Annual Summary 2007

Transcription

Annual Summary 2007

Annual Summary 2007
Rabobank Group
Contents
2
4
6
10
15
19
23
26
29
32
34
38
44
46
Key figures
Rabobank Group at a glance
Chairman’s foreword
Rabobank Group
Domestic retail banking
Wholesale banking and international retail banking
Asset management and investment
Leasing
Real estate
Risk management
Corporate social responsibility
Annual figures
Profile of Rabobank Group
Colophon
Annual Summary 2007
Rabobank Group
Key figures
Volume of services (in millions of euros)
Total assets
Private sector lending
Due to customers
Assets managed and held in custody
Financial position and solvency (in millions of euros)
Equity
Tier I capital
Qualifying capital
Risk-weighted assets
Tier I ratio
BIS ratio
Profit and loss account (in millions of euros)
Total income
Operating expenses
Value adjustments
Taxation
Net profit
Ratios
Net profit growth
Return on equity
Efficiency ratio
Nearby
Local Rabobanks
Offices:
- branches
- contact points
Cash dispensing machines
Foreign places of business
Employees
Number of employees (in fte)
Employee satisfaction
Absenteeism
Market shares (in the Netherlands)
Mortgages
Savings
Small and medium-sized enterprises
Food & agri
Ratings
Standard & Poor's
Moody's Investor Service
Dominion Bond Rating Service
2
Rabobank Group Annual Summary 2007
2007
2006
2005
2004
570,503
355,973
249,515
301,300
556,455
324,110
234,917
291,200
506,573
278,095
186,427
224,200
483,574
248,958
177,482
223,400
31,375
28,484
29,156
266,573
10.7
10.9
29,377
26,391
27,114
247,458
10.7
11.0
26,349
24,860
25,272
213,901
11.6
11.8
23,004
21,404
21,205
196,052
10.9
10.8
11,499
7,709
742
386
2,662
10,049
6,887
450
367
2,345
9,363
6,242
517
521
2,083
9,222
6,177
479
773
1,793
13.5%
10.1%
67.0%
12.6%
9.4%
68.5%
16.2%
9.7%
66.7%
9.1%
67.0%
174
188
248
288
1,159
3,102
3,107
349
1,214
3,091
3,139
330
1,249
3,031
3,116
267
1,299
2,965
3,062
244
54,737
85%
3.8%
50,573
87%
3.6%
45,580
81%
3.7%
50,216
85%
3.8%
28%
41%
38%
84%
26%
39%
38%
84%
23%
39%
38%
83%
25%
39%
40%
84%
AAA
Aaa
AAA
AAA
Aaa
AAA
AAA
Aaa
AAA
AAA
Aaa
AAA
Lending
in billions of euros
Tier I ratio
in %
Value adjustments
in basispoints of average lending
400
12
40
350
10
35
300
8
30
250
6
25
200
4
20
150
2
15
100
0
10
50
2004 2005 2006 2007
5
0
0
2002 2003 2004 2005 2006 2007
2004 2005 2006 2007
Dutch GAAP
Net profit
in millions of euros
Return on equity
in %
3,000
12
2,500
10
2,000
8
1,500
6
1,000
4
500
2
0
0
2004 2005 2006 2007
3
Key figures
2004 2005 2006 2007
Net profit up 14%
4,000
3,500
350
2006
2007
3,000
300
up 10%
2006
2007
400
Rabobank Group
Rabobank Group is an international financial services
provider operating on the basis of cooperative
2,500
250
principles. Rabobank Group’s operations include retail
2,000
200
banking, wholesale banking, asset management,
1,500
150
leasing and real estate. In the Netherlands, its focus
1,000
100
is on all-finance services and, internationally, on food
500
50
& agri. The organisation employs more than 60,000
0
0
staff in 43 countries. Rabobank Group comprises
the independent local Rabobanks plus their central
All financial targets were realised. The domestic retail banking organisation Rabobank Nederland and its (inter
business contributed strongly to the increase in net profit.
national) subsidiaries. Rabobank Group’s structure
The turbulence in the financial markets caused a decline in
guarantees strong internal cooperative ties.
Rabobank International’s net profit.
Net profit up 24%
1,500
1,250
250
2006
2007
1,000
200
Net profit down 43%
800
80
700
70
2006
2007
600
60
500
50
up 11%
2006
2007
up 4%
2006
2007
300
The domestic retail banking business comprises
the local Rabobanks, Obvion and Bizner. The 174
750
150
independent local Rabobanks have over 1,100
500
100
branches and operate more than 3,100 cash
250
50
dispensing machines. Overall, the local Rabobanks
0
0
employ around 29,000 staff. The local Rabobanks
serve millions of Dutch clients, both private and
Rabobank Group strengthened its positions in the mortgages corporate, with a comprehensive package of financial
and the savings markets. The strong competition in the
services. Together, the local Rabobanks make up
mortgages market persisted. The Rabobank 2010 project
the largest insurance agent in the Netherlands.
is the response of the local Rabobanks to the changing
Obvion is a provider of mortgages and simple
market conditions.
financial products and operates exclusively in
collaboration with independent agents. Bizner is
the first corporate Internet bank without account
managers or branch offices, but with self-service.
Wholesale banking and international
retail banking
Rabobank International – the Group’s wholesale
banking and international retail banking business –
400
40
employs more than 10,000 staff world-wide and
300
30
serves clients from 29 countries. Besides regional
200
20
activities, Rabobank International has divisions that
100
10
are directed globally. These include Global Financial
0
0
Markets, Structured Finance, Leveraged Finance,
Direct Banking, Telecom Media & Internet and Trade
The credit market crisis caused a decline in the results of
& Commodity Finance. Rabobank International
Global Financial Markets. As a result, Rabobank International’s focuses on food & agri customers. The Irish ACCBank
net profit was lower. The international retail banking business is a 100% subsidiary of Rabobank International and
was developed further with the acquisitions of Mid-State
in Poland, Rabobank International owns a 46%
Bank & Trust, HNS Banco, Hagabank and Bank Hagakita.
interest in Bank BGZ. In addition, Rabobank
International has interests in private equity.
4
Net profit up 62%
400
400
350
350
2006
2007
300
300
250
250
200
200
150
150
100
100
50
50
0
0
The asset management activities are handled by
Robeco, an asset manager with global operations,
as well as by the Swiss private bank Sarasin and by
Schretlen & Co, the Dutch private bank for high
net-worth clients. Rabobank Group has a 46%
shareholding in Sarasin and a voting share of 69%.
In all, more than 3,600 people are employed in
Rabobank Group’s asset management and
investment activities.
Assets managed and
held in custody for
clients up 6%
2006
2007
The favourable development in profit was the result of the
expansion of the Group’s interests in Sarasin and Transtrend,
the divestments by Sarasin and the strong investment
performance of the Transtrend Diversified Trend Program.
The sustainable activities were expanded.
Net profit up 14%
300
30
Leasing
250
25
2006
2007
200
20
150
15
100
10
50
5
0
0
Rabobank’s leasing activities are performed in
29 countries by De Lage Landen. Asset financing
products help producers, vendors and distributors in
offering their products in Europe, the Americas, Asia/
Pacific, Australia and New Zealand. Also included in
De Lage Landen is Athlon Car Lease, an international
supplier of operating car leasing that operates in
seven European countries. In the Dutch heartland,
De Lage Landen offers a broad range of leasing and
trade financing products. Freo is De Lage Landen’s
new Internet concept for simple loans. De Lage
Landen employs around 4,600 staff.
Loan portfolio
up 10%
2006
2007
The Car Leasing and Financial Institutions units saw strong
growth. Despite the integration, car lease customers were
better satisfied with the services provided. De Lage Landen’s
activities in the consumer loans market now include the
Freo label.
Net profit up 48%
200
20
Real estate
150
15
2006
2007
100
10
50
5
0
0
The private and corporate real estate activities
are performed by Rabo Bouwfonds, a leading real
estate enterprise with three core activities focused
on real estate: development, finance and investment
management. Rabo Bouwfonds labels include
Bouwfonds Property Development, Rabo Vastgoed,
FGH Bank, Nederlandse Hypotheekbank, Rijnlandse
Hypotheekbank and Bouwfonds Asset Management.
Rabo Bouwfonds employs around 1,800 staff and
operates in several European countries.
Loan portfolio up 31%
2006
2007
Rabo Bouwfonds had an excellent year. A great deal of
effort was spent on merging the various real estate units.
In the Netherlands, Rabo Bouwfonds strengthened its
position in the market for real estate financing.
5
Bert Heemskerk
For Rabobank Group, 2007 was a good year, although a tumultuous one.
Never in my 38-year career have I seen so many issues in a single year as in
2007. Obviously, the most prominent issue for our sector was the credit
market crisis, which upsets the entire financial world. Nevertheless, we
succeeded in meeting our own financial targets in 2007 as well, with net profit
increasing by 14% to EUR 2.7 billion, compared with EUR 2.3 billion in 2006.
Virtually all Group units contributed to this increased result, which reflects
not only the benefit of the proper spread of our activities, but also the
strength of our modest risk profile. In 2007, great progress was made with the
realisation of a number of strategic goals. We succeeded in strengthening
our positions in some Dutch markets that are of special importance to
Rabobank Group, one being the mortgages market. In order to serve today’s
and tomorrow’s customers, we made significant investments in new distribution channels. We
also greatly expanded our international retail banking business. In addition, our subsidiaries
were able to strengthen their activities and market positions in 2007 in accordance with our
strategic principles.
Stronger market leadership position in the Netherlands
In the Dutch mortgages market, where competition remains fierce, the local Rabobanks
and Obvion succeeded in growing their market share by more than 2 percentage points,
to almost 28%. Many new clients opened savings accounts at the local Rabobanks in 2007,
causing our share of the savings market to grow by almost 2 percentage points to 41%.
In the start-up market, Rabobank Group increased its market share to 38%. Rabo Bouwfonds
strengthened its position in the Dutch market for real estate financing.
Expansion of international activities
As in 2006, much progress was made at the international level. In 2007 we acquired fine
banks in California, Indonesia and Chile. In addition, we increased our interest in the Polish
BGZ Bank and opened our fourth foreign Internet bank, in Australia.
Credit market crisis hinders Rabobank International
Since the summer of 2007, the financial world was upset by the so-called subprime mortgages
in the United States. This ‘credit crunch’, as it has come to be called, also hindered Rabobank
International in the second half of 2007. Results for Rabobank International were affected by
the credit market crisis. Since trade in a number of professional markets was virtually stagnant,
results for Global Financial Markets fell.
Organic recovery in the Netherlands
With mixed news from abroad, everything went quite well in the Netherlands. Our advertising
icon Jochem was replaced by Fatima. In addition, Rabobank was pronounced one of the
Netherlands’ most popular employers in 2007.
Also in 2007, we enhanced our image as an innovative bank, including tests with paying via
Rabo Mobiel cell phones. Another novelty that adds to our reputation was the launch of Bizner.
Freo, De Lage Landen’s first online internet merchant bank is another new, innovative and
customer-oriented label. Best of all though was the news from the Netherlands that the results
of the local Rabobanks, after a disappointing year 2006, showed strong recovery in 2007.
6
Strong performance in asset management, leasing and real estate
Our asset management, leasing and real estate activities each performed very well. It is good
to see growing collaboration among the Group units. After a number of acquisitions in 2006
and 2007, we decided, on the basis of a strategic reorientation, to sell the Alex online
investment bank.
We do not shun dilemmas
At the same time, 2007 was not without issues. Examples include the OpMaat Hypotheek
