Annual Summary Rabobank Group

Transcription

Annual Summary 2008
Rabobank Group
Rabobank Group Annual Summary 2008
13693 04 2009
www.rabobank.com/reports
Rabobank Group
Annual Summary 2008
Annual Summary 2008
Rabobank Group
6 Chairman’s foreword
9 Strategic Framework
11 Financial developments in Rabobank Group
17 Domestic retail banking
22 Wholesale banking and international retail banking
26 Asset management and investment
31 Leasing
35 Real estate
39 Insurance
41 Risk management
46 Responsible banking for a sustainable future
52 Annual figures
52 Consolidated balance sheet
54 Consolidated profit and loss account
55 Consolidated statement of changes in equity
56 Consolidated cash flow statement
57 Business segments
58 Profile
Key figures
2008
2007
2006
2005
2004
Volume of services (in millions of euros)
Total assets
Private sector loan portfolio
Due to customers
Assets under management and held in custody for clients
612,120
408,620
304,214
183,600
570,491
368,709
276,610
231,800
556,455
324,110
234,917
219,300
506,573
278,095
186,427
156,200
483,574
248,958
177,482
140,300
Financial position and solvency (in millions of euros)
Equity
Tier I capital¹
Qualifying capital¹
Risk-weighted assets¹
33,459
30,358
30,912
238,080
31,409
28,518
29,190
266,573
29,377
26,391
27,114
247,458
26,349
24,860
25,272
213,901
23,004
21,404
21,205
196,052
Profit and loss account (in millions of euros)
Income
Operating expenses
Value adjustments
Taxation
Net profit
11,652
7,611
1,189
98
2,754
11,022
7,663
266
397
2,696
10,049
6,887
450
367
2,345
9,363
6,242
517
521
2,083
9,222
6,177
479
773
1,793
Ratios
Tier I ratio¹
BIS ratio¹
Net profit growth
Return on equity
Efficiency ratio
12.7%
13.0%
2%
9.7%
65.3%
10.7%
10.9%
15%
10.2%
69.5%
10.7%
11.0%
13%
9.4%
68.5%
11.6%
11.8%
16%
9.7%
66.7%
10.9%
10.8%
12%
9.1%
67.0%
Nearby
Member banks
Offices
Cash dispensing machines
Members (x 1,000)
Client satisfaction private individuals
Foreign places of business
153
1,112
3,097
1,707
7.7
569
174
1,159
3,107
1,638
7.5
349
188
1,214
3,139
1,641
7.5
330
248
1,249
3,116
1,551
7.4
267
288
1,299
3,062
1,456
7.3
244
Market shares (in the Netherlands)
Mortgages
Savings
Small and medium-sized enterprises
Food & agri
30%
43%
39%
84%
28%
41%
38%
84%
26%
39%
38%
84%
23%
39%
38%
83%
25%
39%
40%
84%
Ratings
Standard & Poor’s
Moody’s Investor Service
AAA
Aaa
AAA
Aaa
AAA
Aaa
AAA
Aaa
AAA
Aaa
1 These figures have been based on the Basel II requirements with effect from 2008.
2 These data cover 92% and 91%, respectively, of the number of FTEs of the Rabobank Group.
3 These data cover 90% of the number of FTEs of the Rabobank Group.
4 These data cover 99% of the FTEs of Rabobank Netherlands, local Rabobanks and Group entities Netherlands related to the share that is purchased centrally.
