ING reveals much more than just a great savings vehicle.
Parent company ING Group is a worldwide diversified financial services firm that provides asset management services and insurance products to customers in the Netherlands, Belgium, North America, Latin America, Asia and Australia.
ING Direct, headquartered in Wilmington, Delaware, represents only 6% of ING Group's 7.2 million euros ($8.6 million U.S.), net income generated in 2005.
ING Group's greatest areas of income growth in 2005 were in ING Direct banking (up 42%), Retail Banking (up 55%) and Insurance Europe (up 24%). Despite their current low impact on income, the ING Direct segment and its nascent Asia/Pacific Insurance segment show the most promise for the future.
ING Direct
So how is ING able to offer such impressive savings rates? ING management successfully gambled on paying out competitive rates in order to accumulate assets that has allowed the bank to earn 48 million euros ($58 million U.S.) in interest income in 2005, up 92% from a the previous year. ING's strategy helped them to accumulate funds totaling 188 billion euros ($226 Billion US). ING Direct has also done well with their hassle free mortgage loans, its secondary core product via its website, which had very strong profits in Germany, Australia and the U.S. The influence of online banking has also helped ING keep its cost down.
On-Line Banking
Banking customers want convenience, and having the ability to manage accounts and pay bills from home has caught on. Well know banks in the U.S. including Bank of America (BAC), Wells Fargo (WFC), JP Morgan Chase (JPM), Wachovia (WB) and Washington Mutual (WM) have a combined 27 million online banking customers according to the online banking research firm the TowerGroup. ING Direct savings account holders have commented that their ability to setup an account online and link brick and mortar bank accounts to their new ING savings has been a quick and pain free process.
Apparently, 15 million ING Direct customers in the US, Europe and Australia are in agreement with those sentiments as the bank continues to grow its client base. Any ING Direct customers who joined in 2005 helped to grow their U.S. online accounts from 1.1 million a year ago to its total of 3.5 million today.
Asia Pacific Exposure
ING will continue to look for growth in the Asia/Pacific market as its insurance income is only 5% of current income before taxes. While the aging population in the U.S. has been well reported to have mass numbers of baby boomers approaching retirement over the next 5 years, counties in the Asia Pacific region have also begun to grey.
The United Nations estimates that 1.2 billion people in the Asia Pacific region will be over the age of 60 by 2050. ING experienced strong sales of annuities, variable and universal life products from Japan, South Korea and Taiwan in 2005. ING is looking for growth in its insurance products, asset management and real estate services in China, India and Thailand based on population trends and spending habits of the different age segments in each country in the next 5 to 10 years.
What will increasing interest rates mean for ING?
The quarter point increase of the Federal Funds Rate to 4.75% by new Fed Chairman Bernanke will put pressure on ING relative to the spread it can earn on dollars loaned out to customers. However, ING's broad diversification into the global marketplace and its focus on insurance-related products should ease investors' concerns.
ING is truly a global player that can broaden an investor's portfolio. ING is currently trading in the $38 range, just off of its 52-week high of $39.64 reached on March 22nd. With an eye focused on the world, and with its propensity for providing convenient services to its customers, this Dutch based company has room to grow as the world around us continues to change.
ING has drawn the attention of web savvy banking customers by offering promotion rates as high as 4.75% on savings accounts along with its new age Cafe's in trendy cities like Philadelphia. A closer look at ING reveals much more than just a great savings vehicle.
Parent company ING Group is a worldwide diversified financial services firm that provides asset management services and insurance products to customers in the Netherlands, Belgium, North America, Latin America, Asia and Australia.
ING Direct, headquartered in Wilmington, Delaware, represents only 6% of ING Group's 7.2 million euros ($8.6 million U.S.), net income generated in 2005.
ING Group's greatest areas of income growth in 2005 were in ING Direct banking (up 42%), Retail Banking (up 55%) and Insurance Europe (up 24%). Despite their current low impact on income, the ING Direct segment and its nascent Asia/Pacific Insurance segment show the most promise for the future.
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ING Direct
So how is ING able to offer such impressive savings rates? ING management successfully gambled on paying out competitive rates in order to accumulate assets that has allowed the bank to earn 48 million euros ($58 million U.S.) in interest income in 2005, up 92% from a the previous year. ING's strategy helped them to accumulate funds totaling 188 billion euros ($226 Billion US). ING Direct has also done well with their hassle free mortgage loans, its secondary core product via its website, which had very strong profits in Germany, Australia and the U.S. The influence of online banking has also helped ING keep its cost down.
Banking customers want convenience, and having the ability to manage accounts and pay bills from home has caught on. Well know banks in the U.S. including Bank of America (BAC), Wells Fargo (WFC), JP Morgan Chase (JPM), Wachovia (WB) and Washington Mutual (WM) have a combined 27 million online banking customers according to the online banking research firm the TowerGroup. ING Direct savings account holders have commented that their ability to setup an account online and link brick and mortar bank accounts to their new ING savings has been a quick and pain free process.
Apparently, 15 million ING Direct customers in the US, Europe and Australia are in agreement with those sentiments as the bank continues to grow its client base. Any ING Direct customers who joined in 2005 helped to grow their U.S. online accounts from 1.1 million a year ago to its total of 3.5 million today.
Asia Pacific Exposure
ING will continue to look for growth in the Asia/Pacific market as its insurance income is only 5% of current income before taxes. While the aging population in the U.S. has been well reported to have mass numbers of baby boomers approaching retirement over the next 5 years, counties in the Asia Pacific region have also begun to grey.
The United Nations estimates that 1.2 billion people in the Asia Pacific region will be over the age of 60 by 2050. ING experienced strong sales of annuities, variable and universal life products from Japan, South Korea and Taiwan in 2005. ING is looking for growth in its insurance products, asset management and real estate services in China, India and Thailand based on population trends and spending habits of the different age segments in each country in the next 5 to 10 years.
What will increasing interest rates mean for ING?
The quarter point increase of the Federal Funds Rate to 4.75% by new Fed Chairman Bernanke will put pressure on ING relative to the spread it can earn on dollars loaned out to customers. However, ING's broad diversification into the global marketplace and its focus on insurance-related products should ease investors' concerns.
ING is truly a global player that can broaden an investor's portfolio. ING is currently trading in the $38 range, just off of its 52-week high of $39.64 reached on March 22nd. With an eye focused on the world, and with its propensity for providing convenient services to its customers, this Dutch based company has room to grow as the world around us continues to change.
by
Gregory S. Davis
Gregory is a freelance writer for Investopedia.com. He has a consulting background in the banking, telecommunications and healthcare fields. Gregory is a graduate of the Wharton School of Business. Click here to visit his website.
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