and the significant shift in the Dutch banking landscape. The OpMaat Hypotheek issue did
not cause us to lose our heads. We have consistently pursued our policy of face-to-face
discussions, offering tailored solutions to our clients. There were some dramatic changes in
the Dutch banking landscape. As a result, we gained a significant number of new customers,
and savings grew strongly. However, the new Fortis / ABN AMRO combination will be a
formidable competitor in the future and the new situation will benefit Rabobank for a
limited period only.
Continued financial soundness
Overall, and despite the credit market crisis, 2007 was a good year for Rabobank Group.
To be sure, the crisis did not leave our operations untouched but we still met all our financial
targets. Growth in net profit was 14%, which was above our annual 12% target. The Tier I ratio,
which testifies to our excellent solvency position, was 10.7. This is above the target of 10.
Return on equity, at 10.1%, likewise exceeded the 10% target.
Economic outlook
It is anticipated that the banking crisis will affect world economy development in 2008.
Together, the large banks, most of which have global operations, took in 2007 losses totalling
over EUR 100 billion. This has led to an unmistakable weakening of their respective solvencies,
as a result of which fewer loans can be granted and higher margins will be negotiated.
It is expected that the Netherlands, too, will see some effects of this in 2008. For 2008, I am
moderately optimistic about the world economy. A significant economic slowdown in the
United States will be inevitable in the first half of 2008, possibly even a recession. This might
result in economic slowdown in Europe, Asia and South America as well.
Outlook for Rabobank Group
The local Rabobanks made a strong contribution to Rabobank Group’s results for 2007.
For 2008, we anticipate continued strong competition in the mortgages market and increasing
competition in the savings market. For maximum synergy benefits, we intend to focus even
more on further integration of our recent acquisitions. Globally, we will continue our focus
on growth as a leading food & agri bank. Following the subprime crisis, Rabobank Group will
review its various activities within Global Financial Markets. In the Netherlands, the schedule
for the local Rabobanks includes the Rabo 2010 project. This involves full integration of the
physical local Rabobank, the local call centre, local Internet and local RaboTV, which will make
us accessible locally 24 hours a day, 7 days a week. Rabobank 2010 anticipates on the trend
of products being increasingly offered and taken out via new channels, such as the Internet.
All things considered, I am very proud of our bank’s performance in 2007, the year in which
sustainability and profitability went hand in hand so naturally.
ert Heemskerk,
B
Chairman of the Executive Board
of Rabobank Nederland
7
Sustainable construction
Rabo Bouwfonds is the largest housing developer in
the Netherlands. It focuses a great deal of attention
on sustainability with regard to construction plans.
For example, Rabo Bouwfonds actively promotes
sustainable design, construction and operation in
relation to the key aspects of energy, materials,
water, health, living quality and waste. Sustainability
also plays a pivotal role in the case of large projects.
This commitment to sustainability is exemplified by
breakthroughs such as the Long-Term Energy Storage
Systems that extract cold and heat from the ground
to be used to heat buildings in the winter and cool
them in the summer. Sustainability also entails paying
attention to the needs and requirements of the people
who live in an area. An excellent example of this is
the Binckhorst development that is located near the
centre of The Hague. While it is currently still a
disorderly business estate, over the next twenty years
it will be transformed into a dynamic area where
people will live, work and recreate. Residents, business
owners, homeowners, experts and other interested
parties have all been invited to join forces to discuss
and help chart the future of this project. Rabo Bouw
fonds is committed to demonstrating its position as an
organisation that takes the city seriously. It is dedicated
to supporting the development of an area, whilst
still respecting the existing structures and buildings.
Rabobank Group
Net profit target achieved; continued financial soundness
Financial targets realised
- Net profit up 14%
- Tier I ratio at 10.7
- Return on equity 10.1%
Balance sheet
- Private sector lending up 10% to EUR 356 billion
- Amounts due to customers up 6% to EUR 250 billion
- Savings up 13% to EUR 101 billion
- Equity up 7% to EUR 31.4 billion
Net profit EUR 2.7 billion
- Income up 14% to EUR 11.5 billion
- Operating expenses up 12% to EUR 7.7 billion
- Efficiency ratio improved by 1.5 percentage points to 67,0%
- Value adjustments at 22 basis points, in line with five-year average
- Risk Adjusted Return On Capital 13,0%
Rabobank Group’s net profit rose by 14% to EUR 2,662 million in 2007, with a
strong contribution from domestic retail banking. The turbulence in the financial
markets caused a decline in Rabobank International’s net profit. Rabobank Group
exceeded its financial targets for 2007: net profit growth was 14%, the Tier I ratio
was 10.7 and return on equity was 10.1%. Rabobank Group achieved a Risk
Adjusted Return On Capital of 13.0%.
Growth of the mortgages portfolio in the Netherlands was an important factor
in the increase in lending, with private sector lending increasing by 10% to
EUR 356 billion. The large number of new savings clients at the local Rabobanks
contributed to the 13% growth in savings to EUR 101 billion.
Despite downward pressures on the interest margin and a slight income decrease
for Rabobank International, total income was 14% higher, at EUR 11.5 billion, the
increase being due to business growth. Organic growth and acquisitions caused
a 12% increase in operating expenses, to EUR 7.7 billion. Gross profit rose by
20% to EUR 3.8 billion and the efficiency ratio showed a 1.5 percentage point
improvement, to 67.0%. The item Value adjustments increased by 65% to EUR 742
million, corresponding to 22 basis points of average lending and in line with the
five-year average of 23 basis points.
Financial targets
1 For page 1 to 37 the numbers in brackets ( )
are comparative figures. For profit and loss
data, they are the figures for 2006; balance
sheet data are the figures at 31 December
2006.
10
Rabobank Group achieved its financial targets in 2007. With an increase in net profit of 14%
(13% 1), Rabobank Group exceeded its target of 12% in 2007. At year-end, the Tier I ratio, i.e.
the ratio between core capital and total risk-weighted assets, was 10.7 (10.7). This is higher
than the internal requirement of 10. The Tier I ratio declined as a result of the acquisition of
Mid-State Bank & Trust and the increase of the bank’s interest in Transtrend. However, due in
part to the issue of Capital Securities, the Tier I ratio was unchanged from 31 December 2006.
The return on equity, i.e. net profit expressed as a percentage of core capital, was 10.1%
(9.4%). This exceeds the target figure of 10%.
RAROC
Rabobank Group uses RAROC, i.e. Risk Adjusted Return On Capital, as a measure of its
financial performance. This measure provides insight in the profitability of the bank’s various
units and products, taking the risk exposure into account. RAROC is calculated by relating
the adjusted profit realised on a particular activity to the capital required for that activity.
In 2007, Rabobank Group realised a RAROC (after tax) of 13.0% (13.8%). Economic capital
required at 31 December 2007 was EUR 20.5 billion.
Balance sheet
Private sector lending up 10% to EUR 356 billion
In 2007, the item Loans to customers grew by 5% to EUR 373.0 (354.9) billion, the greater
part by far of which – EUR 356.0 (324.1) billion – concerned private sector lending.
In 2007, growth in domestic mortgage lending was an
400
important contributor to the 10% increase in private sector
350
lending to EUR 356.0 (324.1) billion. At 31 December 2007,
300
23% of lending was abroad.
250
50% of private sector lending was to private individuals,
200
33% to the trade, industry and services (TIS) sector and 17%
150
to the food & agri sector.
100
The growth of the mortgage portfolio in the Netherlands was
50
an important driver for the 8% increase in lending to private
0
individuals to EUR 180.1 (166.1) billion. Lending to private
2005 2006 2007
individuals comprises mainly mortgages and – to a lesser
extent – consumer loans. The private mortgages portfolio
grew by 10% to EUR 177.4 (160.9) billion.
More real estate loans were granted and De Lage Landen’s loan portfolio grew further.
This contributed to the 10% growth in lending, to EUR 116.4 (105.5) billion, to enterprises
in the trade, industry and services (TIS) sector.
Lending to the food & agri sector grew by 13% to EUR 59.4 (52.5) billion, the greater part
of which was to the primary agricultural sector. The growth in lending to the fruit and
vegetables and the grain and oil seeds sectors was an important contributor to the growth
in lending to the primary agricultural sector to EUR 40.1 (34.3) billion.
Lending by sector
Food & agri
TIS
Private individuals
Amounts due to customers up 6% to EUR 250 billion
The amounts due to customers grew by 6% to EUR 249.5 (234.9) billion in 2007, with savings
making a significant contribution to this growth. Otherwise, the amounts due to customers
rose as a result of the increase in corporate time deposits. The increase in interest rates made
Lending by activity
at year-end 2007
Wholesale banking and
international retail banking
Leasing
Real estate
Other
11
Rabobank Group
Lending by region
at year-end 2007
68%
22%
5%
4%
1%
Netherlands
America
Europe excluding the
Netherlands
Australia and New Zealand
Asia
76%
11%
9%
3%
1%
Breakdown of amounts
due to customers
300
Other amounts due to customers
Repurchase transactions
Time deposits
Current accounts/
settlement accounts
Savings
150
time deposits more attractive for corporate clients of the
local Rabobanks, resulting in a 19% increase in corporate
time deposits, to EUR 55.0 (46.3) billion.
250
200
Savings up 13% to EUR 101 billion
100
The local Rabobanks saw a large inflow of new savings
clients in 2007. As a result, savings at Rabobank Group grew
2005 2006 2007
by 13% to EUR 101.2 (89.5) billion. The greater part of
savings – EUR 89.6 (80.5) billion – is entrusted to the local
Rabobanks. Due to the higher short-term interest rate, more
private individuals are opting for time deposits. As a result, the proportion of fixed-time
deposits grew by 14 percentage points to 26% of total savings. Roparco saw its savings grow
by 15% to EUR 4.9 (4.3) billion.
Thanks to the large number of new internet savings clients abroad, savings at four Internet
banks abroad grew by 65% to EUR 5.1 (3.1) billion.
50
0
Equity up 7% to EUR 31.4 billion
Retained earnings resulted in an increase in equity. This addition caused the item Retained
earnings and other reserves to grow by EUR 2.3 billion to EUR 19.7 (17.4) billion in 2007.
In the year under review, Rabobank Group issued Capital Securities for private investors in
Asia and New Zealand, resulting in a EUR 1.0 billion increase in equity. These retained earnings,
particularly, together with the issues caused equity to grow by 7% to EUR 31.4 (29.4) billion.
At the end of 2007, 62% of equity consisted of retained earnings and other reserves, 20%
of Rabobank Member Certificates, 9% of Capital Securities and Trust Preferred Securities III-VI
and 9% of other minority interests.
Financial results
Income up 14%
Total income grew by 14% in 2007 to EUR 11,499 (10,049) million, with a particularly
strong contribution from commission and other income. Interest income was 5% higher,
at EUR 6,771 (6,472) million. Due to the higher interest rates, clients felt less inclined to settle