2
Personell data
Number of employees (in FTEs)
Employee satisfaction
Absenteeism
Females employed
Females in senior positions (> scale 7)
WIA-influx
Training expenses in EUR millions
Training expenses in EUR per FTE
Products and services specifically geared to sustainability
(amounts in millions of euros)
Investment
Rabo Green Bonds (cumulative)
Robeco sustainable assets
Robeco sustainable equity funds
Sarasin sustainable assets
Sarasin private equity funds
Third party sustainable investment products (via Schretlen & Co
and Rabobank Private Banking)
Robeco sustainable capital subject to engagement
Sarasin sustainable capital subject to engagement
Rabo sustainable seed capital, venture capital and private equity
Payments, savings, loans
Green financing (outstanding)
Green saving
Climate mortgage loan
- number
- amount
Stimulation loan, start-up loan, and Growth & Innovation loan
(loans managed by Stichting Garantiefonds Rabobank)
Loans with Landbouw BF/BF+ surety fund
Non-commercial sustainable activities (in millions of euro’s)
Rabobank Foundation, loans and donations
Project Funds, donations
Donations by local Rabobanks
Donations Rabobank Netherlands, Rabobank International
and other Group entities
Business operations
CO₂-emissions attributable to business operations
(tonnes CO₂ x1,000)
CO₂ per FTE (tonnes CO₂)
Electricity usage (kWh per FTE)²
Share of green electricity²
Gas usage (in m³ per m² gross floor area)³
A4 Paper usage (kg per fte)⁴
Lease portfolio A, B and C cars (% of total)
3
Key figures
2008
2007
2006
2005
2004
60,568
86%
3.8%
55.1%
22.1%
0.20%
99.9
1,649
54,737
85%
3.8%
55.4%
20.7%
0.15%
98.0
1,790
50,573
87%
3.6%
55.6%
19.9%
0.18%
76.9
1,518
45,580
81%
3.7%
56.3%
19.0%
50,216
85%
3.8%
55.6%
17.8%
68.7
1,509
69.0
1,374
3,622
2,620
516
4,363
123
3,518
5,247
420
4,778
-
3,130
105
191
-
2,644
88
122
-
1,984
81
5
-
159
9,555
1,069
138
124
15,125
3
65
5,249
10
4
3
3,373
125
2,882
106
2,409
-
2,184
-
1,814
-
934
71.7
250
19.2
-
-
-
451
355
367
364
267
376
-
-
17.0
3.7
20.4
10.6
1.1
20.3
15.9
1.3
-
10.1
1.6
-
7.4
2.8
-
3.8
-
-
-
-
176
3.0
5,050
85%
9.6
39.1
73.3%
176
3.1
4,705
85%
8.3
45.2
70.8%
4,580
86%
8.1
48.7
-
4,276
96%
8.7
50.6
-
3,352
25%
8.1
46.5
-
Rabobank Group at a glance
Net profit up 2%
in millions of euros
4,000
400
Rabobank Group
3,500
350
2007
2008
3,000
300
2,500
250
As a stable market party, Rabobank Group achieved strong
growth in its amounts due to customers, which increased
by 10% to EUR 304.2 billion. The Tier I ratio was 12.7% and
return on equity was 9.7%.
Rabobank Group is an international financial services
provider operating on the basis of cooperative
principles. The operations include retail banking,
wholesale banking, asset management, leasing,
real estate and insurance. In the Netherlands, the
strategic focus is on all-finance services and, inter
nationally, on expanding its leading position as a
food & agri bank. The organisation employs around
61,000 FTEs and has operations in 45 countries.
Rabobank Group comprises independent local
Rabobanks plus their central organisation Rabobank
Nederland and the subsidiaries. Rabobank Group has
a 39 per cent stake in insurance company Eureko.
Net profit up 13%
1,500
Domestic retail banking
1,250
250
2007
2008
1,000
200
Net profit down 92%
500
150
400
120
2007
2008
300
90
200
60
100
30
0
0
2,000
200
Private-sector lending
portfolio up 11%
in billions of euros
1,500
150
1,000
100
500
50
2007
2008
0
0
portfolio up 10%
2007
2008
portfolio up 11%
2007
2008
300
The domestic retail banking business comprises
the local Rabobanks, Obvion and Bizner. The 153
750
150
independent local Rabobanks have over 1,100
500
100
branches and around 29,000 FTEs, and operate more
250
50
than 3,100 cash dispensing machines. The local
0
0
Rabobanks serve 7.5 million Dutch clients, both
private and corporate, offering a comprehensive
Despite the turbulence in the financial sector, the local
package of financial services. Rabobank is the largest
Rabobanks succeeded in strengthening their market posimortgage bank, savings bank and insurance agent.
tions. Our strong position in the savings market was
It is also the leading bank for the small and mediumextended further. Lending showed a strong growth, particu- sized enterprises sector in the Netherlands.
larly on the business side. Rabobank Group strengthened its Obvion focuses exclusively on collaboration with
number one position in the mortgages market. The Raboindependent brokers and it is the largest mortgage
bank 2010 programme, which is aimed at customer service lender in this field in the Netherlands. Bizner is an
improvement, became available for all local Rabobanks.
internet bank where businesses can handle their
own banking transactions online.
The financial crisis depressed results in Global Financial
Markets and caused an increase in the impairment losses.
As a result, Rabobank International’s profit decreased.
Rabobank International expanded its international retail
banking activities further. It increased its existing interest in
the Polish Bank BGZ to a 59% majority interest.
