NATIONALISED Dutch lender ABN AMRO reported a 16 per cent drop in net profit to €454m (£363m), hit by a rise in losses on bad loans due to the ongoing recession in its home market.
It was a significant improvement on the €23m loss seen in the fourth quarter of last year, when all banks were hit by a Eurozone credit crunch.
But ABN AMRO chairman Gerrit Zalm warned that the recovery could be short-lived: “As the business environment we operate in is still unstable, these first-quarter results cannot be extrapolated for the remainder of the year,” he said.
Instead, the bank expects impairments to continue to rise as they did in the first quarter of this year. The bank has lost €187m on bad loans so far this year, 50 per cent more than during the first quarter of last year.
But despite a deterioration in Dutch house prices, mortgage impairments were relatively stable. Instead, the rising losses stemmed from commercial real estate and consumer loans.
Zalm also warned against the government raising its banking levy – Holland is one of the few EU countries other than the UK to have imposed an extra tax just for banks.
“A real concern for the Dutch banking sector is the recent proposal to raise the bank tax further,” he said, saying that along with an avalanche of other regulations, it will make Dutch banks much less competitive.