their mortgage loans prematurely. Income from penalty interest declined. The margin in
domestic retail banking declined as a result of the continued competition in the mortgages
market. The margin in the leasing activities declined likewise. The growth in lending offsets
the effects of the lower penalty-interest income and the lower interest margin.
The rise in asset management commission was largely due to the fact that Sarasin was
consolidated from the end of 2006. Further, the good investment performance of the
Transtrend Diversified Trend Program and the expansion of the interest in Transtrend
contributed to the higher commission income. Total commission income was 24% higher,
at EUR 2,857 (2,296) million.
Breakdown savings Rabobank Group
120
Other
Roparco
Fixed-time deposits
Savings accounts
Telesavings
Internet savings
80
100
60
40
20
0
2005 2006 2007
Equity
35
Other minority interests
Capital Securities and Trust
Preferred Securities III t/m VI
Rabobank Member Certificates
Retained earnings and other reserves
25
30
20
15
10
5
0
2005 2006 2007
12
Results (in millions of euros)
2007
2006
Interest
6,771
6,472
Change
5%
Fees and commission
2,857
2,296
24%
Other income
1,871
1,281
46%
Total income
14%
11,499
10,049
Staff costs
4,445
4,117
8%
Other administrative expenses
2,846
2,429
17%
Depreciation and amortisation
418
341
23%
Operating expenses
7,709
6,887
12%
Gross result
3,790
3,162
20%
742
450
65%
3,048
2,712
12%
386
367
5%
2,662
2,345
14%
22
15
Efficiency ratio
67.0%
68.5%
Return on equity
10.1%
9.4%
RAROC
13.0%
13.8%
Value adjustments
Operating profit before taxation
Taxation
Net profit
Value adjustments (in basis points)
Ratios
Balance sheet (in billions of euros)
31-Dec-07
31-Dec-06
Total assets
570.5
556.5
3%
356.0
324.1
10%
Due to customers
249.5
234.9
6%
266.6
247.5
8%
20.5
16.9
21%
BIS ratio
10.9
11.0
Tier 1 ratio
10.7
10.7
54,737
50,573
Economic capital
Capital ratios
8%
Other income was 46% higher, at EUR 1,871 (1,281) million, with a strong contribution
from the parts of Bouwfonds, which had been acquired in 2006. The acquisition of Athlon
in the second half of 2006 and the sale of activities at Sarasin likewise contributed to the
increase in other income. Income from the Eureko participation, which is included in other
income, was lower.
Operating expenses up 12%
Total operating expenses increased by 12% in 2007 to EUR 7,709 (6,887) million. The higher
staffing level caused staff costs to go up by 8% to EUR 4,445 (4,117) million. In 2007, several
acquisitions resulted in an increase in staff numbers by around 2,800 FTEs. Rabobank Group’s
total number of employees grew by 8% in 2007 to 54,737 (50,573) FTEs. The growth in activities,
both organic and due to acquisitions, caused an 17% increase, to EUR 2,846 (2,429) million,
in other administrative expenses. Depreciation charges were 23% higher, at EUR 418 (341)
million, mainly because of higher depreciations on buildings and self developed software.
Value adjustments at 22 basis points
The item Value adjustments increased by 65% in 2007 to EUR 742 (450) million. This corresponds
to 22 (15) basis points of average lending, which is in line with the five-year average of 23
basis points.
13
Rabobank Group
Income tax up 5%
Income tax recognised in 2007 amounted to EUR 386 (367) million, which is equivalent to an
effective tax rate of 12.7% (13.5%). One of the contributors to the lower income tax was the
reduction in the Dutch corporate income tax rate compared to 2006.
Net profit up 14%
Because Rabobank Group’s income grew more strongly than its expenses, the efficiency
ratio improved by 1.5 percentage points in 2007, to 67.0% (68.5%). The higher gross profit,
particularly, caused Rabobank Group’s net profit to grow by 14% in 2007, to EUR 2,662
(2,345) million. After deduction of minority interests and payments on Rabobank Member
Certificates, Capital Securities and Trust Preferred Securities III-VI, the sum remaining was
EUR 1,937 (1,757) million.
14
www.rabobank.nl,
Strong performance and strengthened positions in important markets
www.obvion.nl,
- Mortgages market share grew to 28%
- Savings market share grew to 41%
- SME market share stable at 38%
- Food & agri market share stable at 84%
Alles in één Polis insurance policies up 6% to 1.3 million
Bedrijven Compact Polis insurance policies up 8% to 185,000
Net profit up 24% to EUR 1.3 billion
- Income up 4% to EUR 5.8 billion
- Operating expenses down 1% to EUR 3.8 billion
- Efficiency ratio improved by 3.6 percentage points to 66.2%
- Value adjustments at 6 basis points, with a five-year average of 12 basis points
- Risk Adjusted Return On Capital 15.1%
www.bizner.nl
The domestic retail banking business – the local Rabobanks, Obvion and Bizner –
had an excellent year, in both financial and commercial terms. Net profit was
24% higher, at EUR 1,349 (1,091) million. As income increased and expenses were
lower, the efficiency ratio improved by 3.6 percentage points to 66.2%.
In 2007, Rabobank Group succeeded in strengthening its position in the
mortgages market as well as in the savings market. In the mortgages market,
where competition remains fierce, the local Rabobanks and Obvion are the clear
market leader, with a combined market share of 28% (26%). Rabobank Group’s
share in the Dutch savings market grew from 39% to 41%. Its share in the SME
market was unchanged at 38%. In the start-up market, Rabobank Group
succeeded in growing its market share by 5 percentage points to 38%. Lending
to the food & agri sector also showed an increase. The local Rabobanks sold more
Alles in één Polis and Bedrijven Compact Polis insurance policies.
Having and keeping satisfied customers is priority number one for Rabobank.
Changing client needs call for a change in the services provided by the local
Rabobanks to their corporate and private clients in the future. The Rabobank
2010 project, which was started in 2007, is the response of the local Rabobanks
to the changing conditions.
Share in Rabobank Group’s net profit
in % Domestic retail banking
15
51%
Duty of care
To Rabobank, a central element is that its clients get products that suit them. A survey by
The Dutch Central Bank and the Netherlands Authority for the Financial Markets indicated
that consumers might not always be fully aware of the operation and the risks of investmentbased mortgages. Accordingly, Rabobank took the initiative in 2006 to invite all its clients with
investment-based mortgages for face-to-face discussions in order to explain the operation
and the risks of this product to them again, starting from the client’s personal situation.
Clients indicate that they value this focus on their personal situation. Nevertheless, the
OpMaat Hypotheek was highlighted in the TROS Radar consumer show and by the Stichting
Woekerpolis Claim in the fourth quarter of 2007. Rabobank maintains that the best way for
client dialogue is through face-to-face discussions in which tailor-made products are offered.
Rabobank 2010 programme: pilot started at five banks
Five local Rabobanks, in conjunction with Rabobank Nederland, embarked on the Rabobank
2010 programme in 2007. The programme’s targets are an even better service to clients,
increased commercial effectiveness and optimisation of the main processes. The findings of
these local Rabobanks will be further analysed in detail in 2008, following which improvement
proposals will be defined and implemented in five areas: processes, back office, management
support functions, commercial control and procurement. In 2008, the analyses and
improvement proposals will be completed and, gradually, more and more local Rabobanks
will start their transformation journey.
New clients strengthen the bank’s position in important markets
Rabobank Group has leading positions in many sectors of the Dutch financial services market.
Rabobank traditionally has strong ties with the food & agri sector. Despite the changing
market conditions, the local Rabobanks maintained a market share of 84% (84%) in the
agricultural sector. In addition, Rabobank Group has a strong presence in the savings market,
the mortgages market and among small and medium-sized enterprises in the Netherlands.
In 2007, the local Rabobanks and Obvion succeeded in strengthening their positions in
the mortgages market further. Rabobank Group’s mortgages market share grew from 26%
to 28%. The market share of the local Rabobanks grew by 2.1 percentage points, to 22.4%.
Obvion, the mortgage lender for the broker channel, saw its market share rise by 0.1
percentage points to 5.3%.
Market shares
in %
90
2005
2006
2007
70
80
60
50
40
30
20
10
0
Agricultural
SME
Savings
Mortgages
Many new clients opened savings accounts with a local Rabobank in the year under review.
Among other factors, this enabled Rabobank Group to increase its market share in the
savings market from 39% to 41%. The savings market share of the local Rabobanks grew by
1.2 percentage points to 38.6%. Robeco’s savings bank Roparco saw its market share rise as
well. At 31 December 2007, Roparco had a 2.1% market share, 0.2 percentage points higher
than a year ago.
The number of SME clients at the local Rabobanks grew to 599,000 in the year under review
and the SME market share, as measured by TNS NIPO, was stable at 38% (38%). Because the
local Rabobanks invest in start-up enterprises – with time, money and attention – they
succeeded in strengthening their leading position in this market. Rabobank Group’s share in
the start-up market rose from 33% to 38%.
16
Each local Rabobank has its own CSR policy
All local Rabobanks and Obvion put a great deal of effort in corporate social responsibility,
with the Boards and management teams identifying their own priorities, accountabilities and
goals. At the end of 2007, all local Rabobanks had CSR coordinators for CSR implementation
and coordination. The outcome of a survey held in 2007 was that staff members have become
more familiar with the concept of CSR and that they appreciate Rabobank Group’s CSR policy.
Social engagement and environmentally conscious operations are considered as strengths.
The chief focus of interest in 2008 will be to embed CSR further in the daily activities of all
staff members.
Early 2007 saw the launch of the Rabocard with climate contribution. For each purchase
that a client makes with his Rabocard, Rabobank, in collaboration with World Wildlife Fund,
invests in projects that help fight climate change.
From February 2007, CSR screening is a standard element in corporate lending to larger
clients among small and medium-sized enterprises.
Lending by sector
Food & agri
TIS
Private individuals
In 2007, private sector lending increased by 11% to EUR 244.1 (220.9) billion, of which 70% is
granted to private individuals, 19% to the trade, industry and services sector and 11% to the
food & agri sector. Loans to private individuals were 8% higher,
250
at EUR 172.1 (158.9) billion, virtually all of which – EUR 168.7
200
(153.7) billion – are mortgages.
150
Growth in the number of clients among small and medium100
sized enterprises and the growing demand for loans caused a
50
16% increase, to EUR 46.1 (39.9) billion, in lending to the trade,
0
industry and services sector. Lending to the real estate, transport
2005 2006 2007
and building sectors particularly showed strong growth.
Lending to the food & agri sector grew by 17% to EUR 25.8
(22.1) billion, with the primary agricultural sector accounting for the greater part. These loans
grew by 19% to EUR 21.6 (18.2) billion. Higher lending to the fruit and vegetables sector and
the dairy and animal protein sector was an important contributor to this growth.
Financial results
Income up 4%
In the year under review, total income was 4% higher, at EUR 5,795 (5,551) million, mainly
due to growth in interest income. Despite fierce competition in the mortgages market and
lower income from penalty interest, interest income was 4% higher, at EUR 4,391 (4,226)