4
Wholesale banking and international
retail banking
Rabobank International – the Group’s wholesale
banking and international retail banking business –
focuses on the food & agri sector. This Group entity
has branches in 27 countries and employs more
than 15,000 FTEs world-wide. Besides regional
activities, Rabobank International has divisions with
global operations, such as Global Financial Markets,
Structured Finance, Leveraged Finance, Renewable
Energy & Infrastructure Finance, Direct Banking and
Trade & Commodity Finance. The retail activities
are performed under the Rabobank label, with the
exception of the Irish ACCBank, which is a fullyowned subsidiary, and the Polish Bank BGZ, in
which Rabobank International has a 59 per cent
stake. In addition, Rabobank International has
equity investments in private equity.
Net profit up 21%
500
250
Asset management and investment
400
200
2007
2008
300
150
200
100
100
50
0
0
Rabobank Group’s asset management business is
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. Together, these entities employ around 3,600
FTEs. Rabobank Group has a 46% stake in Sarasin
and a voting share of 69%.
Assets under
management and
held in custody for
clients down 21%
2007
2008
Net profit unchanged
250
25
Leasing
200
20
2007
2008
150
15
100
10
De Lage Landen is responsible for Rabobank
Group’s leasing business. Asset financing products
help manufacturers, vendors and distributors to
boost sales in more than 30 countries all over the
world. In addition, De Lage Landen operates its
international car lease business Athlon Car Lease in
eight European countries. In the Dutch home
market, De Lage Landen offers a broad range of
leasing and trade financing products. Through the
Freo brand, among others, it supports Rabobank
Group’s efforts to be the Dutch market leader in
consumer credits. De Lage Landen employs
around 4,700 FTE’s.
50
5
Loan portfolio up 13%
0
0
2007
2008
De Lage Landen reported satisfactory growth, with higher
margins on new contracts. The lease car portfolio increased
by 6% to 211,000.
De Lage Landen’s customer focus earned it the ‘Vendor
Lessor of the Year Award’.
Net profit for Rabo
Real Estate Group
down 65%
250
2007
2008
Loan portfolio up 22%
2007
2008
The decrease in assets under management, which was due
to the fall in share prices, was partly offset by the inflow of
assets. The strong performance of Robeco’s alternative
investments and the gain from the sale of Alex contributed
to the result. Sarasin achieved a record inflow of assets and
received several awards for its outstanding investment
performance.
5
Rabobank Group at a glance
25
Real estate
Rabobank Group’s private and corporate real
estate activities are performed by Rabo Real Estate
100
10
Group. This real estate enterprise focuses on three
50
5
core businesses: the development of owner0
0
occupied houses and commercial real estate,
finance and asset management. In these markets,
As a result of worsened market conditions, Rabo Real Estate Rabo Real Estate Group operates under the brands
Bouwfonds Property Development, MAB
Group sold fewer owner-occupied houses: 8,746, down
from 13,173 in 2007.
Development, FGH Bank and Bouwfonds REIM.
The loan portfolio grew further and the margin on new
Rabo Real Estate Group employs more than 1,700
financings was higher. Real estate assets under manageFTEs and operates mainly in the Benelux countries,
ment were up 35% to EUR 6.8 billion.
Germany and France.
200
20
150
15
Chairman’s foreword
2008 may rightly be called a historic year. The subprime crisis in the United States
escalated to become a deep and world-wide financial crisis. Regrettably, it has
meanwhile developed into an economic crisis. The banking sector suffered
unprecedented and far-reaching consequences. Across the globe - and in our
country, too - bankruptcies, government interventions and nationalisations were of
the order of the day. It is difficult times like these that the benefits of a cooperative
bank clearly come to the fore. Our societally oriented business culture, which is
based on the Rhineland model, our democratic consultative structure, our prudent
risk management, our sustainable remuneration policy – all these factors, combined
with our strong financial performance and solvency, have contributed to Rabobank
Group’s continuing stable performance. In addition, we continued to serve our
clients without the help of others.
Strategy adjustment called for
The radically changing market conditions clearly necessitate an adjustment to our strategy. Like other
banks, Rabobank will have to finance a large proportion of its growth in lending from the increase in its
amounts due to customers. Even more than in the past, we shall focus on our core activities and on
specific growth markets. Where possible, we are expanding our position as the leading provider of allfinance services in the Netherlands. We are claiming the position as the world’s best food & agri bank.
