WaMu loves the Internet
No. 1 thrift will rely more on its online banking arm to grow its retail banking business.
NEW YORK (CNNMoney.com) -- With the housing market in a slump and interest rates on the rise, Washington Mutual's looking to the Internet to help grow its retail banking business
The nation's biggest savings and loan, long known for its aggressive branch-building strategy, is singing the praises of its online banking arm and plans to rely more on cyberspace to win new customer accounts, Washington Mutual (Charts) CEO Kerry Killinger said at its investor day conference in Seattle Thursday.
Killinger said the Seattle-based company is adding more than 700 checking accounts a day and hopes to grow over $1 million new checking accounts a year.
"The Internet is giving us more flexibility," he said. "It's taking off the heat of opening many more stores."
In fact, Killinger said the company, which originally planned to open 150 to 250 branches by the end of the year, expects to come in at the low end of that estimate.
Despite the projected store openings, Washington Mutual - which is now shortening its moniker to WaMu - is still on track to close 35 branches in Atlanta and 28 in Chicago, executives said, in a bid to cut costs and improve efficiency.
The company's focus on retail banking, which now accounts for about two-thirds of its profit, is a strategic move to cushion itself from the downturn in the housing market.
Killinger said he expects the housing market to be soft for some time, which will lead to higher delinquencies and credit costs for the company.
To offset some of the financial concerns, WaMu said that it would exit non-core or lower-performing businesses. The company announced plans in July to sell its rights to service about $140 billion of mortgages to San Francisco-based Wells Fargo - a move that lowered its risk profile, Killinger said.
He added that the company remains committed to cost-cutting. In the second quarter, the company cut 4,000 jobs, or 7 percent of its work force, and it announced another 900 cuts in July.
Steve Rotella, WaMu's president and chief operating officer, said the company has continued to open new branches even as it reduced retail banking staff by 4 percent in recent months.
To further reduce costs, he said the company will move more of its back office operations to lower-cost domestic locations such as San Antonio, Texas, and Jacksonville, Fla.
He said the company will also boost the number of jobs offshore to 7,500 by the end of next year.