UPDATE 2-Rabobank H1 profit rises despite credit-crisis hit
(Adds details, executive comments)
UTRECHT, Netherlands, Aug 27 (Reuters) - Dutch financial group Rabobank reported a 12 percent rise in first-half net profit on Wednesday after higher interest income and a capital gain offset a 529 million euro ($778 million) charge on risky mortgage and monoline insurance-related investments.
Utrecht-based Rabobank [RABN.UL], the Netherlands' leading mortgage bank, said it had a net profit of 1.525 billion euros, compared with last year's 1.365 billion euros.
The result was boosted by a net gain of 276 million euros on the sale of Alex Beleggersbank to internet broker BinckBank (BINCK.AS), and by a 19 percent rise in interest income.
Unlisted Rabobank, which offers banking, insurance, asset management, leasing and real estate services, said total income rose 7 percent to 6.08 billion euros.
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.
"PEANUTS"
Rabobank, along with other Dutch financial groups such as ING (ING.AS), have weathered the global credit crisis better than their European and American peers after subprime mortgages for risky U.S. borrowers began to sour last year, triggering a credit crunch that continues to pressure balance sheets.
But Heemskerk said there was a possibility the bank will not meet its targeted 12 percent 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 euros after tax on its investments in residential mortgage-backed securities (RMBS) and other investments and a 245 million euro loss linked to monoline insurers. An additional charge of 44 million euros on a liquidity facility led to the total charge of 529 million euros for the first half.
The bank also booked against shareholders' equity a negative revaluation of 788 million euros as the turmoil continued in global financial markets.
"It's peanuts," CFO Bruggink said referring to the bank's subprime-related losses, adding that the 1.7 percent negative revaluation through shareholders equity was "less than peanuts".
At the presentation of its 2007 results in March, Rabobank posted a total charge of 568 million euros, including RMBS-related writedowns.
It said on Wednesday it had a comfortable liquidity position with tier 1 capital at 11.2 percent, adding that long-term funding at relatively attractive conditions continues to be available. (Editing by Quentin Bryar)
