Lower interest costs and market share gains in corporate lending helped to stem earnings runoff at ING Bank Australia last year, according to financial accounts lodged with corporate regulators.
The Dutch-owned bank, now Australia’s fifth largest retail deposit taker, suffered only a 15 per cent decline in net profit to A$375 million for the 12 months to the end of December.
While the result was $65 million lower than the 2019 bottom line, the performance slide was less pronounced than the 25 per cent-plus earnings declines recorded by domestic rivals such as NAB and CBA.
ING Bank chief executive Melanie Evans said the company attracted more than 100,000 new customers last year, which pushed the aggregate customer base to more than two million.
“In 2020 we welcomed 100,000 new customers who chose ING as their main bank, and opened 300,000 new Orange Everyday transaction accounts, bringing the total number of active customers to over two million,” she told the shareholder in the bank’s annual report.
“The strength of our balance sheet relies on a diversification strategy across portfolios and segments.
“In 2020 our wholesale banking business outperformed the market, growing 36 per cent year on year.”
ING’s wholesale banking operation, which provides finance to corporate borrowers in infrastructure, utilities and other industries, grew its loan book by $2 billion to almost $8 billion.
The bank is deepening its exposure to renewable energy projects after funding a major battery storage system in Queensland and two solar farms in NSW during the year.
The expansion in corporate lending nullified the negative impacts of slowing mortgage growth and a contraction in the size of the small business loan book.
Total lending stood at $65 billion at the end of December compared to $62.95 billion at the end of 2019.
The bottom line was dented by a near-fourfold increase in loan impairment expenses to $122 million.
Most of the increase was due to collective provisions to cover increased risks associated with borrowers seeking Covid-related relief packages.
The bank had 670 borrowers on relief packages affecting $4.5 billion worth of loans at the end of December.
Mortgage borrowers(641 packages) accounted for most of the assistance, but there were also 26 business borrowers granted repayment deferrals on loans worth $570 million.
ING was the fifth largest deposit taker in Australia at the end of last year with an aggregate deposit base of $62.8 billion – up $3.8 billion.
Although the bank recorded 16 per cent growth in household deposits, there was a marked change in the composition of its retail funding, with customers shifting billions out of term accounts.
The value of term deposits declined by more than $4.7 billion to $19.8 billion, while at call deposits ballooned more than $6 billion to $39.4 billion.
The bank’s funding profile also benefited from drawdowns on the Reserve Bank’s Term Funding Facility.
At the end of December, ING had fully drawn its initial TFF allowance of $1.86 billion and raised another $500 million under an additional allocation.
The bank is eligible for another $2 billion of TFF funding this year.
In February, ING Bank Australia paid its first dividend