million. The increases in both lending and savings offset the effects of lower mortgage margins
and lower penalty interest. Commission income from payment transactions and other financial
services were major factors in the 10% rise in commission income to EUR 1,379 (1,259) million.
Commission income from insurance activities was 1% lower, at EUR 376 (379) million.
Operating expenses down 1%
Total operating expenses were 1% lower in 2007, at EUR 3,835 (3,877) million. The staffing
level in the domestic retail banking business declined by 71 FTEs to 29,304 (29,375) FTEs.
In line with this decrease staff costs were 2% lower, at EUR 2,072 (2,118) million. Other
administrative expenses were 1% higher, at EUR 1,618 (1,607) million, partly as a result of
higher training costs and higher marketing expenses.
Because the favourable economic climate in the Netherlands continued, the increase in
the item Value adjustments was virtually in line with the growth in lending. The item Value
adjustments rose by 4% to EUR 145 (139) million in the year under review. This corresponds
to 6 (7) basis points of average lending and is far lower than the five-year average of
12 basis points.
17
Net profit up 24%, RAROC 15.1%
Gross profit increased by 17% in 2007, as a result of higher income in combination with
lower operating expenses. The increase in gross profit especially caused net profit to grow
by 24% to EUR 1,349 (1,091) million.
In 2007, domestic retail banking achieved a Risk Adjusted Return On Capital (RAROC)
of 15.1%. At year-end, economic capital required amounted to EUR 8.9 billion.
2007
2006
Interest
4,391
4,226
4%
Fees and commission
1,379
1,259
10%
-62%
Other income
Change
25
66
Total income
5,795
5,551
4%
Staff costs
2,072
2,118
-2%
1,618
1,607
1%
145
152
-5%
Operating expenses
3,835
3,877
-1%
Gross result
1,960
1,674
17%
Value adjustments
Taxation
145
139
4%
1,815
1,535
18%
466
444
5%
1,349
1,091
24%
6
7
Efficiency ratio
66.2%
69.8%
RAROC
15.1%
Net profit
Ratios
31-Dec-07
31-Dec-06
Total assets
277.7
242.4
15%
244.1
220.9
11%
89.6
80.5
11%
152.4
143.2
6%
29,375
0%
Savings
Economic capital
18
8.9
29,304
Decline in net profit due to difficult second half-year
www.rabobank.com
Savings at Direct Banking activities up 65% to EUR 5.1 billion
Risk-weighted assets up 19% to EUR 76 billion
Net profit down 43% to EUR 394 million
- Income down 3% to EUR 2,546 million
- Operating expenses 8% higher, at EUR 1,715 million
- Efficiency ratio 6.9 percentage points higher,at 67.4%
- Value adjustments at 63 basis points; higher than the five-year average
Rabobank International – Rabobank Group’s wholesale banking and international
retail banking business – saw its net profit decline by 43%. Net profit for 2007
was EUR 394 (687) million. Results for Rabobank International were affected
by the credit market crisis. Since trade in a number of professional markets was
virtually stagnant, results for Global Financial Markets fell. This decline was
partly offset by the good performance of Participations and by lower taxation.
The international retail banking network was expanded by the acquisition
of Mid-State Bank & Trust in the United States, Hagabank and Bank Hagakita
in Indonesia and HNS Banco in Chile. In addition, Rabobank International
increased its Direct Banking activities by opening its fourth Internet bank
abroad, in Australia.
Credit and liquidity crisis
The credit crisis has left deep scars in the financial markets over the past months, and, like
other financial institutions, Rabobank is feeling its negative effects. The crisis was caused by
increased payment problems among less creditworthy mortgage borrowers in the United
States as a result of higher interest rates and the decline in house prices. Since many of these
so-called subprime mortgages had been securitised, bundled and resold to other parties in
past years, it was unclear where the risks ended up. The result was a lack of confidence,
making banks hesitant to lend to each other, causing an acute liquidity shortage in the
money markets. The crisis soon spread to the entire credit market. Even products totally
unrelated to US subprime mortgages were affected. Many markets that, until recently, were
liquid saw their liquidity disappear. This had significant consequences for the valuation of
in %
Wholesale banking and
international retail banking
15%
19
In millions of euros
Alt-A RMBS
Subprime RMBS
Revaluation charged
to 2007 profit (after tax)
Revaluation
charged to
equity
Carrying value
at 31
December
2007
% of cost
AAA rating
AA or higher
rating
2
4
41
82%
94%
96%
17
24
165
73%
82%
94%
CDO
265
99
112
17%
91%
98%
Total
284
127
318
positions, because if there is little or no trading in certain financial assets, it is difficult to
establish their fair market value. Price quotations seen in the market became more than just a
reflection of a position’s credit risk, the lack of liquidity, too, is reflected strongly in the prices.
Rabobank Group’s balance sheet and profit and loss account are affected by the turmoil in
the financial markets, in the context of which a distinction has been made between effects
from ‘indirect subprime exposure’ and ‘other effects on profit and equity’.
Indirect subprime-exposure
Rabobank has no direct exposure to subprime mortgages. However, Rabobank
International’s investment portfolios contain a limited indirect exposure in the form of
Residential Mortgage Backed Securities (RMBS’s) and Collateralized Debt Obligations (CDO’s).
These items have been revalued, with EUR 284 million in value adjustments being charged
to profit and loss and EUR 127 million to reserves. At 31 December 2007, this exposure
amounted to EUR 318 million.
Other effects on profit and equity
Apart from the indirect subprime effects discussed above, the turmoil in the financial
markets has had other effects in a broader sense, in the form of value adjustments to those
financial assets and liabilities that are valued at fair value. These effects are reflected partly in
profit and partly in reserves, and result from, inter alia, increased credit spreads. Partly as a
result of this, the item ’Net income from financial assets and liabilities at fair value through
profit and loss’ was EUR 284 million lower in 2007, at EUR –38 (246) million. In the investment
portfolio, which totals more than EUR 50 billion, a revaluation of EUR 697 million was
charged to equity.
The credit crisis also caused many structures that had been financed with money market
paper to be difficult to finance. Examples include Asset Backed Commercial Paper (ABCP
conduits) – i.e. collateralised money market investment vehicles – and Structured Investment
Vehicles (SIVs) – i.e. off-balance sheet investment vehicles. Over the past few months, the
ABCP market has started to show a split, with high-quality programmes still able to finance
themselves and the lesser quality programmes, including SIVs, gradually disappearing from
the market. Despite the crisis and thanks to its high-quality programmes, Rabobank still
succeeded in refinancing its maturing commercial paper. At year-end, Rabobank Group had
EUR 23 billion in ABCP outstanding, largely for the financing of its own originated loans and
for customer loans and receivables. A relatively minor part concerns so-called securities
arbitrage programmes. Since the benefits of these programmes will largely diminish as a
result of the Basel II regulations in force as from 2008, Rabobank Group is considering a
winding down of these structures.
Rabobank sponsored a SIV called ‘Tango’, in which it had a 10% shareholding. Since the
situation regarding SIVs shows no signs of improvement in the short term, this position has
likewise been wound down. After the other investors had bought out more than EUR 5 billion
in assets, the remaining Tango assets (EUR 4.8 billion), will be recognised on Rabobank’s
balance sheet in January 2008. This will have no direct effect on profit and loss.
After an excellent first half, results for the second half of 2007 lagged behind, particularly
in the Global Financial Markets division.
20
CSR testing
In 2007, Rabobank International introduced a corporate social responsibility testing system
for credit applications from clients and investment proposals made to Rabo Private Equity.
The chief aim is to prevent undesirable practices such as child labour, poor working conditions,
pollution and deforestation. If a client is unable to meet Rabobank Group’s CSR requirements
to a sufficient degree, the bank enters into in a dialogue with that client in an attempt to
strengthen the sustainable character of the client’s operations. For Rabobank Group and for
the clients involved, this engagement activity is still in full development. Refusing or dissolving
the relationship with the client is a real option if all else fails.
A number of Rabobank Group’s international branch offices are planning to devise a climate
policy with reduction targets, where applicable, for their respective countries.
Private sector lending up 4% to EUR 77.7 billion
Lending by region
at year-end 2007
America
Europe excluding the
Netherlands
Netherlands
Australia and New Zealand
Asia
35%
30%
15%
15%
5%
Lending by sector
Food & agri
TIS
Private individuals
Private sector lending grew by 4% in 2007 to EUR 77.7 (74.7) billion, despite the 11%
depreciation of the US dollar. The international retail banking business
accounted fully for this growth in lending.
Thanks to the expansion of the international retail banking
network, lending to private individuals grew by 17% to EUR 3.8
(3.3) billion. Lending to the food & agri sector grew by 6% to
EUR 28.1 (26.5) billion, with this sector accounting for 36% of
total private sector lending. Lending to the trade, industry and
services (TIS) sector grew by 2% to EUR 45.7 (44.9) billion.
At 31 December 2007, 28% (24%) of lending came from the
international retail banking business, where lending increased by
18%, to EUR 21.6 (18.2) billion. In Australia and New Zealand, this lending
grew by 12% to EUR 8.8 (7.8) billion. The portfolio of the American retail banking activities
increased by 42% to EUR 6.0 (4.2) billion. The lending portfolio acquired with Mid-State Bank
& Trust amounted to EUR 1.2 billion. The consolidation of HNS Banco, Hagabank and Bank
Hagakita resulted in an EUR 0.4 billion increase in lending. Loans
80
at ACCBank grew by 4% to EUR 6.5 (6.2) billion.
70
60
Financial results
50
40
Mid-State Bank & Trust has been consolidated in Rabobank
International’s results from May 2007. The smaller banks HNS
Banco, Hagabank and Bank Hagakita made limited contributions
to net profit in 2007.
30
20
10
0
2005 2006 2007
Income down 3%
Total income declined by 3% in 2007 to EUR 2,546 (2,622) million. Although some units
within Global Financial Markets benefited from the turbulence in the financial markets,
income at Global Financial Markets fell by EUR 497 million to EUR 268 million. At the same
time, Participations had an excellent year. Income at Global Financial Markets is largely
recognised in other income. As a result, other income was 47% lower, at EUR 320 (601) million.
Like many others, Leveraged Finance and Structured Finance were hindered by the subprime
crisis in the American mortgages market, although to a lesser extent. Income from Leveraged
Finance was 7% lower and income from Structured Finance was 5% lower.
The growth in lending in the international retail banking business and the Corporate
Banking activities contributed to the 11% growth in interest income to EUR 1,832 (1,649)
million. Income from the Corporate Banking activities was 11% higher. Of total income,
24% (19%) is from the international retail banking business. Income from the retail banking
activities was 23% higher, at EUR 624 (506) million. ACCBank’s income showed a marginal
increase, which was in line with the slight growth in lending. Income from the retail banks
in the other regions rose as a result of both organic growth and acquisitions.