As a bank that operates in a socially responsible manner, we are making an extra commitment to clean
technology and sustainable energy. We use the highest standards for our CSR policy and these will be
embedded in our core processes even deeper. We believe that the adjusted strategy will strengthen our
national and international market positions and will provide a sound basis for the future.
Slight increase in net profit in a difficult year
Although 2008 was a very difficult year for the financial sector globally, Rabobank Group realised a 2%
rise in net profit to EUR 2.8 billion. Return on equity was 9.7% and the liquidity position lost none of its
soundness. Amounts due to customers were 10% higher, at EUR 304.2 billion. Also, we kept our good
access to the capital market. Rising credit prices caused interest margins to improve, particularly for
Rabobank International. Our Tier I ratio, the capital ratio that we as a cooperative bank set such great
store by, remained very strong, at 12.7%. Last October and November, rating agencies Standard & Poor’s
and Moody’s, respectively, both reconfirmed our triple A rating, with a ‘stable outlook’.
Robust growth in loan portfolio and capital position remains strong
The loan portfolio was 11% higher in 2008, at EUR 408.6 billion. Growth in corporate lending for the
local Rabobanks was stronger than in 2007. Lending likewise increased at Rabobank International,
FGH Bank, De Lage Landen and Obvion. The food & agri position abroad was extended further. Early in
2008, for example, we increased our stake in the Polish Bank BGZ to a majority interest. This bank fits our
ambition to be a global leader as a food & agri bank.
Influenced by the financial crisis, trading results at Rabobank International declined, as did, project
results at Rabo Real Estate Group. Income from the participation in Eureko was negative. Non-recurring
gains, such as from the sale of Alex and the consolidation of Bank BGZ, made a positive contribution to
earnings. Growing loan losses, which were associated with the worsening economic conditions, caused
impairment losses, at 31 basis points of average lending, to be higher than the long-term average of
21 basis points.
6
Bert Heemskerk (H.), Chairman of the Executive Board of Rabobank Nederland.
Helped by retained earnings and the issue of hybrid capital, equity showed in 2008 a 7% net increase
to EUR 33.5 billion in 2008.
Growth in market shares
In 2008 Rabobank’s market share in the Dutch savings market increased by 2 percentage points to 43%.
The local Rabobanks and Obvion succeeded in strengthening their share of the contracting mortgages
market from 28% to 30%. Thanks to robust growth in lending to Dutch enterprises, Rabobank strengthened
its position in the corporate market further. Our market share in the small and medium-sized enterprises
sector increased by 1 percentage point to 39%. De Lage Landen saw a further increase in the volume
of its leasing activities. Rabo Real Estate Group sold fewer owner-occupied houses than in 2007, but the
real estate financings and the real estate assets under management were both higher. At Group level
however, assets under management decreased as a result of the negative returns on stocks. The demand
for Robeco’s traditional investment products declined. Our Switzerland-based sustainable private bank
Sarasin realised a record inflow of assets.
The cooperative is there for its clients
The value of our cooperative bank manifested itself clearly in 2008. In these tumultuous times, Rabobank
has shown itself to be an extremely stable factor in the banking sector. As a cooperative, we serve the
interests of our members and clients with our explicit focus on the long term. To us, customer satisfaction
is an important guiding principle. Under the Rabobank 2010 renewal programme, the local Rabobanks
made the first steps towards a better, and modern customer service. I am pleased to see that, in 2008,
Rabobank continued to be among the top 3 of customer-friendliest enterprises and also had the best
public image among the Dutch banks. Clients likewise indicated their satisfaction with the services of
our subsidiaries, such as De Lage Landen.
Social engagement and responsibility
As a cooperative bank, Rabobank uses clear sustainability and social responsibility criteria for enterprises
we finance. The end of 2008 marked the tenth anniversary of our Ethics Committee, which advises on
social and moral issues.
The expansion of our sustainable investment activities included the acquisition of a stake in Econcern.
Robeco likewise positioned itself more emphatically as a sustainable investor. We have started a dialogue
with stakeholders on CSR issues and have joined what is known as the Equator principles and the Round
Table on Sustainable Palm Oil, among others.
7
Chairman’s foreword
Through the Rabobank Foundation, we continued our promotion of cooperatives and microfinance
in a number of developing countries in 2008. Rabo Development has built up interests in foreign
partner banks, acquiring a 40% interest in the Paraguayan Banco Regional and a 35% interest in
Banque Populaire du Rwanda in 2008. Also, the local Rabobanks again distributed profits, in the form
of cooperative dividend, for the benefit of people and society.
