News Rabobank
Rabobank: dairy farming is a vulnerable sector
Rabobank today presented the bank's results for the first half of 2022. In addition to the bank's financial performance, the press conference also further discussed the nitrogen problem that is gripping the agricultural sector in the Netherlands.
Rabobank recorded a net profit of almost €2022 billion in the first half of 1,6. That was almost €2021 billion in the first half of 2,2. The Russian invasion of Ukraine had a negative effect on the bank's loan portfolio. This is mainly because the bank has decided to withdraw completely from the Russian market. This negative effect was partly offset by the release of provisions that the bank created in connection with the corona crisis. Rabobank's total income decreased by 3% in this first half. Interest income did increase by 7% due to higher volumes and higher interest rates. Commission and commission income continued to increase, mainly higher income on current accounts and on assets under management. The bank's costs were 5% higher, mainly due to additional investments to comply with money laundering prevention and detection rules and investments in IT. Due to the high inflation, Rabobank expects that cost pressures will continue, despite additional efficiency measures.
Uncertainty is a threat to dairy farming
During the presentation of the figures, special attention was paid to the nitrogen problem. The nitrogen plans presented by the government earlier this year have created a great deal of uncertainty for Dutch dairy farming in particular. It is still unclear exactly how this will work out for dairy farming, said Wiebe Draijer, Rabobank CEO. "The plans and the associated nitrogen map have caused great uncertainty among our customers." According to the CEO, agriculture is now being looked too one-sidedly for nitrogen reduction. There must be an integrated plan in which all sectors contribute equally and not just livestock farming. Additional costs incurred by the farmer to reduce nitrogen emissions must be distributed in the chain, according to Draijer.
Credit to livestock farmers
Rabobank has €10,3 billion in loans outstanding in Dutch dairy farming. This sector is now classified as vulnerable due to the uncertainty created by the government's nitrogen plans. Due to this problem, the bank has added €76 million to the noose pot. "That is a measure at sector level," said CFO Bas Brouwers. "At the company level, we look at the results and opportunities and threats of the individual entrepreneur." Nevertheless, the nitrogen plans do have an impact on lending to individual companies. The bank is especially critical for farmers who are close to Natura 2000 areas. "But we see that farmers who are close to nature and want to continue to take this into account in their future plans," said Draijer. "A large number of companies with an older company head have no successor. A good buy-out arrangement for those companies can create space for companies with a successor and who are willing and able to continue."
Writing off bank loans as suggested by some parties is completely unacceptable to Draijer. "The right of mortgage is a fundamental security in our financial system. Mortgage loans are only written off in case of extreme emergency. Compare it with a municipality that wants to build a road where a house is in the way. Then the municipality does not say anything. the owner we are going to tear down your house and the mortgage lender should cancel the loan. That would put a bomb under the financial market."
Jurphaas Lugtenburg
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