The retail banking unit of Dutch lender ABN AMRO has reported an underlying profit of EUR276m for the first quarter of 2016, down 18% from EUR338m a year ago.

The division’s operating income was EUR946m, down 3% from EUR978m in the first quarter of 2015.

The division’s net interest income declined 1% year-on-year to EUR830m. Operating expenses rose 12% to EUR551m from EUR493m in the first quarter of 2015.

Overall, the banking group posted an underlying profit of EUR475m for the first quarter of 2016, a drop of 13% from EUR543m a year ago.

ABN AMRO Group chairman of the managing board Gerrit Zalm said: "2016 got off to a challenging start due to turmoil in the financial markets, caused by concerns over the Chinese economy and initially a further decline in the oil price, combined with a further reduction in already negative interest rates. Net profit for the first quarter of 2016 was EUR 475 million, a decline of EUR 68 million compared with the same period in 2015. The first quarter of 2016 included regulatory levies of EUR 98 million compared with nil in the first quarter of 2015.

"The decline in profitability was the result of lower revenues caused by market volatility in the first two months, combined with higher operating expenses (up 8%) due to regulatory levies – all this resulted in a 31% drop in the operating result. The decline in operating profit was largely offset by a sharp decrease in loan impairments to almost nil, well below the average through-the-cycle and levels seen in the first quarter of 2015."