First-half net profit fell 38% as the economic downturn increased loan losses and pressured margins.
Chairman Jan van Rutte said loan losses and unpaid mortgages are likely to rise further in the second half with the economy seen worsening and Dutch unemployment rising.
Net profit slipped to EUR338 million from EUR543 million a year earlier. Most of the net figure came from EUR271 million the bank was awarded by the courts to compensate preference shareholders following the bank’s nationalization.
In the first half of 2009 Fortis Bank Nederland achieved a net operating profit of EUR 51 million, driven by Retail Banking and Merchant Banking. Due to exceptional gains, the total net profit for the first half of 2009 came to EUR 338 million.
This net operating result was achieved despite the negative impact of challenging markets, high funding costs, high default rates and costs for separation and preparation of the integration.
Despite these difficult circumstances, Fortis Bank Nederland had a successful start in rebuilding and reinforcing its businesses and its risk and treasury activities.
Key developments
- Net operating profit of EUR 51 million slightly higher than the second half of 2008 (EUR 42 million), but significantly lower than the first half of 2008 (EUR 562 million)
- Net profit of EUR 338 million positively impacted by exceptional gains on Fortis Capital Company Ltd. of EUR 271 million and recovered funds from the Madoff investment fraud of EUR 16 million
- The amount of loans granted to customers increased by 1.7% in the first half of 2009
- Clients remained loyal and showed their faith in the bank, as reflected by an increase in client deposits of roughly EUR 9 billion in the first half of 2009
- The short-term funding facility of EUR 34 billion granted by the Dutch State in October 2008 was fully repaid in the first half of 2009, ahead of schedule
- Changes in impairments in the first half of 2009 remained high at EUR 195 million (EUR 179 million including exceptional items)
- The availability of wholesale funding increased significantly since January 2009. The average amount of funds raised in the wholesale market (money markets and commercial paper) had increased on average to EUR 18 billion in June 2009 from EUR 12 billion in December 2008. The average tenor of wholesale funding also improved
- DNB reconfirmed the bank’s advanced Basel II status
- On 30 June 2009, the solvency ratio had risen to 11.7% and the tier 1 ratio had climbed to 7.7% under Basel I. Under Basel II the solvency ratio decreased to 13.5% and the tier 1 ratio to 9.1%
- Much progress was made towards becoming a stand-alone bank. The separation from Fortis Bank SA/NV and ASR Nederland is well on track, as well as preparations for the integration with ABN AMRO in accordance with the plans for the combined bank as announced by the Transition Team on 19 May 2009
The full report is available here
