Banks have more and more money left over from lending savings. Because savings interest rates rise only gradually, banks' interest margins rose again in the third quarter. Savers hardly look beyond borders in search of higher interest rates.
Dutch banks have seen their average interest margin increase to 1.5 percent in the past four quarters, according to the latest figures from De Nederlandsche Bank (DNB).
Wat is rentemarge?
Banken beheren spaargeld van consumenten en lenen een groot deel hiervan uit. Bij leningen ontvangen banken rente, bij spaargeld betalen de banken rente. Het verschil tussen de rente-inkomsten en de rente-uitgaven is de rentemarge van de banken.
The interest margin has been increasing since the fall of 2022. It has certainly not been this high since 2008. DNB does not have older figures available.
Banks have seen their profits rise since the European Central Bank raised interest rates. In the past year and a half, it has raised the key interest rate from an all-time low to an all-time high. This interest affects the rates that banks can charge.
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Bank profits doubled
The fact that the banks were performing well was already evident in August in the doubled half-yearly profits of ING, Rabobank, ABN AMRO, de Volksbank (SNS Bank and ASN Bank) and Triodos Bank. They all pointed to higher interest rates at the European Central Bank as the reason behind their good numbers.
The interest margin increases because banks increase interest rates on savings products less quickly than interest rates on loans. Major banks increased interest rates on their savings in small steps to approximately 1.7% for freely withdrawable savings.
The fact that interest rates on savings and loans do not rise as quickly is partly because the rise in interest rates on savings applies immediately to almost all savings. For loans, interest rates mainly apply to newly purchased products.
Savers in the Netherlands are also stuck. Switching in your country does not make any sense because there is not much difference between interest rates. You can earn more interest on your savings abroad, but not everyone takes this step.
The supervisor looks at the competition between banks
In the past two years, nearly twice as much Dutch savings have ended up abroad, according to recent figures from DNB. Total savings abroad rose from 5.6 billion euros to 10.5 billion euros at the end of September.
However, this represents less than 2% of the total Dutch bank balance. Therefore, Dutch banks do not have to fear that savers will withdraw their money due to low interest rates.
Given the lag in savings rates, regulator ACM, at the request of outgoing Finance Minister Sigrid Kaag, is examining whether there is sufficient competition among Dutch banks. ACM expects to present results before the summer of 2024.
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