21
Total operating expenses were 8% higher in 2007, at EUR 1,715 (1,586) million. Acquisitions
were important drivers for the 49% growth in staff numbers to 9,957 (6,684) FTEs. Of this
increase, around 2,800 FTEs are the result of acquisitions. Despite the staff increase, staff
costs rose by a mere 3% to EUR 890 (867) million. The expansion of the activities contributed
to the 16% rise in other administrative expenses to EUR 772 (668) million.
Due to the crisis on the financial markets, the item Value adjustments increased to EUR 493
(234) million in 2007. This corresponds to 63 (39) basis points of average lending and is higher
than the five-year average of 46 basis points.
Net profit down 43%; RAROC 8.4%
As a result of the decline in gross profit and the increase in the item Value adjustments, net
profit fell by 43% to EUR 394 (687) million, despite the lower income tax. The lower result
from Global Financial Markets and the higher income from Participations, the latter being
largely tax-exempt because of participation exemption, contributed to the decline in the
item Taxation.
Rabobank International achieved a Risk Adjusted Return On Capital (RAROC) of 8.4% in 2007.
At year-end, the economic capital required was EUR 4.6 billion.
Interest
Fees and commission
Other income
2007
2006
Change
1,832
1,649
11%
394
372
6%
320
601
-47%
2,546
2,622
-3%
Staff costs
890
867
3%
772
668
16%
53
51
4%
Total income
Operating expenses
1,715
1,586
8%
Gross result
831
1,036
-20%
Value adjustments
493
234
338
802
Taxation
-56
115
Net profit
394
687
63
39
67.4%
60.5%
-58%
-43%
Ratios
Efficiency ratio
RAROC
31-Dec-07
31-Dec-06
399.9
404.0
-1%
77.7
74.7
4%
76.3
64.3
19%
6,684
49%
Total assets
Economic capital
22
8.4%
4.6
9,957
www.robeco.com,
Net profit: strong performance with limited cash flow
www.sarasin.com,
Assets managed and held in custody up 6% to EUR 232 billion
- Cash flow EUR 7 billion
- Investment performance of Robeco fixed income funds under pressure
Number of orders handled in the Netherlands up 8% to 8.2 million
Net profit up 62% to EUR 362 million
- Income up 77% to EUR 1,479 million
- Operating expenses up 80% to EUR 991 million
www.schretlen.com
In 2007, Rabobank Group’s asset management activities – Robeco, Sarasin,
Schretlen & Co and Alex – realised a 62% increase in net profit, to EUR 362
(223) million. This favourable development was the result of the expansion
of the Group’s interests in Sarasin and in Transtrend, in combination with the
divestments by Sarasin and the strong investment performance of Transtrend’s
Diversified Trend Program.
Besides the expansion of the Group’s interest in Transtrend to 100%, Robeco
acquired a 64% interest in the Sustainable Asset Management Group, another
leading Swiss-based global player in sustainable investments besides Sarasin.
Alex is sold to BinckBank and as from 2008 ceased to be part of Rabobank Group.
In 2007, the inflow of assets at Sarasin and the positive investment results
made together an important contribution to the 6% growth, to EUR 232 (219)
billion, in assets managed and held in custody for clients.
Assets managed and held in custody for clients up 6% to EUR 232 billion
in % Asset management
and investment
14%
Assets managed and held in custody for clients grew by 6% to EUR 232 (219 2) billion.
Deposits, due to the increase in interest paid on them, became a more interesting investment
category for clients. For Robeco, this resulted in an asset outflow from a number of investment
funds, including Robeco Lux-o-rente and Rorento. Despite the inflow of
funds at Sustainable Asset Management Group and Harbor Capital
Advisors, both of which are Robeco subsidiaries, Robeco’s cash
flow was slightly negative on balance. Rabobank Group’s total
cash flow amounted to EUR 7 billion, largely as a result of an
inflow of assets at Sarasin. Despite the turbulence in financial
markets, the majority of equity funds showed positive returns
for 2007, resulting in positive investment results and a EUR 10
billion increase in assets. The positive investment results were
largely offset by the depreciation of the US dollar by 11% and of the
Swiss franc by 3%. As a result of the consolidation, from the beginning of
2007, of the Sustainable Asset Management Group, assets grew by more than EUR 2 billion;
the sale of Sarasin’s Luxembourg activities and the acquisition of DWS Investment Switzerland
by Sarasin caused a net decline in assets of more than EUR 2 billion.
More assets managed sustainably
2 Assets managed and held in custody on 31
December 2006 have been adjusted for the
increase in Sarasin’s assets in the second half
of 2006.
23
Thanks to Rabobank Group’s expansion of its interest in Sarasin, the proportion of assets
managed in a sustainable manner has been significantly enlarged since the end of 2006.
Being widely known as an investor with a long and successful track record in areas such as
renewable energies and energy efficiency, the rising awareness amongst investors of the
threats and opportunities brought
about by a potential change in our
230
climate boosted Sarasin’s sustainable
225
assets from EUR 3.2 billion to EUR 4.8
220
billion.
215
Robeco acquired a majority interest
in Sustainable Asset Management
Group (SAM Group) in 2007. SAM
Group ranks among the top of
sustainable asset managers. Since
2007, Robeco’s activities include
engagement on behalf of Dutch
equity funds operating in the market
for private individuals. In this context,
Robeco actively enters into
constructive dialogue with a large number of enterprises it invests in. It also performs
engagement activities for Rabobank Pension Fund, among others. As a result, the proportion
of assets managed for which Robeco applies engagement has seen substantial growth.
Changes in assets managed and
held in custody for clients
240
31-12-2007
Other
Sarasin divestments and investments
SAM Group
Exchange results
Investment results
Cashflow
31-12-2006
235
Investment orders handled in the Netherlands up 8% to 8.2 million
Due to growth in the number of clients and the turbulence in the financial markets, the large
number of orders handled in 2006 was exceeded in 2007. The number of orders for securities
and in-house funds in the Netherlands grew by 8% to 8.2 (7.6) million. The number of orders
handled by local Rabobanks increased by 8% and the number of in-house fund orders handled
by Rabobank Group increased by 11%. In 2007, Alex succeeded to increase its number of
orders by 17% compared to 2006.
Financial results
Sarasin has been consolidated in Rabobank Group’s figures since late 2006. Transtrend
has contributed in full to Rabobank Group’s results since March, 2007. Alex contributed
to Rabobank Group’s profit for the full year 2007. The gain on the sale of Alex should have
a positive effect on Rabobank Group’s results for 2008.
Income up 77%
Increases in both commission and other income were important drivers for the 77% growth,
to EUR 1,479 (836) million, in total income. Commission income increased by EUR 441 million
to EUR 1,089 (648) million. The increase in commission income was largely due to Sarasin’s full
consolidation as from year-end 2006. The strong investment performance of the Transtrend
Diversified Trend Program and the expansion of the Group’s interest in Transtrend also
contributed to the increase in commission income. The gains from the sale at Sarasin of both
its Luxembourg and its brokerage activities were important drivers for the EUR 206 million
increase in other income, to EUR 308 (102) million.
Assets managed and held in
custody for clients
at year-end 2007
Equity
Fixed income
Mixed
Alternatives
Money market
Real estate
Other
24
47%
29%
10%
6%
5%
2%
1%
Total operating expenses were 80% higher in 2007, at EUR 991 (551) million, largely as a
result of the consolidation of Sarasin. This fact, among others, caused staff costs to increase
by EUR 251 million to EUR 581 (330) million and other administrative expenses by EUR 176
million to EUR 386 (210) million.
2007
2006
82
86
1,089
648
308
102
1,479
836
Staff costs
581
330
386
210
Interest
Fees and commission
Other income
Total income
24
11
991
551
80%
Gross result
488
285
71%
1
-
487
285
71%
Taxation
125
62
102%
Net profit
362
223
62%
8.2
7.6
8%
31-Dec-07
31-Dec-06
232
219
6%
69
72
-3%
3,454
3,126
10%
Number of orders in the Netherlands (in millions)
Assets managed and held in custody (in billions of euros)
For clients
Investment portfolio
25
77%
Operating expenses
Value adjustments
Change
Leasing
Net profit benefits from organic growth and Athlon acquisition
www.delagelanden.com
Loan portfolio up 10% to EUR 20.7 billion
- Car lease contracts up 9% to 205,000
- Consumer loans up 42% to EUR 0.9 billion
Net profit up 14% to EUR 234 million
- Income up 18% to EUR 995 million
- Operating expenses up 20% to EUR 594 million
- Efficiency ratio inclined by 1.0 percentage points to 59.7%
- Value adjustments at 61 basis points, below the five-year average
Net profit for De Lage Landen, Rabobank Group’s lease subsidiary, grew by 14%
to EUR 234 (206) million in 2007. The Car Leasing and Financial Institutions units
both saw strong growth in 2007. In order to improve its service to clients with
global operations, De Lage Landen worked hard at further standardisation of its
business processes in the year under review. Athlon, which had been acquired in
2006, was integrated further with Translease. Among car lease clients, satisfaction
with the services continued to grow. Since August 2007, De Lage Landen has
also been providing consumer loans under the new Freo label.
Expansion in Europe
De Lage Landen greatly expanded its European presence in 2007. In Poland, De Lage Landen
started the sale of car leasing contracts and concluded a collaboration agreement with Bank
BGZ, one of Rabobank Group’s minority interests. This agreement enables BGZ clients to
purchase lease products of De Lage Landen. With the acquisition of IT Finans in Norway,
De Lage Landen strengthened its Norwegian presence in 2007. IT Finans specialises in
financing solutions for office supplies and IT. The newly started activities of the Cargobull
Finance joint venture in Hungary and Romania gave De Lage Landen a solid platform for
further expansion in Central and Eastern Europe.
CSR in lending
In 2007, De Lage Landen introduced a corporate social responsibility test in its lending
process, against which all applications from larger non-private clients must be tested.
Particular attention is paid to the development of the CSR policy for loans granted in Brazil.
The policy includes restrictions on lending to clients operating in the Amazon biome and the
in % Leasing
26
9%
Loan portfolio
22
Other
Consumer finance
Trucks & trailers
Car leasing
Technology finance
Healthcare
Materials handling &
construction equipment
Financial services
Office equipment
Food & agri
18
state of Mato Grosso. CSR measures were introduced within Car
Leasing as well, with free NS (Dutch Rail) Business Cards being
offered to all drivers of cars leased from Athlon in order to
encourage public transport use. In addition, diesel vehicles have
been equipped with particulate filters. In order to reduce fuel
consumption, maintenance costs and CO2 emissions, a ‘new
driving’ promotion scheme for leased car drivers was developed.
20
16
14
12
10
8
6
4
In the year under review, De Lage Landen’s loan portfolio grew
by 10% to EUR 20.7 (18.9) billion, despite the 11% depreciation of
the US dollar, which caused the contribution from the Americas
to decline by 2 percentage points, to 39%.
2
0
2005 2006 2007
Financial results
2007
2006
Change
518
507
2%
52
49
6%
Other income
425
286
49%
Total income
995
842
18%
Staff costs
369
305
21%
193
168
15%
32
21
52%
Operating expenses
594
494
20%
Gross result
401
348
15%
Value adjustments
100
77
30%
301
271
11%
Taxation
67
65
3%
Net profit
234
206
14%
61
53
Efficiency ratio
59.7%
58.7%
RAROC
21.0%
Interest
Fees and commission
Ratios
31-Dec-07
31-Dec-06
