Dutch economy drives Rabobank profit rise, aims to help farmers

AMSTERDAM, Aug 16 (Reuters) - Rabobank, the Dutch-based cooperative lender, on Thursday reported a 12 percent rise in first-half net profit to 1.7 billion euros ($1.94 billion), helped by cost-cutting and strong economic growth in the Netherlands.

Improving business conditions also allowed for a 37 million euro release in earlier provisions for bad loans, Rabobank said, while its overall loan portfolio grew 2 percent to 415.7 billion euros, following years of decline.

Rabobank, a major agricultural lender, said it mainly increased lending to customers in its international Wholesale, Rural and Retail division, with 60 percent invested in agricultural and food businesses.

The bank expects many of its agricultural customers to be hit by the unusually dry and hot summer, which severely damaged crops in the Netherlands and elsewhere in Europe, Chief Executive Wiebe Draijer told reporters.

"Many farmers will run into liquidity problems, and we aim to help them as well as we can", Draijer said. "We have enough room to do this and foresee no consequences for ourselves."

The bank mainly expects to help farmers by giving them more time to pay back loans, but does not foresee an increase in defaults, as most companies will remain solvent, the CEO said.

Rabobank strengthened its capital buffer in the first six months of 2018, with the core capital adequacy ratio improving to 15.8 percent at the end of June, from 15.5 percent in December. ($1 = 0.8779 euros) (Reporting by Bart Meijer and Toby Sterling; Editing by Subhranshu Sahu and Alexander Smith)

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