The retail banking unit of ABN AMRO has reported an underlying profit of €269 million for the second quarter of 2014, a 16% increase compared to €232 million for the same period last year.

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The second operating income of the retail banking segment stood at €903 million, a 3% increase compared to €876 million previous year period.

Net interest income grew by €31 million compared with second quarter of 2013 mainly due to an improvement in deposit margins and, to a lesser extent, higher deposit volumes.

The margin on mortgages increased somewhat as margins on new mortgages (and for interest period resets) are above the average margin of the existing portfolio. Especially mortgages originated pre-crisis have low margins and do not reflect the current costs involved.

Net fee and commission income showed a limited decline and amounted to €110 million. This change is due to fewer investment transactions and a switch to an all-in fee model for investment products in the Netherlands.

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Overall, the bank reported a net profit of €39 million for the second quarter of 2014. This was impacted by two special items, a €216 million one-off cost for the transition to a new pension scheme and a €67 million levy for SNS Reaal

Gerrit Zalm, chairman of the managing board of ABN AMRO, said: "In the second quarter, the Dutch economy showed signs of further improvement. The Dutch housing market continued to improve in the second quarter, resulting in a growing number of residential housing transactions and an on-going rise in average house prices since the middle of last year.

"Overall, we are satisfied with the results and remain cautiously optimistic about the recovery of the Dutch economy, although with geopolitical risks in the world mounting, the upward trend may be strained going forward."