Our operating environment

House prices in the Netherlands rose

The Dutch housing market remained tight. Average house prices rose by 8.7% in 2024, driven by lower mortgage rates, higher incomes and a widening of lending criteria. This encouraged younger and first‑time buyers in particular. Demand for houses was high – a reflection of population growth and smaller households. In addition, house builds were delayed by strict environmental criteria for new construction.

Businesses continued to face significant skills shortages

Companies throughout Europe faced continued skills shortages. Unemployment rates remained at historically low levels, leading to higher wage costs for many companies. In banking, shortages remained in high-skill areas such as data analytics, IT and risk modelling. Competition for talent remained fierce, with banks devoting more time and resources to recruiting and retaining staff.

Economic growth rates remained subdued

Gross domestic product (GDP) growth improved, though growth rates were still relatively low. The Dutch economy grew by an estimated 0.9% in 2024, buoyed by rising government spending and household consumption. Even so, the economy remains vulnerable to external shocks, including the current conflicts in both Ukraine and the Middle East. At the same time, declining interest rates reduced borrowing costs for companies.

Companies continued to invest in the sustainability transition

Businesses continued to invest in sustainability, particularly in transition themes such as new energies and mobility. Further progress was made on implementing Europe’s Green Deal, bringing increased demand for sustainable finance. Meanwhile, banks are increasingly embedding social and environmental criteria in loan and investment decisions, risk management and reporting.

Threats to cybersecurity are growing in complexity and scale

In banking, information is a critical asset. Clients increasingly depend on digitalisation and online services requiring complex IT systems. Greater interconnectivity has also increased vulnerability to security threats, as has the rise in geopolitical tensions. Threat actors are using more sophisticated methods. This affects ABN AMRO and our vendors, also leading to third-party risk. We are strengthening our ability to prevent, prepare for and swiftly respond to cyber incidents.

Interest rates were cut as inflationary pressures eased

Short-term interest rates remained high in the first half of 2024. But in June, the European Central Bank (ECB) changed tack as inflationary pressures eased and the prospects for growth dwindled. The ECB cut its benchmark deposit rate four times by 100 basis points in total.

Banks increased use of artificial intelligence to improve productivity

Banks are increasingly using generative artificial intelligence – GenAI – to help improve productivity and reduce costs. At ABN AMRO, nearly half of the employees now use it in their work. The technology helps call centre agents by providing automated call summarisation and answer suggestions, and our software engineers are piloting the use of GenAI in the development of code.

Banks continued to operate in a highly regulated sector

Since the financial crisis in 2007-2008, the volume of banking regulations has increased substantially. In recent years, new regulations have been introduced on capital requirements, for example, as well as data privacy, cybersecurity and sustainability reporting. These new regulations have helped strengthen client protection but have also added to banks’ costs and operational complexity in most areas.

Digital banking continued to grow in importance

Among clients, demand increased for safe, personalised, real-time digital banking. Digital assets gained ground, while established banks continued to invest in research & development to keep pace with the latest developments in digital technologies, increase efficiency and reduce costs. More competition emerged from digital banks and technology companies looking to enter the financial services market.