Economic recovery possibly not until 2010
In 2009, virtually all western economies will have to cope with a recession, and many emerging markets
will see a slowdown. An economic downturn occurring in so many countries simultaneously must lead
to a fall in international trade. It is anticipated that the impact of the oil price shock in 2008 will in 2009
be followed by the consequences of the continuing state of unrest in financial markets. Of course, all
this will not leave the open economy of the Netherlands unaffected. Although the Netherlands had a
relatively good starting position when the recession set in - a high gross domestic product and a low
unemployment rate – this bright picture suddenly, darkened during the fourth quarter of 2008. It has
since become evident that, with a rising unemployment rate in the offing, the Netherlands, too, is going
through a recession. It is difficult to predict how deep this recession is going to be and how long it will
last. Much will depend on recovery in the financial markets. If these show an upswing, the world
economy could begin to slowly recover in 2010. And then the Dutch economy too, driven by growing
exports, could find the way up again.
Effects on Rabobank Group in 2009
There is no doubt that in 2009, Rabobank Group will feel the consequences of the unfavourable economic
climate in the Netherlands and the sombre prospects for the world economy. Our solvency and liquidity
are expected to remain strong. In the Netherlands, the competition for savings is likely to continue.
The recession will impact our growth in lending and will result in impairment losses that maybe above
our long-term average. In these exceptional circumstances, cooperative banking demands extra care in
balancing risk against return. It is necessary for us to maintain our robust capital position if we wish to
keep on serving our clients well, also in the long term. In 2009, we shall continue to fulfil our role as a
socially committed bank that operates responsibly.
Bert Heemskerk, Chairman of the Executive Board of Rabobank Nederland
8
Strategic Framework
Rabobank Group’s course into the future has been plotted in its Strategic Framework
2005-2010. The shift in the Dutch banking landscape, which set in last year, and
the turbulent developments in the international financial markets now call for
adjustments to this framework. Accordingly, at the end of 2008, proposals for a
revised Strategic Framework covering the period 2009-2012 were brought up for
discussion within the organisation. Under these proposals, the principles will be
tightened and refocused in several areas.
Strategic principles
Cooperative identity
In order to ensure its distinguishing cooperative identity, Rabobank, as a large, independent bank, aims
to play a part in the European process of consolidation that is expected for the future. To Rabobank as a
cooperative, the client’s interest is a guiding principle, and its structure and way of working are focused
accordingly. Through their influence and control, members enforce discipline on the cooperative.
Austere management and efficiency are integral elements of the bank’s cooperative character. Its service
provision is oriented for long-term continuity.
Dutch all-finance service provider
As an all-finance service provider, Rabobank Group offers a comprehensive package of financial
products and services. The diversification within the Group benefits its financial stability. Its broad range
of knowledge and expertise results in innovation and synergy benefits. Market leadership remains
important to Rabobank Group, but not at the expense of unhealthy margins, for it must never lose sight
of its cooperative mandate.
Global food & agri bank
International growth is necessary because opportunities for growth in the domestic market are set to
gradually level out. Moreover, food & agri is an attractive niche because of Rabobank’s global knowledge
leadership, which it owes to its agricultural roots. In addition, Rabobank Group aims to be a global leader
in sustainable energy and clean technology, partly in order to ensure sustainable economic development.
High credit rating
Under the present economic conditions a high credit rating is even more important. Thanks to its triple
A status, Rabobank has an edge in terms of access to financing at relatively favourable rates, particularly
in difficult times. A robust balance sheet, stable profit growth and a high Tier I ratio are prerequisites for
it to be able to sustain this exceptional position.
Social responsibility
As a cooperative, Rabobank feels a great social responsibility for the global promotion of sustainable
economic development. It ranks among the top 3 of the world’s most sustainable banks. CSR policy
within Rabobank Group, including its core banking processes, must meet the highest possible standards.
9
Strategic Framework
Strategy adjustment
At the end of 2008 and in connection with the change in circumstances, adjustment proposals for a
revised Strategic Framework covering the period 2009-2012 were brought up for discussion within
Rabobank Group. These have yet to be finalised by the Central Delegates Assembly.
Stronger focus on funding
As a result of the change in market conditions, Rabobank Group is putting even greater emphasis on
sound balance sheet ratios. Growth in lending largely depends on growth in amounts due to customers.
It is important that both the local Rabobanks and Rabobank International provide for a significant part
of their own funding. Expansion of the activities of subsidiaries will be aligned with the volume of
funding available at Rabobank Group.
