Rabobank, the Dutch co-operative bank, on Thursday reported a sharp fall in first-half profit as a result of restructuring costs and a large one-off charge, despite generally favourable business conditions.
Net profit fell to €924 million from €1.52 billion in the same period a year ago. The bank took a €514 million charge under a national compensation scheme for settlements with small and mid-size companies. Many were sold products to hedge against a rise in interest rates without being properly informed they could lose money when rates fell.
Underlying profit
The company said underlying operating profit, which strips out the impact of the charge, was €2.12 billion, compared with €2.18 billion in the first half of 2015.
The bank said its business was strong given Dutch economic growth of about 1.7 per cent, and provisions for bad loans were near record lows.
In December, Rabobank announced plans to shed 9,000 jobs, a fifth of its workforce, and sell as much as €150 billion s worth of assets on its balance sheet by 2020 to make itself more resilient to financial shocks.
In the first half, the bank reduced staff by 1,888 full-time employees, incurring €190 million in redundancy costs.
It sold or securitised €2.5 billion worth of its Dutch mortgage portfolio, but remains the Netherlands’ largest with a portfolio of just under €200 billion. – (Reuters)
