Rabobank profits fall by a quarter as lender hit with charges
Pre-tax profit at the Dutch lender Rabobank fell by 26 per cent in the first half of the year, the company said today, after it was hit with impairment charges and struggled with low interest rates.
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The figures
Rabobank’s operating profit before tax dropped to €1.61bn (£1.49bn) in the six months to the end of June from €2.17bn in the same period a year earlier.
In the same period, total income at the Netherlands’ biggest mortgage lender fell four per cent to €5.76bn from €6.03bn in the first half of 2018.
Impairment charges – effectively a reduction in the value of a company’s intangible assets – rose to €440m in the second half of the year from minus $37m a year earlier.
Why it’s interesting
Rabobank said the rise in impairment charges on financial assets represented such costs returning to more normal levels after a low period.
The Dutch lender said low interest rates were squeezing its margins – the difference between the rate a bank receives on loans and gives out on deposits.
It also said the global economic slowdown and trade tensions posed a threat to future growth.
What Rabobank said
“During the first half-year international developments continued to threaten stability and growth prospects worldwide,” said chairman Wiebe Draijer.
He cited “the escalating trade war between the United States and China, the growing likelihood of a hard Brexit and the persistent low interest rate environment”.
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“Given this continuing uncertainty, it is with satisfaction that we can look back and observe the important strides we have taken toward achieving our strategy and our mission as a cooperative bank.”
(Image credit: Getty)