Greater focus on the corporate market
In the Netherlands, Rabobank aims to be the largest and most important bank for corporate enterprises.
A stronger position in the corporate market offers private banks additional opportunities to the
‘entrepreneur in private’ as well. Further growth is likewise sought in the private-banking segment
through differentiated customer service, collaboration with subsidiaries and improved quality of advice.
Implementation of Rabobank 2010
Rabobank wishes to develop further as a cooperative. Its primary target is to help clients achieve their
aspirations and is indeed its license to operate. The Rabobank 2010 programme will enable local
Rabobanks to offer an optimum response to the changing clients’ wishes. At the same time, the
programme introduces an optimised servicing model and produces cost reductions from standardisation.
In order to maintain their market leadership, the local Rabobanks must operate at competitive rates.
International: focus on food & agri
Rabobank International will focus more on Rabobank Group’s core activities. In the Netherlands, this
means supporting the ambition to be the largest and most important corporate bank. Abroad, Rabobank
International is to focus more on food & agri. In addition, Rabobank International will more strongly
manifest itself in the areas of sustainable energy and clean technology. The business entity Global
Financial Markets will confine itself to client-related activities and liquidity management; other activities
will be phased out. Rabo Development will gradually increase the number of minority interests in
partner banks having a food & agri focus in developing countries. Abroad, the Rabobank Foundation
will focus on countries where Rabobank International and/or Rabo Development operate.
Sharper focus among subsidiaries
The subsidiaries likewise will focus more on supporting the realisation of Rabobank Group’s core
objectives, i.e. all-finance market leadership in the domestic market and building up a distinct position
as the world’s pre-eminent food & agri bank. Other important main functions of the subsidiaries and
participations is continuing to be the leveraging of specialisations and achieving sound financial returns.
Strategic and financial core objectives
The strategic core objectives are:
- to achieve all-finance market leadership in the Netherlands;
- to strengthen our position as the leading international food & agri bank;
- further growth of, and greater synergies with, our subsidiaries.
A continued, high credit rating demands an adequate Tier I ratio and a stable growth in profits.
Accordingly, Rabobank Group has formulated the following financial objectives:
- Tier I ratio of at least 12.5%;
- return on equity of at least 10%;
- 10% net profit growth.
Because the Basel II regulations entered into force on 1 January, 2008, the minimum for the Tier I ratio has
been raised from 10.0% to 12.5%. The shift of activities within Rabobank International towards activities
with a lower risk profile has caused us to reduce the expected annual net profit growth from 12% to 10%.
10
Financial developments
in Rabobank Group
Handsome result in turbulent times
Financial targets
- Tier I ratio at 12.7%
- Return on equity 9.7%
- Net profit up 2%
Balance sheet
- Loan portfolio up 11% to EUR 408.6 billion
- Amounts due to customers up 10% to EUR 304.2 billion
- Equity up 7% to EUR 33.5 billion
Net profit EUR 2.8 billion
- Efficiency ratio improved by 4.2 percentage points to 65.3%
- Impairment losses at 31 basis points and above long-term average
- RAROC 12.5%
Despite all the turbulence in the financial markets, Rabobank Group’s Tier I ratio of
12.7% still outstripped the desired high level of 12.5%. Return on equity was 9.7%
and Rabobank Group realised a 2% increase in net profit. Although the bank failed
to achieve its targeted net profit growth, this still is a strong performance, given the
conditions in the market. The growth in corporate lending in the Netherlands was an
important factor in the 11% increase, to EUR 408.6 billion, in the private loan portfolio.
There was a strong, 10% growth in amounts due to customers, to EUR 304.2 billion.
The general choice for security in turbulent times yielded many new clients and a
lot of new funds.
Due mainly to the higher interest result, income was 6% higher, at EUR 11.7 billion.
Because of the stronger focus on cost reduction, operating expenses were 1% lower
at EUR 7.6 billion. The strong performance of Rabobank Pensioenfonds resulted in
lower pension charges. Thanks to these developments, the efficiency ratio improved
by 4.2 percentage points to 65.3%. All told, Rabobank Group realised a net profit of
EUR 2.8 billion, with RAROC at 12.5%.
Financial targets
Rabobank Group uses three financial targets: Tier I ratio, return on equity and net profit growth. The Tier I
ratio, i.e. the ratio between core capital and total risk-weighted assets, was 12.7% (10.7%⁵) at year-end
2008, exceeding the desired level of 12.5%. This increase was related to the introduction of Basel II.