Loan portfolio
20.7
18.9
10%
21.1
18.9
12%
4,128
7%
Economic capital
Loan portfolio by region
at year-end 2007
Europe
America
Asia/Pacific
27
Leasing
60%
39%
1%
1.1
4,411
Income up 18%
The 18% increase in total income in 2007, to EUR 995 (842) million, was mainly due to the
growth of the item Other income, which includes the car leasing activities. The continued
growth of these activities was an important driver for the 49% growth in other income to
EUR 425 (286) million. Downward pressures on margins caused interest income to grow by
only 2% to EUR 518 (507) million.
Total operating expenses were 20% higher, at EUR 594 (494) million in the year under review.
This was largely due to higher staff costs. The greater part of the 21% increase in staff costs
to EUR 369 (305) million was the result of the acquisition of Athlon. Staff levels grew by 7% in
2007 to 4,411 (4,128) FTEs as a result of organic growth of the activities. Other administrative
expenses were 15% higher, at EUR 193 (168) million.
The item Value adjustments increased to EUR 100 (77) million in 2007. This was connected
with the growth of the loan portfolio and the greater portfolio share of consumer loans.
This corresponds to 61 (53) basis points and is below the five-year average of 69 basis points.
Net profit up 14%; RAROC 21.0%
Net profit was 14% higher, at EUR 234 (206) million. Following its acquisition, in mid-2006,
Athlon contributed for six months to De Lage Landen’s result for that year. For 2007, Athlon’s
full-year contribution was recognised, resulting in an additional increase in net profit of
EUR 18 million.
28
Real estate
Strong net profit development for Rabo Bouwfonds
www.rabobouwfonds.com
Number of houses sold 6% lower, at 13,173
Assets managed in real estate up 21% to EUR 5.1 billion
Net profit Rabo Bouwfonds EUR 97 million higher, at EUR 246 million
- Income up EUR 387 million, at EUR 670 million
- Operating expenses up EUR 258 million, at EUR 352 million
For Rabo Bouwfonds, Rabobank Group’s real estate subsidiary, 2007 was an
excellent year. In the first full year since the acquisition of parts of Bouwfonds
in 2006, net profit grew by EUR 97 million to EUR 246 (149) million. In the year
under review, Rabo Bouwfonds paid a great deal of attention to the integration
of the various real estate units. Since the focus remains on the customer during
the integration, Rabo Bouwfonds succeeded in strengthening its position in
the real estate market in 2007. In the Netherlands, the Bouwfonds Property
Development and Rabo Vastgoed tandem maintained its position as the largest
housing developer by far. FGH Bank strengthened its position in the Dutch market
for real estate financing. Assets managed by Bouwfonds Asset Management
reached the EUR 5 billion mark in 2007.
Further integration of activities
After the acquisition of parts of Bouwfonds late in 2006, a great deal of attention was paid
in 2007 to the integration of a number of units within Rabo Bouwfonds. The successful
integration ensured that several synergy opportunities were realised.
In its new set-up, Rabo Bouwfonds has opted for a strong central holding, in combination
with a maximum of decentralised accountabilities.
Within the Development division, Bouwfonds Property Development was merged with
Rabo Vastgoed. From mid-2008, this division will operate under the Rabo Bouwfonds
Development label. In the Finance division – i.e. FGH Bank – work was done on the integration
of Rijnlandse Bank and De Nederlandse Hypotheekbank. Since the second half of 2007,
FGH Bank’s asset management activities – i.e. FGH Asset Management – have been integrated
with Bouwfonds Asset Management. In 2008, this division will operate as Rabo Bouwfonds
Real Estate Investment Management (REIM).
in %
Real estate
29
Real estate
6%
Number of houses sold 6% lower, at 13,173
Number of houses sold
2007
The Netherlands
France
Germany
Other
In 2007, 13,173 houses were sold by Rabo Bouwfonds, 69% of
which in the Netherlands. In the previous year, Rabo Vastgoed
and Bouwfonds Property Development had sold 14,073 houses.
In 2007, Rabo Bouwfonds completed 223,782 (188,585) m2
of commercial real estate, with 570,970 (714,565) m2 of
commercial real estate under construction.
70%
22%
5%
3%
Loan portfolio
FGH Bank’s new granted loans reached a record of EUR 6.3 billion in
2007. The gross loan portfolio grew by 31% in 2007, to EUR 13.5 (10.3) billion. The net loan
portfolio, after syndications, grew by 33% to EUR 12.5 (9.4) billion. Repayments amounted to
EUR 2.0 billion. Investment financing makes up the greater part
16
of the portfolio: 73%. In June 2007, EUR 3.0 billion of FGH Bank’s
14
loan portfolio was securitised.
12
10
Assets managed in real estate up 21% to EUR 5.1 billion
Assets managed by Bouwfonds Asset Management grew by 21%
in 2007 to EUR 5.1 (4.2) billion. The increase was due in part to the
4
expansion of the Bouwfonds US Residential Fund for institutional
2
investors and to the contribution of houses to the Woning
0
Dispositie Fonds. Early in 2007, private individuals subscribed
2005 2006 2007
en masse to the Bouwfonds Germany Residential Fund IV, and
the subscription had to be closed prematurely. The issue of
Bouwfonds Germany Residential Fund V followed later in the year. Subscription to this
limited partnership was open also for private banking clients of the local Rabobanks.
8
6
CSR in core activities
Rabo Bouwfonds embeds corporate social responsibility in its core activities: development,
finance and investment management. For example, in 2007 all new housing projects were
put in a software package that enables control of sustainability, living comfort and quality
during development. By offering ‘sustainability financing’ in the near future, FGH Bank intends
to stimulate sustainability in building. Investment management researched the possibilities
of turning a number of funds, e.g. the housing fund for the elderly and the European housing
fund, into energy-friendly funds.
In 2008, a harmonised code of conduct will be implemented that is tailored specifically
to Rabo Bouwfonds, while being fully in line with Rabobank Group’s ethical principles.
Financial results
In 2007, the parts of Bouwfonds that were acquired in 2006 contributed in full to Rabo
Bouwfonds’ results.
The item ‘Net profit Rabo Bouwfonds’ corresponds with the annual profit as published by
Rabo Bouwfonds. The item ‘Net profit real estate division’ is net of amortisation and financing
charges resulting from the acquisition of parts of Bouwfonds.
Income up EUR 387 million
Total income increased by EUR 387 million in 2007 to EUR 670 (283) million. The decline in
interest income by EUR 12 million to EUR 86 (98) million was due to the expansion of the
development activities since late 2006, which caused interest expense to increase. Chiefly
because the former parts of Bouwfonds, unlike 2006, contributed to income for the full year
2007, other income grew by EUR 399 million to EUR 583 (184) million.
30
Operating expenses up EUR 258 million
Total operating expenses were EUR 258 million higher in 2007, at EUR 352 (94) million.
Staff numbers grew by 3% in the year under review, to 1,700 (1,654) FTEs. Mainly as a result
of the acquisition of parts of Bouwfonds, staff costs rose by EUR 162 million to EUR 217 (55)
million and other administrative expenses were EUR 86 million higher, at EUR 122 (36) million.
Net profit up EUR 97 million
The EUR 129 million increase in gross profit was an important driver for the EUR 97 million
rise in net profit Rabo Bouwfonds to EUR 246 (149) million.
2007
2006
86
98
1
1
Other income
583
184
Total income
670
283
Staff costs
217
55
122
36
13
3
Operating expenses
352
94
Gross result
318
189
2
-1
316
190
66%
70
41
71%
246
149
65%
Interest
Fees and commission
Value adjustments
Taxation
Net profit Rabo Bouwfonds
Other expenses
Net profit Real estate division
Number of houses sold
Other information (in billions of euros)
Loan portfolio
Assets managed
31
Real estate
Change
68%
92
45
104%
154
104
48%
13,173
14,073
-6%
31-Dec-07
31-Dec-06
13.5
10.3
31%
5.1
4.2
21%
1,700
1,654
3%
Risk management
An important element of banking is deliberately taking well-considered risks.
Rabobank Group pursues a prudent risk policy which entails a moderate risk
profile. At the end of 2007, Rabobank Group obtained permission from the
Dutch Central Bank to use the most advanced calculation methods for the
capital requirement under Basel II, which came into force for Rabobank Group
on 1 January 2008. The turbulence in the financial markets did not leave
Rabobank Group untouched but did not affect its financial soundness.
External capital requirement
The new accord on capital adequacy –‘Basel II’– came into force for Rabobank Group on
1 January 2008. The introduction of Basel II will have a beneficial effect on Rabobank Group’s
capital requirement. Total capital requirement at 31 December 2007 will be almost 27% lower,
from EUR 21.3 billion under the Basel I regulations to EUR 15.5 billion under Basel II. For 2008
and 2009, the Basel II requirements are subject to a minimum of 90% and 80%, respectively,
of the Basel I capital requirement. The reduction from Basel I is mainly due to the relatively
low risk profile of Rabobank’s large mortgage portfolio. In addition, Basel II takes into account
collateral, which will lead to a substantial reduction of the capital requirement in both
corporate lending and leasing.
At 31 December 2007, the available Tier I capital amounted to EUR 28.5 billion, leading to a
Tier I ratio under Basel I of 10.7%. Based on the Basel II requirements, this ratio would be 14.7%.
Internal capital requirement: economic capital
The second pillar of Basel II prescribes that banks should have an internal capital assessment
process that, apart from the risk types to which the external capital requirement applies, also
calculates an internal capital requirement for the other material risk types. Within Rabobank
Group, this internal capital assessment process has been realised by the introduction of an
economic capital framework. At 31 December 2007, the economic capital amounted to
EUR 20.5 (16.9) billion.
Credit risk
The favourable risk profile of Rabobank Group’s loan portfolio is partly due to the bank’s
prudent policy for accepting new clients. Approval of larger credit applications is decided
on by committees. The Executive Board itself decides on the largest financing applications.
For corporate loans, a key concept in Rabobank Group’s policy for accepting new clients is
the ‘know your customer’ principle, meaning that loans are granted only to corporate clients
of which the management, including its integrity and expertise, is known to Rabobank Group.
Once a loan has been granted, ongoing credit management takes place while reference is
made to new information, both financial and non-financial. If it is likely that the debtor is
unable to fulfill all its contractual obligations, this is a matter of impairment and an allowance
is made which is charged to income. At 31 December 2007, impaired loans as a percentage
of private sector lending amounted to 1.2% (1.3%).
32
31-Dec-07
Impaired loans and allowances
(in millions of euros)
31-Dec-06
Impaired loans
Specific and
collective
allowances 3
Balance sheet
value
2,598
895
Wholesale- en international retailbanking
1,229
637
350
Leasing
Other
Rabobank Group
Impaired loans
Specific and
collective
allowances 3
Balance sheet
value
1,703
2,617
866
1,750
592
1,455
713
743
181
169
281
169
111
21
8
13
2
1
1
4,198
1,720
2,478
4,355
1,749
2,606
Liquidity risk and funding
Liquidity risk was a prominent factor in the financial markets in 2007. Lack of trust, inspired
by doubts about the quality of certain investments that were related to the subprime
mortgages in the United States, caused the money market to become almost stagnant in a
number of cases. Central bank intervention kept the system going but could not prevent
strong increases in interest rates, particularly in December.
