“I’ve seen a higher appetite for saving money rather than for loans over the past year, but no significant shifts yet. We get more deposits than loans granted, but that’s how our strategy is and we want to keep it going,” says Maria Cristina Matei, deputy general manager in charge of retail with ING Bank for a year and a half. “Lending did not plunge but we did not see any exuberance, either,” adds the executive who has been working for the bank for fifteen years.
ING has been seeing an increase in the number of customers inquiring about loans in lei over the past year, driven by the more and more frequent warnings issued about the exchange rate risk and cost fluctuations. Asking questions and actually taking out a loan are a long way apart, though, because of the over five percent interest rate gap.
ING sells mortgage loans in euros, charging 6.11% interest from customers who also buy a life insurance policy, while the interest on a similar leu loan stands at 11.66% on similar terms. The bank grants retail loans in euros only for those who can pledge real estate as collateral.
Maria Cristina Matei says the market cannot suddenly shift towards lending in domestic currency because of the imbalance between asset and liability maturity.
The banker sees a shift from deposits maturing in one month to longer maturities but that will not be anything significant because of the high appetite for cash specific to the crisis periods.
Commenting on the effects of the new lending rules that will come into force next January, she says they are not a change as far as ING is concerned, because “the rules introduced were already a standard for us.”
She does expect them to make a negative impact on the consumer finance market, though, because shorter maturities mean higher installments to pay, which means fewer people will qualify, hence the decline.
“Consumer loans had reached maturities of over five years because of the gap between income levels and the investments that applicants needed. If the indebtedness level is accurately calculated, such a lending regime can be healthy, too.”
The average maturity of loans in ING’s consumer loan portfolio is six years.
What can the bank do to offset the effects of the new rules on sales? “The only thing we have left is being more active in finding customers.”
Can something be done about loan costs, too? “I believe interests are already low enough as they are and I wouldn’t expect new significant cuts because risk costs are still high.”
The bank will introduce new cash dispensers next year that will allow customers to deposit and withdraw cash in euros. These machines will be installed only in the bank’s network of self-service offices, called Self’Bank, in Bucharest and other large cities.
Citibank introduced dual ATMs last year, which let customers withdraw both lei and euros but their network is hardly significant.
ING is also making investments in buying some of the latest generation cash machines, which come with the “recycle” function. They are equipped with smart cash boxes, which allow the cash deposited by one customer to be made available for withdrawal by other customers.
ING reached one million retail customers in 2010, six years after entering the retail market and says the business has become profitable after the extensive investments in technology in the first few years.
“It is too soon to talk about a two million retail customer target, but we will go towards it. For now we are focusing on consolidating the position we reached at the end of last year when we went past our first million.”
(English version by Loredana Fratila-Cristescu)