The return on equity, i.e. net profit expressed as a percentage of core capital, was 9.7% (10.2%). Net profit
for 2008 was 2% (15%) higher, which is below the target.
5) For pages 1 to 51, the numbers in brackets ( ) are comparative figures. For profit and loss data, they are the figures for 2007; balance sheet
data are the figures at 31 December 2007. The comparative figures have been restated as and when new knowledge became available.
11
Financial developments in Rabobank Group
Balance sheet
General
Given the amendments to IAS 39 and IFRS 7 were applied in 2008, Rabobank Group decided to reclassify
a portion of its assets worth EUR 12.0 billion to loans to customers and due from other banks. To ensure
a correct view of the various trends, the comparative figures at year-end 2007 were restated in our
reports by taking this reclassification into account. For comparative and analysis purposes, therefore,
the year-end 2007 figure for loans to customers is EUR 385.7 billion, rather than EUR 373.0 billion.
Lending by sector
450
Food & agri
TIS
Private individuals
350
Lending by activity
year-end 2008
400
Wholesale banking and
international retail banking
Leasing
Real estate
Other
300
250
200
150
100
65%
25%
5%
4%
1%
50
0
2004 2005 2006 2007 2008
Higher loan portfolio volume, partly due to increased corporate loan portfolio
Despite the unfavourable economic conditions during the year under review, the balance sheet item
‘loans to customers’ increased by 11% to EUR 426.3 (385.7) billion, the greater part by far of which
concerned the private loan portfolio.
The growth in corporate lending in both domestic retail banking and at Rabobank International was
an important contributor to the 11% growth of the private loan portfolio, to EUR 408.6 (368.7) billion.
Of the private sector loan portfolio, 47% consists of loans to private individuals, 36% of loans to the
trade, industry and services sector (TIS) and 17% of loans to the food & agri sector. Due to the growth of
the mortgage portfolio in the Netherlands, the volume of loans to private individuals increased by 8% to
EUR 194.0 (180.1) billion. Virtually all of this part of the portfolio consists of mortgages, the remainder
being consumer credits. The loan portfolio to the trade, industry and services sector (TIS) increased by
13% to EUR 146.3 (129.2) billion. The loans to the food & agri sector were 15% higher, at EUR 68.3 (59.4)
billion. The greater part of of the portfolio concerned the primary agricultural sector. The growth in
loans to the meat sector contributed to the increase in lending to the primary agricultural sector by 9%
to EUR 43.8 (40.1) billion.
Of the private sector loan portfolio, 73% is from the Netherlands, 11% from Europe outside the
Netherlands, 12% from America, 3% from Australia and New Zealand and 1% from other countries.
Loan portfolio TIS
by industry at year-end 2008
Loan portfolio food & agri
by industry at year-end 2008
Real estate
20%
Financial institutions
excluding banks
19%
Wholesale sector
10%
Industry
7%
Building
6%
Transport and storage
6%
Non-food retail
4%
Health care
3%
Corporate services
3%
Information and communication 3%
Art and recreation
1%
Utilities
1%
Other
17%
Animal protein
Dairy
Grain and oil seeds
Fruit and vegetables
Food retail
Food and agri inputs
Flowers
Beverages
Miscellaneous crops
Sugar
Other
12
19%
17%
13%
12%
7%
7%
6%
4%
3%
3%
9%
Breakdown of amounts
due to customers
300
Other amounts due to
customers
Repurchase transactions
Corporate time deposits
Current accounts/
settlement accounts
Savings
150
Breakdown of amounts due
to customers
at year-end 2008
250
200
58%
37%
Asset management & investment 5%
100
50
0
2004 2005 2006 2007 2008
Increase in time deposits contributed to growth in amounts due to customers
The strong growth in the amounts due to customers demonstrates that Rabobank Group is considered
a safe haven in these turbulent times. In 2008, the amounts due to customers increased by 10% to
EUR 304.2 (276.6) billion. Savings, i.e. the funds entrusted by private individuals, are the major category
within the amounts due to customers and increased by 13% to EUR 114.7 (101.2) billion. Besides savings,
current accounts likewise contributed to the growth in the amounts due to customers.