Within Rabobank Group, liquidity risk has long been recognised as an important risk type.
The policy within Rabobank Group therefore is that the maturity of the funding is aligned
with that of the loans. In addition, this risk is managed in three different ways, the first of
which is to limit outgoing cash flows.
Secondly, a large buffer of liquid securities is being held. If necessary, these assets can be
used for borrowings from central banks, in repo transactions or for direct selling in the market
as a way of generating liquidity.
Thirdly, liquidity risk is limited by Rabobank Group’s prudent funding policy, which is to
meet the funding requirements of the Group entities at an acceptable cost. In this context,
diversification of funding sources and currencies, flexibility of the funding instruments used
and active investor relations play an important role. Because of the flight to quality, the
liquidity available to Rabobank Group was even greater than under normal circumstances.
In addition, the Triple A rating enables Rabobank Group to attract funds at relatively low rates.
These three pillars have contributed to the fact that at no time during the year under review
did the turbulence in the financial markets cause liquidity problems for Rabobank Group.
3 This does not include the general allowance
of EUR 635 (583) million euro.
33
Risk management
www.rabobank.com/content/about_
us/corporate_social_responsibility/
NGOs, public authorities and consumers increasingly demand that commercial
enterprises conduct their business while having regard for the quality of life of
our planet. Poverty alleviation and climate change are the international themes
of corporate social responsibility that were the focus of attention in 2007. These
days, not a single enterprise can afford to act without reflection on issues such
as human rights or the use of scarce sources of (fossil) energy. In 2007, Rabobank
Group itself – and in conjunction with its clients – worked hard to achieve its
targets as a financial service provider, while focusing on Rabobank Group’s
contribution to a more sustainable society.
Intensified dialogue with society
Rabobank Group values dialogue with its stakeholders. These discussions are part of
Rabobank Group’s issue management. Early identification and analysis of relevant trends
and problems enable Rabobank Group to assess relevant risks sooner and to manage them
better, to respond to commercial opportunities and to conduct its business in a more
sustainable manner. Rabobank Group refined its issue management process further in 2007,
while making it clearer what it is willing and able to influence and what is outside its span
of control. In 2008, based on the experience gained, the complaints procedure concerning
Rabobank Group’s commercial financing will be extended to social issues.
CSR in lending
Rabobank Group finalised the introduction of corporate social responsibility assessments
in its national and international lending businesses in early 2007. Partly on the basis of such
guidelines as the Global Reporting Initiative (GRI) and the Global Compact, ten social themes
have been embedded in these lending procedures. All new credit applications from clients
will be tested against them, regardless of a client’s industry or country of operation.
Thus, Rabobank Group limits the social and financial risks that are directly associated with
its economic activities.
CSR contributes to innovations
Corporate social responsibility is beneficial to innovations in Rabobank Group’s policy,
products and services. In both the short and the long term, this is in the interest of society,
the bank, its staff and its customers. The innovative power of CSR for Rabobank Group was
again evident in 2007. It has resulted in new financial products and services including the
Rabo KlimaatHypotheek, the Rabocard with climate contribution, a financing tool for soil
decontamination, various sustainable investment funds and a charity desk. This charities
department helps clients achieve their social responsibility targets. In addition, Rabobank
Group has demonstrated in several publications, including ‘Biomass, food and sustainability:
is there a dilemma?’ how CSR results in innovative thinking and acting within the bank.
Rabobank Group wishes to see sustainability become an integral and self-evident part of
its value proposal to the mass market.
In 2007, Rabobank Group detailed a specific policy for CSR issues in a number of sectors.
Visions of intensive cattle farming and CSR in horticulture were written. The policies for the
fishing industry and for basic agricultural products such as soy were formalised further.
Likewise, the bank’s human rights policy was formalised by adopting with five special
guidelines and a start was made with its introduction in the organisation.
34
Climate change affects Rabobank Group’s policy
At the same time, the climate and scarcity issues are clear opportunities for Rabobank Group
because more and more capital will be required for the development of technologies with a
more sustainable character. Already, Rabobank Group has developed many initiatives and
will continue to do so, both in its own operations and through climate-friendly products and
services, by financing sustainable initiatives and by raising awareness among customers and
employees of problems and paths towards solutions.
Achieving climate-neutral business operations
The actions are based on three principles. Rabobank Group aims to reduce its own use of
natural resources and raw materials, deploys re-usable materials and materials with a lower
environmental impact as much as possible and compensates for the remaining environmental
impact. This approach is known as the Trias Energetica. In 2007, Rabobank Group quantified
the CO2 emissions related to its own operations. It was then decided to offset these emissions,
which amount to 175,000 tonnes, by procuring CO2 credits. Also in 2007, a full accounting
system for its CO2 emissions from the use of natural gas, electricity, mobility and paper was
set up so as to be able to identify relevant opportunities for CO2 reduction, monitor the
effectiveness of environmental measures and formulate additional climate targets.
Rabo Development
Late in 2005, Rabobank took the initiative to develop banks according to the Rabobank model
in a number of developing countries. These banks do not necessarily have a cooperative
structure but distinguish themselves from other (international) banks because they expressly
consider rural areas as their markets and focus on serving all market segments. This gives
Rabobank’s partner banks a unique position, as other banks focus mainly on the higher-end
market segments in urban areas. Rabobank concentrates on the long-term development
of its partner banks, with profitability as a subservient factor for the shorter term. Partner
banks are being developed along the same lines that Rabobanks have developed over
time in the Netherlands.
In 2007, Rabobank Group obtained a minority interest in Banco Terra, in Mozambique,
and in the Zambia National Commercial Bank. In earlier years, Rabobank Group had acquired
minority interests in the United Rural Cooperative Bank of Hangzhou, in China, and in the
National Microfinance Bank, in Tanzania, bringing the number of banks collaborating with
Rabobank Group to four.
35
Investing in clean technology
Global warming is creating a growing need for clean
technologies. These so-called Clean Tech technologies
make generating energy and producing materials,
products and services more efficient and as a result
help to reduce pollution, waste and the use of scarce
raw materials. Examples include wind and solar
energy, biofuel and water purification. The Robeco
Clean Tech Private Equity fund invests worldwide in
funds and non-listed companies that invest in clean
technology. Both institutional and private clients
are welcome to invest in this fund.
In order to further promote investments in Clean
Tech, the Rabobank Group established the Clean
Tech Research Desk in 2007. This department is
rapidly emerging as a leading centre of knowledge
in the field of clean technology. This pool of
specialised expertise benefits both the Rabobank
Group and its clients who are welcome to turn
to the Clean Tech Research Desk specialists for
advice and assistance.
Annual figures
Consolidated balance sheet
At 31 December
At 31 December
2007
2006
Assets
Cash and cash equivalents
Due from other banks
Trading financial assets
Other financial assets at fair value through profit and loss
Derivative financial instruments
Loans to customers
Available-for-sale financial assets
Held-to-maturity financial assets
Investments in associates
Intangible assets
Property and equipment
Investment properties
Current tax assets
Deferred tax assets
Other assets
2,129
43,218
29,179
18,133
26,089
372,968
50,355
859
4,558
3,183
5,572
1,105
419
1,577
11,159
1,630
49,086
36,789
21,468
18,992
354,924
48,961
1,489
3,250
1,844
5,022
1,338
176
1,477
10,009
Total assets
570,503
556,455
38
Liabilities
Due to other banks
Due to customers
Debt securities in issue
Derivative financial instruments and other trade liabilities
Other debts
Other financial liabilities at fair value through profit and loss
Provisions
Current tax liabilities
Deferred tax liabilities
Employee benefits
Subordinated debt
Total liabilities
Equity
Equity of Rabobank Nederland and local Rabobanks
Rabobank Member Certificates issued by group companies
Capital Securities and Trust Preferred Securities III to VI
Minority interests
Total equity
Total equity and liabilities
39
Annual figures
At 31 December
At 31 December
2007
2006
73,428
249,515
141,812
31,097
10,518
27,303
1,167
202
851
941
2,294
539,128
94,626
234,917
128,066
26,694
10,649
26,270
1,175
172
836
1,223
2,450
527,078
19,650
6,233
25,883
2,779
2,713
31,375
570,503
17,426
5,808
23,234
1,959
4,184
29,377
556,455
Consolidated profit and loss account
For the year ended 31 December
2007
2006
29,356
22,585
6,771
25,059
18,587
6,472
3,394
537
2,857
2,741
445
2,296
753
556
(38)
64
1,092
11,499
246
7
472
10,049
Staff costs
Operating expenses
Value adjustments
Taxation
Net profit
4,445
2,846
418
7,709
742
3,048
386
2,662
4,117
2,429
341
6,887
450
2,712
367
2,345
Of which attributable to Rabobank Nederland and local Rabobanks
Of which attributable to holders of Rabobank Member Certificates
Of which attributable to Capital Securities
Of which attributable to Trust Preferred Securities III to VI
Of which attributable to minority interests
Net profit for the year
1,937
299
17
106
303
2,662
1,757
277
110
201
2,345
Interest income
Interest expense
Interest
Fee and commission income
Fee and commission expense
Fees and commission
Income from associates
Net income from financial assets and liabilities at fair value through
profit and loss
Gains on available-for-sale financial assets
Other
Income
40
Consolidated statement of changes in equity
Equity of Rabobank
Nederland and local
Rabobanks
Rabobank
Member
Certificates
Capital
Securities
and TPS
Minority
interests
Total
equity
At 1 January 2006
Arising in the period (after taxation):
Net fair value changes – available-for-sale financial assets
Net fair value changes – associates
Net fair value changes – cash flow hedges
Other changes
Currency translation differences
Reclassified to net profit for the year – available-for-sale
financial assets
Total income and expense for the year recognised directly
in equity
Total income and expense
Payment on Rabobank Member Certificates and Trust Preferred
Securities III to VI (TPS)
Other
At 31 December 2006
15,450
5,811
2,092
2,996
26,349
(277)
94
(16)
11
(14)
-
(133)
(191)
(277)
94
(16)
11
(338)
295
-
-
-
295
93
1,757
1,850
277
277
(133)
110
(23)
(191)
201
10
(231)
2,345
2,114
126
17,426
(277)
(3)
5,808
(110)
1,959
1,178
4,184
(387)
1,301
29,377
At 1 January 2007
Arising in the period (after taxation):
