And again, there is a bank that makes more profits with higher interest rates. Today it became Volksbank, including SNS, ASN Bank and Regiobank, which made a profit of 191 million. It’s not the only bank making big profits: ABN Amro, Rabobank and ING also benefited from higher interest rates. On the other hand, consumers only gradually realize that their interest in saving is increasing.
“Big banks are in no rush to raise their savings rates,” says Joyce Donat of the Consumers’ Association. “Raising interest rates is a way to attract customers and raise capital, but people still invest their savings in these banks.”
Central banks around the world are rapidly raising interest rates to combat inflation. A year ago, the European Central Bank applied negative interest rates. This caused banks to have to pay the money they deposited with the central bank. Now they are getting interest again on their money held in the central bank and their income is increasing. Due to the increase in interest rates, banks have higher profit margins in loans and housing loans extended to their customers.
Big banks announced higher profits in 2022:
Although banks’ profits increase due to higher interest rates, they increase their savings rates more slowly. This may be because banks are making less profit with it, said economist Dirk Bezemer of the University of Groningen.
“When banks raise savings rates, that immediately means additional costs. The interest they charge on a loan or mortgage is fixed for a longer period of time. So if interest rates generally go up, then not immediately.” That means banks make more money.”
At the same time, commercial banks receive more money from the central bank. Due to the increase in interest rates, the fees that banks charge for money deposited with the central bank are higher. “This is one of the reasons commercial banks have increased their savings rates,” Bezemer said.
Current savings rates at major banks:
However, major banks have announced increases in savings interest rates. For example, Rabobank will increase the savings rate from 0.25 percent to 0.5 percent on February 16. ABN Amro will apply the same increase on March 1. In addition, Volksbank announced today that it will increase savings interest rates from 1 March. ING has yet to announce a rate hike: interest rate remains at 0.25 percent.
“This is a pretty big step forward,” says Donat of the consumer association. “But if you look at other Dutch and international banks it could be much higher.” He cites Bunq, where the maximum savings rate is 1.56 percent, and the French Renault Bank (1.55 percent).
In November, ING CEO Steven van Rijswijk said it is not surprising that savings rates have not yet risen as fast as the rate set by the ECB. “In general, banks follow the interest rate movements of central banks. You look at the product range in a country, the competition in the country, the costs in a country. It depends on how fast the central bank follows the rate hike.”
“More than ECB interest”
Van Rijswijk said it’s special that savings now earn interest. “The Netherlands is one of the first markets where we announced rate hikes. We’ve done this in Germany as well, but not yet in a few other markets. So the Netherlands is relatively fast in this regard.”
Robert Swaak, chairman of ABN AMRO, confirmed on Wednesday that the increase in the savings rate in annual figures “is dependent on more factors than just an ECB interest rate, and this has always been the case.”
Source: NOS
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
