Rabobank expects profitability to be hit hard this year due to the negative effects of the corona crisis on the economy. That says the bank in an update about the virus outbreak.

Rabobank points to significantly higher depreciation as a result of the crisis. For this year, the bank is counting on write-offs on loans that may not be repaid to an amount of 2 billion euros.

According to the bank, it is still too early to give a concrete forecast for net profit this year, but there will be a “significant impact”, according to Rabobank. The company indicates that the financial buffers are strong enough to absorb that impact.

Rabobank says it will help customers in times of crisis, for example by offering deferred payment on loans from companies and private individuals. The bank is one of the main lenders to small and medium-sized companies in the Netherlands. Rabobank is also a major player in the mortgage market.

The bank also thinks that the Dutch economy may shrink by 5 percent this year due to the crisis and the measures to combat the virus outbreak. Rabobank uses an assumption of a short-term crisis. Before 2021, the bank expects an economic recovery in the Netherlands of 4.9 percent. For the global economy, the financial group expects a contraction of 2.6 percent for 2020, with growth of 5.3 percent next year.

In addition, Rabobank believes that home sales in the Netherlands will decrease by approximately 20 percent this year. House prices are expected to rise by 3.9 percent. That is less strong than the previous forecast for a price increase of 4.5 percent.

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