Rabobank, the largest retail bank in the Netherlands, warned that 2012 will be a difficult year because of weak European government spending and uncertainty in the financial markets.
"The market will continue to struggle in 2012. Consumer and business confidence is not expected to recover in the near future," Rabobank said. "It will still be some time before all countries of Europe have their public finances back in good order and confidence has been restored in the financial markets," the bank said.
Rabobank, which lost its triple-A credit rating from Standard & Poor's last year as the agency changed its ratings system, reported a 5% fall in 2011 net profit to €2.6 billion.
A rise in bad debt costs, which stood at 37 basis points of average outstanding lending, caused net profit to fall, the bank said.
"The continuing poor property market conditions fuelled a rise in bad debt costs in the real estate business. Rabobank International's bad debt costs remained high because of sustained losses suffered by Irish-based ACCBank due to the weak economy and property market," Rabobank said.
Pointing to the debt crisis and regulatory changes, Rabobank said it expected its operations to grow slower than in the past decade.
The bank, which has its roots in the farming sector, said its international operations would focus on providing banking services to the food and agricultural industry.
Rabobank said it was "top priority" to reform the Dutch housing market, where prices have fallen 10% since 2008, to boost consumer confidence and economic growth in the Netherlands.
Unlike its main Dutch rivals ABN AMRO and ING, Rabobank did not need state aid during the 2008 credit crisis, and did not make a loss during that time.
