Analysis: old earnings model banks in decline


Tomorrow the annual earnings season of the Dutch major banks will break loose, as ING traditionally is the first to reveal the performance over the past year. Next week, ABN Amro, Rabobank and De Volksbank will be exposed.

Given the results from the first three quarters of last year, many analysts count on neat performance. After all, the economy turned out excellent last year. Yet this is not a matter of course. The negative interest rate policy of the European Central Bank (ECB) is disastrous for the way in which banks traditionally earn their money: the margin between paying interest on savings and receiving interest on loans.

Many banks have maintained their earnings model despite the negative ECB interest rates thanks to cost savings and the growth of the loan book and falling interest rates on savings accounts. But the big banks do not dare to go below the current 0.03% interest rate. Now that the hope of an interest rate hike at the ECB has evaporated, the earnings model is really in danger. Not surprisingly, therefore, ABN Amro and Rabobank increase the costs for payment packages and ask more for a new payment card.

Because Dutch consumers are used to cheap, no bank will immediately ask double for the meager few euros that a payment account traditionally costs us. A dime more goes with some spite still. But for a substantial increase in ‘standard services’ such as payments, customers demand something extra.

Interesting example is Deutsche Bank. The consumer branch issued 7% more credit cards within four weeks after the introduction of Apple Pay. At the internet bank Bunq customers in Spain, France and Italy have to take out a premium subscription to pay with Apple Pay.

Chances are that ING, ABN Amro, Rabobank and De Volksbank will also launch such ‘subscriptions’ with extra service to keep profits up to standard. Logically, the focus is on technology companies. But not excluded are collaborations with, for example, insurers, telecom providers, energy companies and even supermarkets and other large retail chains. Closing a good deal through the bank can best be the key to a new business model for banking.

By: Lesley Woutersen

Lesley Woutersen, one of the co-founders of the EconomicInform gives away all of his free time to the project. He is interested in stock exchange and digital assets. Lesley can be reached by

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