Dutch banks bolster loan loss provisions

Leading Dutch lenders built up sizeable loan loss provisions last year, in anticipation of the damaging economic fallout from the Covid-19 pandemic.

The country’s largest bank by Tier 1 capital, ING, increased its loan impairment provisions by 161% year-on-year in 2020 to $3.3bn, while Rabobank, the second-largest lender, increased provisions by 109% to $2.4bn, according to The Banker Database.

The biggest rise, however, was by ABN Amro, the third-largest bank, which increased loan loss provisions by 285% last year to $2.8bn.

While the 3.8% decline in gross domestic product was the Netherlands’ worst performance since the Second World War, the overall impact was not as bad as feared and credit impairments have so far remained low. But banks are likely to remain cautious as support measures are withdrawn later this year and the economic outlook remains uncertain.

“Banks have maintained sizeable management overlay buffers to safeguard against potential future credit quality deterioration,” according to DBRS Morningstar.

Trends identified using The Banker Database, an online database providing comprehensive financial data and insight for 4000 of the world's leading banks in 190 countries. Contact us.