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Funding costs lead to bank profit drop

by Staff Reporter10 minute read
The Adviser

Staff Reporter

Despite recording a solid result in the 12 months to 31 December 2012, one of Australia’s banks still managed to suffer a 9 per cent drop in total net profit after tax.

Yesterday, ING DIRECT announced a net profit after tax of $276.9 million, down from $310 million last year.

The bank’s chief executive, Vaughn Richtor, said the drop in profits could be largely attributed to high funding costs, but he remains “confident” about the future.

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“An easing in costs in the second half allowed us to deliver 25 basis point cuts to variable mortgage rates in both October and December,” he said.

“Striking the right balance between customer and shareholder enabled us to deliver on our fair value promise to customers.”

ING DIRECT delivered strong growth across retail deposits and established itself as a competitive force in the Australian superannuation market, with the lender opening 9,335 Living Super accounts.

“We believe Australians pay too much in superannuation fees and Living Super provides an alternative, a balanced fund with no administration or management fees – a first for all Australians,” Mr Richtor said.

“We are very pleased with the launch of Living Super with both customer numbers and funds under management.

“We have made the product simple enough to be sold direct and the fee proposition is very compelling.”

After establishing itself as Australia’s first direct bank and a savings champion, ING DIRECT now offers customers payment accounts, superannuation, home loans and savings.

“Our strategy is about becoming the primary bank for our customers,” Mr Richtor said.

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