Net fair value changes – available-for-sale financial assets
Net fair value changes – associates
Net fair value changes – cash flow hedges
Currency translation differences
Reclassified to net profit for the year – available-for-sale
financial assets
Total income and expense for the year recognised directly
in equity
Total income and expense
Payment on Rabobank Member Certificates, Trust Preferred
Securities III to VI and Capital Securities
Issue of Capital Securities
Exchange of government bonds for subordinated loans
to Rabobank Nederland
Other
At 31 December 2007
17,426
5,808
1,959
4,184
29,377
(39)
70
12
(205)
-
(170)
(584)
(225)
(623)
70
12
(600)
315
-
-
-
315
153
1,937
2,090
299
299
(170)
123
(47)
(809)
303
(506)
(826)
2,662
1,836
-
(299)
-
(123)
990
-
(422)
990
134
19,650
415
10
6,233
2,779
(415)
(550)
2,713
(406)
31,375
41
Annual figures
Consolidated cash flow statement
Cash flows from operating activities
Adjusted for:
Non-cash items recognised in profit and loss
Value adjustments
Result on sale of property and equipment
Share of (profit) of associates and result on sale of subsidiaries
Fair value results on investment properties
Fair value results on financial assets and liabilities at fair value through
profit and loss
Net result on available-for-sale financial assets
Net change in operating assets:
Due from other banks
Trading financial assets
Derivative financial instruments
Net change in non-trading financial assets at fair value through profit and loss
Loans to customers
Net change in liabilities relating to operating activities:
Derivative financial instruments and other trade liabilities
Due to customers
Debt securities in issue
Other debts
Income tax paid
Other changes
Net cash flow from operating activities
Cash flow from investing activities
Acquisition of subsidiaries net of cash and cash equivalents acquired
Disposal of subsidiaries net of cash and cash equivalents
Acquisition of property and equipment and investment properties
Proceeds from sale of property and equipment
Acquisition of available-for-sale financial assets and held-to-maturity
financial assets
Proceeds from sale and repayment of available-for-sale financial assets and
held-to-maturity financial assets
Net cash flow from investing activities
Cash flows from financing activities
Proceeds from issue of Capital Securities
Payment on Rabobank Member Certificates, Trust Preferred Securities III to VI
and Capital Securities
Repayment of subordinated debt
Net cash flow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The cash flows from interest are included in the net cash flow from
operating activities
Interest income
Interest expense
42
2007
2006
3,048
2,712
418
742
(9)
(698)
(6)
341
450
(14)
(527)
2
38
(64)
(246)
(7)
(15,330)
7,610
(7,097)
3,335
(18,044)
7,874
2,222
5,143
(4,019)
(50,473)
4,403
14,598
13,746
(131)
(833)
1,076
6,802
(4,488)
29,472
12,074
3,583
(809)
(2,285)
1,005
(431)
18
(559)
398
1,714
3
(646)
330
(21,443)
(16,160)
15,156
(6,861)
12,861
(1,898)
990
-
(422)
(10)
558
499
1,630
2,129
(387)
(13)
(400)
(1,293)
2,923
1,630
28,831
21,620
24,675
17,740
Business segments
Domestic retail
banking
Wholesale
banking and
international
retail banking
Asset
management
and investment
Leasing
Real estate
Other 4
Total
For the year ended 31 December 2007
External income
Income from other segments
Total income
Segment expense
Operating profit before tax
Income tax expense
7,736
(1,941)
5,795
3,980
1,815
466
1,349
717
1,829
2,546
2,208
338
(56)
394
1,473
6
1,479
992
487
125
362
1,611
(616)
995
694
301
67
234
1,008
(362)
646
437
209
55
154
(1,046)
1,084
38
140
(102)
(271)
169
11,499
11,499
8,451
3,048
386
2,662
For the year ended 31 December 2006
External income
Income from other segments
Total income
Segment expense
Operating profit before tax
Income tax expense
7,731
(2,180)
5,551
4,016
1,535
444
1,091
1,582
1,040
2,622
1,820
802
115
687
894
(58)
836
551
285
62
223
1,304
(462)
842
571
271
65
206
492
(248)
244
100
144
40
104
(1,954)
1,908
(46)
279
(325)
(359)
34
10,049
10,049
7,337
2,712
367
2,345
4 Other includes various income and expense items
not allocated to individual segments, such as income
and expense due to the application of centralised
hedge accounting, and consolidation effects.
43
Annual figures
Rabobank Group is an international financial services provider operating on the
basis of cooperative principles. Its operations include retail banking, wholesale
banking, asset management, leasing and real estate. In the Netherlands, its focus
is on all-finance services and, internationally, on retail and wholesale banking
and food & agri. The organisation employs more than 60,000 staff in 43 countries.
Rabobank Group comprises the independent local Rabobanks plus their central
organisation Rabobank Nederland and its (international) subsidiaries. Rabobank
Group’s structure is characterised by strong internal ties, that stem from its
cooperative roots.
Rabobank Group has the highest credit rating, Triple A, awarded by the well-known international
rating agencies Standard & Poor’s, Moody’s and Dominion Bond Rating Service. In terms of
Tier I capital, the organisation is among the world’s twentieth largest financial institutions.
Local Rabobanks, Rabobank Nederland and Rabobank International
Together, the 174 independent local Rabobanks employ around 29,000 staff and form the
densest banking network in the Netherlands. Rabobank has over 1,100 branches and operates
more than 3,100 cash dispensing machines. The local Rabobanks serve millions of Dutch
clients, both private and corporate, with a comprehensive package of financial services.
The local Rabobanks and their members and customers make up Rabobank Group’s
co-operative core business. Firmly rooted in society, committed, near-by and a leader.
Clients can become members of their local Rabobank. In turn, the local Rabobanks are
members and shareholders of Rabobank Nederland, the supralocal cooperative organisation
that advises the banks and supports their local services. Rabobank Nederland also supervises,
on behalf of the Dutch central bank, the solvency, liquidity and administrative organisation
of the local Rabobanks.
Rabobank Nederland is the holding company of a number of specialised subsidiaries in
the Netherlands and abroad. Rabobank International is Rabobank Group’s wholesale bank
and international retail bank. It employs more than 10,000 staff world-wide and serves its
customers from 29 countries.
Mission and ambition
Rabobank puts the common interests of people and communities first. Based on its
commitment to those interests, Rabobank aims to be a driver and an innovator that contributes
to the sustainable development of prosperity and well-being. Its goal is to help people and
communities achieve their present and future ambitions. Strengthening mutual collaboration
and supplying the best possible financial solutions are the means to achieve that end. Based
on this mission, Rabobank Group’s ambition is to be the largest, best and most customerdriven and innovative financial institution in the Netherlands.
In the international environment, Rabobank Group aspires to be the best food & agri bank,
with a strong presence in the world’s major food & agriculture countries. For this purpose,
Rabobank Group uses the experience it has accumulated in the Netherlands over many
years. In addition, Rabobank Group aims at global excellence in sustainable entrepreneurship
and banking, as would befit its identity and position in society. Rabobank Group works hard
to embed corporate social responsibility in its core activities even further.
44
Our values
In the Netherlands, Rabobank Group offers all the financial services needed by clients as they
participate in an economy-driven modern society. Rabobank Group strives to ensure that its
services are continually adjusted and updated so that they always meet the needs of private
individuals and businesses alike. Rabobank believes that sustainable growth in prosperity
and well-being requires careful nurturing of natural resources and the living environment
and it aims to contribute to this with its activities. Rabobank respects the culture and
traditions of the countries where it operates without losing sight of its own objectives and
values. Rabobank Group’s desired profile in the world is defined by core values that are
derived from its mission and ambition: respect, integrity, professionalism and sustainability.
In all its actions, Rabobank puts its clients’ best interest first. The bank creates customer value by:
– providing those financial services considered best and most appropriate by our clients;
– ensuring continuity in the services provided with a view to the long-term interests of
the client;
– showing commitment to our clients and their environment, so that we can contribute to
achieving their ambitions.
Rabobank Group
9 million clients
1.64 million members
174 local Rabobanks
Rabobank Nederland
Support of
Staff functions
local Rabobanks
Rabobank Group
Rabobank International
Private individuals
Corporate Social Responsibility
Food & agri
Small & medium-sized enterprises
Investor Relations
Wholesale banking
Private Banking
Long Term Funding
International retail banking
Other support units
Other staff units
Labels
Asset
Leasing
Real estate
Insurance
Housing
Business
De Lage Landen
Rabo Bouwfonds
Eureko (39%)
Obvion
Bizner
Zoekallehuizen.nl
Rembrandt
management
Robeco
Schretlen & Co
- Athlon
- FGH Bank
- Interpolis
Sarasin
Mergers and
IRIS
Acquisitions
The local banks and their members make up the core of the banking business. They are the cooperative’s key stakeholders. Being the central
(legal) entity, Rabobank Nederland is in the centre of the diagram of the organisation. In the Netherlands, Rabobank Nederland facilitates the local
Rabobanks, including the development of new products and marketing support. Within Rabobank Nederland, staff functions are performed for
the local Rabobanks and for Rabobank Group as a whole, including Shared Services & Facilities, Group ICT and Cooperative & Management,
Corporate Social Responsibility, Investor Relations, Long Term Funding, Human Resources, Legal and Tax Affairs, Knowledge & Economic Research
and Communications. Finally, Rabobank International, with its expertise, serves a large number of corporate and retail clients all over the world.
The bottom part of the diagram of the organisation describes the chief labels within the Rabobank Group operating in the various markets
under their own brands.
45
Colophon
Published by
Rabobank Nederland Communications
Editors
Andries van der Bruggen, Geoffrey van Diessen,
Smink, Van der Ploeg & Jongsma
Design concept
Beukers Scholma, Haarlem
Design
Borghouts Design, Haarlem
Photographs
Disclaimer
This Annual Summary is a translation of the Dutch
Annual Summary. In the event of any conflict in
interpretation, the Dutch original takes precedence.
Annual Reports
Rabobank Group publishes the following Annual/
Interim Reports
– Annual Report 2007
(in Dutch and English to be published in April 2008)
– Consolidated Financial Statements 2007
DutchPhotography, Amsterdam
Edwin Walvisch, Heemstede
– Annual Sustainability Report 2007
English translation
Ernst & Young Language & Translation Services,
– Interim Report 2008
The Hague
(in Dutch and English, to be published in September
Internet
2008)
Info.nl, Amsterdam
SiteManagement
Printers
For copies of these reports please contact Rabobank
Nederland: [email protected]
DDPP Document Partners, Wormerveer
All Annual Reports are also available on the internet:
www.rabobank.com
46
March 2008
www.rabobank.com

Annual Summary 2007

Transcription

Similar documents

Profile - Rabobank

Visual Partner

Presentation for Investors

guided tour "kaunas - hanza town"

PV laboratory equipment for the T.A. Marryshow

Montport III Business plan

PowerPointova predstavitev

fall/winter 2015/16 iconic rings

BGK - HBOR

Annual Summary Rabobank Group

EIF in Poland - European Investment Fund

Rabobank Group