In the case of credit institutions, among which we count ourselves,
we will have to start from the fact that part of the profit may never
be regarded as surplus earnings as it is retained in the business to
cover future risks.
In a diversified business this will encounter problems, since every
diversification has its own degree of risk. If the fiscal profit, so the
profit on the fiscal unit, becomes the point of application for the
retained capital gains tax, the difference in degree of risk is
disregarded.
In the course of 1975 the Government introduced an amended
draft Bill concerning the supervision of the credit system before the
Second Chamber. This Bill provides for the possibility of fitting the
mortgage banks, by a special regulation, into the ordering of the
financial regime in this country.
In April 1975 the shares in n.v. Beleggingsmaatschappij voor
Vastgoed Agora' were introduced to the Stock Exchange. The
success of this introduction and developments in the price of these
shares during the past year have strengthened us in our conviction
that the marketing of selected real estate in the form of an
investment company— after a period of ripening fills an important
need.
In our semi-annual report we already mentioned the transfer of
50% of the shares in Makelaarskantoor Gemako b.v. to the Amfas
Groep n.v. The expectation seems justified that with this joint
venture the basis has been laid for a further development of this
company.
finance business
The bad economic situation, which was reflected in a further
decline in activity and a progressive decrease in world trade, has
not left interest rates in the Dutch capital market unaffected. If
long-term interest rates were still maintained at a stable level
during the early months of 1975, in the middle of the year they
dropped to a level of 8.25%.
The more optimistic expectations about a recovery in economic
conditions in the world were then in turn responsible for a rise in
interest rates. However, after it had become clear that, certainly in
Holland, the economic situation could not be expected to take a
turn for the better in the short term, this was reflected in a renewed
fall in interest rates in the capital market.
As a result of the progressive growth of our mortgage portfolio our
appeal to the open and the private capital market is constantly
increasing. Nevertheless, we were able to cover our capital needs
during the past financial year satisfactorily. The fact that
internationally the guilder is looked upon as a hard currency and
the fact that at a relatively high level of interest rates in Holland
