Dutch co-operative bank Rabobank reported a 12 per cent rise in interim profit today as tight cost controls made up for moderate revenue growth.
Rabobank, one of The Netherlands' leading retail banks, said net profit rose to €941 million as strong fee income and solid revenues from insurance made up for a lacklustre 2 per cent increase in lending income.
Overall revenues rose 5 per cent to €5.1 billion, and costs fell 1 per cent to €3.41 billion.
Rabobank Chairman Bert Heemskerk said he expected a limited increase in income over the rest of the year as tough competition in the domestic mortgage market and low interest rates meant that profit margins on loans were shrinking.
Unlike Rabobank's listed rivals ABN Amro and ING, who benefited from a sharp drop in loan loss provisions, the co-operative group saw its provisions for bad and doubtful loans rise 45 per cent to €249 million.
Rabobank said its loan loss provisions in the first half of 2004 were very low, and its rate in 2005 is still below the long-term average.