FRANKFURT, Feb 1 (Reuters) - ING’s fast growing German unit incurred a sharp rise in costs in 2017 but said it was still committed to offering free checking accounts for its banking customers.
ING-Diba, whose online-only, no-frills and zero-fees offering has upended the German market, said on Thursday that costs were 44 cents for each euro of revenue in 2017, up from 40 cents the previous year.
That is still well below the 70 cents and higher for traditional German banks.
Investments in wholesale banking and IT, along with 120 new hires, were behind the rise in costs, said Chief Financial Officer Remco Nieland. Higher costs were a conscience decision to lay the groundwork for long-term growth, he said.
Low costs have enabled the bank to offer its checking accounts for free, stealing market share from its competitors.
ING-Diba will continue to offer free accounts “as long as possible”, Chief Executive Officer Nick Jue said. “We certainly won’t impose fees this year.”
The Frankfurt-based subsidiary now has more than 9 million customers and ranks as the No. 3 retail bank in Germany, behind behemoths Deutsche Bank and Commerzbank CBKG.DE>.
Germany’s retail banking sector, however, remains fragmented with hundreds of savings banks and cooperatively owned lenders having a combined market share of about 70 percent.
“We want to become one of the leading universal banks in Germany,” Jue said. (Reporting by Tom Sims; Editing by Alison Williams)