Rabobank made record profits last year; now looking into potential takeovers

Rabobank is joining other banks, like ING, in looking for potential takeovers. There is economic insecurity due to the threat of an incoming trade war, but Rabobank said that they have “done their homework” over the last few years. Partly because of this, the bank was able to significantly increase annual profits, while other banks saw their results decline.

“The bank is doing well. We are one of the most capital-strong banks in Europe,” said Stefaan Decraene, the bank’s CEO, during the presentation of the annual figures. He pointed out that the bank is active on several continents, mostly in agriculture, but also in other sectors. "If there are opportunities regarding smaller banks that are also active in that segment, we will look into that."

More banks have been looking into takeovers again, as of late. Decraene has said that there is currently nothing to report regarding this. Rabobank also completed purchases of other companies last year.

For example, the German company elf Leasing was incorporated with leasing subsidiary DLL. Its area developer, BPD, also took over BEMOG Projektontwikkeling. These were small acquisitions and, therefore, somewhat less visible.

Decraene thinks caution is necessary due to the import tariffs on steel and aluminum that U.S. President Donald Trump recently announced. "But if it is just modest trade obstructions, it will likely be okay," added financial director Bas Brouwers. "It is a bit like guessing what will happen in the coming days, weeks, and months," said Decraene. "Especially in this context, I think it is very good that we are achieving these impressive results."

Profits in the banking world are under pressure because central banks are lowering interest rates. This makes it more difficult for banks to make a margin on savings accounts, for example.

However, net profits rose to a record of almost 5.2 billion euros last year at Rabobank. Brouwers stated that interest rates did not drop as far as they had anticipated. This is why the interest rates were still favorable for the bank, according to him.

In addition, the financial company lost less money on loans that may never be repaid. Brouwers said that Rabobank benefited from the fact that the bank had already made sharp choices a few years ago about where the group would grant loans and where they would not.

In his view, having good loans in the portfolio is ultimately the best way for a bank to arm itself against a possible trade war.