March 28, 2024
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17:26
To further accelerate its growth, the Argenta banking group will focus mainly on services for smaller entrepreneurs and a broader savings offering in the Netherlands in the coming months. ‘Although we are not suddenly going to offer credits for large companies or fancy payment systems.’
The Antwerp Argenta has long been known as a savings bank for private customers. But this customer base also includes many self-employed people and smaller entrepreneurs. In many cases today, they cannot turn to the bank for financial services linked to their company, CEO Peter Devlies said on Thursday during the presentation of the group’s annual figures.
To change this, Argenta will expand its offering for the self-employed and small businesses in the coming months. “We are responding to a growing need among our customers,” says Devlies. ‘We have noticed that many self-employed people who are personal customers here also ask us for business services, because they are less satisfied with the service of the bank they use for their business. It is therefore a logical step for us to expand our business services. We do this primarily for our existing customers.’
In recent months, Argenta has launched a number of business services. The bank already offers payment terminals. This offering will be expanded this spring. The baker around the corner will also be able to turn to the bank for a business loan to expand his business. ‘But don’t think that we will suddenly provide business loans to large companies or that we will develop fancy applications for international payment transactions. We focus on needs that are close to those of our private customers, such as asset management. Until today, customers could not invest any cash surpluses from their company through our retail packages.’
Digital in the Netherlands
At the same time, Devlies wants to focus on the growth engine of the Netherlands this year. Argenta has been active there for years in both the mortgage and savings markets. That engine runs well. The Netherlands represents more than half of Argenta’s mortgage portfolio of more than 40 billion euros, and the bank is still gaining market share.
By offering a more extensive range of term accounts, Argenta also gained ground as a savings bank in the Netherlands. The group, which is only active as an online bank in the Netherlands, saw deposits there increase by more than 10 percent. This year, Argenta wants to move up a gear on the Dutch savings market, Devlies understands. ‘We notice that the demand for more savings products is increasing. We have everything in-house to meet this need. But as a savings bank in the Netherlands, we will continue to work only digitally.’
Earn from hedging
Argenta is expanding its offering after a record year. The bank and insurer recorded a net profit of 310 million euros last year, compared to 238 million euros a year earlier. Just as was the case with the other banks, these strong figures at Argenta are also largely due to the higher interest rates. The bank saw its interest income increase by almost a third to 824 million euros.
But to deduce from this that money just fell out of the sky for Argenta and other banks thanks to the policy of the European Central Bank is wrong, says Devlies. He points out that Argenta’s interest costs – such as the interest that the group pays out to its customers – have risen more sharply than the interest rate in recent months. ‘What the Wetstraat says about the banks’ income is therefore incorrect.’
The fact that the bank can still achieve higher interest income is because it has hedged itself against interest rate risks on the financial markets. Normally that kind of hedging – as it is called in the jargon – costs a bank money. But due to the exceptional market conditions, in which short-term interest rates are higher than the returns on longer-term loans, Argenta was able to earn money from these hedging instruments last year.
In addition, banks also have to pay taxes and duties that are largely based on outstanding deposits, says Devlies. Last year, Argenta paid 285 million euros in bank taxes, corporate taxes and social contributions. ‘Despite all the accusations being thrown at the banking sector these days, the government will receive almost as much money as our entire net profit this year.’
‘Government’s lack of long-term vision fuels risky behavior’
Argenta is, unsurprisingly, not in favor of the federal government’s proposals to reduce the costs of refinancing a home loan. If these proposals are successful, in many cases customers would no longer have to pay a reinvestment fee when they revise their home loan. “But those compensations are there for a good reason,” says Argenta. ‘They are intended to counter the mismatch between assets and liabilities on the balance sheet when a customer adjusts his home loan. Such reinvestment fees are also common in other countries.’
But it bothers Argenta CEO Peter Devlies even more that nowadays there are a lot of proposals to tackle costs in the banking sector without a long-term vision. ‘Banks are obliged to carry out checks on their customers, they must create buffers, etc. All legitimate demands. But it does come with a price tag. If the government also says that you are not allowed to charge certain rates, it becomes difficult. The income has to come from somewhere. As a government, you don’t want companies to take more risks, do you?’
