Dutch financial group Rabobank reported a 12 per cent rise in first-half net profit today after higher interest income and a capital gain offset a €529 million charge on risky mortgage and monoline insurance-related investments.
Rabobank said it had a net profit of €1.5 billion, compared with last year's €1.3 billion.
The result was boosted by a net gain of €276 million on the sale of Alex Beleggersbank to internet broker BinckBank, and by a 19 per cent rise in interest income.
Unlisted Rabobank, which offers banking, insurance, asset management, leasing and real estate services, said total income rose 7 per cent to €6.08 billion.
It said the credit crisis was expected to continue for some time, adding that it was more challenging than ever to make concrete forecasts for second-half earnings.
"We exceeded our financial targets despite the difficult situation on the financial markets. Profit continued to rise and returns remained stable," Chief Executive Bert Heemskerk said.
However, Mr Heemskerk said there was a possibility the bank will not meet its targeted 12 per cent growth in full-year net profit if the credit crisis and ensuing economic slowdown worsens.
"We are not prophets on how the economic situation will develop, but if it continues on nicely we will meet it (the target), but if there are extra hits from a further worsening, we don't rule out that it will not be met," he told reporters.
The bank said it booked a charge of €240 million after tax on its investments in residential mortgage-backed securities (RMBS) and other investments and a €245 million loss linked to monoline insurers. An additional charge of €44 million euros on a liquidity facility led to the total charge of €529 million for the first half.
The bank also booked against shareholders' equity a negative revaluation of €788 million as the turmoil continued in global financial markets.
Reuters