Growth in savings mainly at local Rabobanks
Breakdown of savings
120
Other
Roparco
Fixed-time deposits
Savings accounts
Telesavings
Internet savings
80
100
60
40
20
0
2004 2005 2006 2007 2008
The secret of Rabobank
Foreign cooperative banks tend to envy ‘the
secret of Rabobank’. Supervisory authorities,
rating agencies and investors focus, in their
assessments of Rabobank, on the Group as a
whole, i.e. on a consolidated basis. Associated
banks must do without the advantages of this
consolidated testing. Rabobank Group’s unique
character is in its entities’ interdependence, both
financially and in terms of checks and balances.
For example, the local Rabobanks have influence
and control in Rabobank Nederland via Delegates
Assemblies, Central Delegates Assemblies and
the General Meeting. In turn, Rabobank
Nederland supervises, on behalf of the collective
of local Rabobanks and on behalf of the financial
authorities, the individual local Rabobanks and
steers the Group as a whole. Ever since its
foundation, this has resulted in sound balance
sheet ratios that reaffirm the secret of Rabobank
year after year.
13
Of all the savings, 89% is entrusted to the local
Rabobanks. The higher interest rate for time
deposits caused many private individuals to opt
for this savings product. As a result, the volume of
the fixed-term deposits increased by 66% to EUR
43.1 (25.9) billion. At Roparco, Robeco’s savings
bank, the volume of savings increased by 10% to
5.4 (4.9) EUR billion. The sale of Alex resulted in a
EUR 0.6 billion decrease in savings. Thanks to the
large number of new internet savings clients, the
Equity
35
Other minority interests
Hybrid capital
Rabobank Member Certificates
Retained earnings and
other reserves
25
savings volume for the foreign internet banks in
Australia, Belgium, Ireland and New Zealand rose
by 30% to EUR 6.6 (5.1) billion.
30
20
15
Equity
10
As a result of retained earnings, the issue of Capital
Securities and the increase in minority interests,
equity was 7% higher, at EUR 33.5 (31.4) billion.
Rabobank Group issued hybrid capital in the form
of Capital Securities in Pounds Sterling, Israeli
shekels, US dollars and Swiss francs. The
consolidation of Bank BGZ contributed to the
increase in minority interests.
At year-end, 60% of equity consisted of retained
earnings and other reserves, 19% of Rabobank
Member Certificates, 10% of hybrid capital and
11% of other minority interests.
5
0
2004 2005 2006 2007 2008
Capital requirements
25
at year-end 2008
20
Other
Operational and business risk
Interest rate and market risk
Credit and transfer risk
10
15
5
Basel I
Basel II
Economic capital
0
External capital requirement
At year-end 2008, the external capital requirement
was EUR 19.0 (21.3) billion, 91% of which is
associated with credit and transfer risk. In addition,
7% is held for operational risk and 2% for market
risk. The introduction of Basel II was an important
factor in the lower external capital requirement. The low risk profile of the loan portfolio, combined with
the available collateral, was the main cause.
Economic capital as an internal capital requirement
RAROC
2008
Wholesale banking and international retail banking
Leasing
Real estate
Other activities
Total
2007
17.7%
0.5%
17.3%
6.9%
22.3%
24.2%
12.5%
14.4%
Economic capital
(in billions of euros)
31-Dec-08
31-Dec-07
8.7
6.2
0.8
1.1
1.7
4.1
22.3
8.9
4.7
0.6
1.1
1.4
3.8
20.5
Apart from its external capital requirement, Rabobank Group calculates an internal capital requirement
based on its economic capital framework. This framework is used for a more complete insight in all the
risks and to enable better balancing of risk and return. Within the economic capital, the bank, as befits
its triple A-status, presupposes a higher level of confidence (99.99%) than is required for Basel II (99.90%).
Furthermore, an internal capital requirement is established for a broader range of risks. Mainly as a
Economic capital
by Group entity at year-end 2008
Economic capital
by risk type at year-end 2008
Real estate
Leasing
Asset management and
investment
Other activities
Credit and transfer risk
Operational and business risk
Interest rate and market risk
Other risks
14
39%
28%
7%
5%
3%
18%
57%
17%
16%
10%
result of the growth in lending, economic capital increased to EUR 22.3 (20.5) billion at year-end 2008.
This internal capital requirement is far lower than the available qualifying capital of EUR 30.9 (29.2) billion.
This sizeable buffer underlines Rabobank Group’s financial solidity.
Financial results
Results (in millions of euros)
2008
2007
Change
8,517
2,889
246
11,652
4,290
2,796
525
7,611
4,041
1,189
2,852
98
2,754
6,771
2,857
1,394
11,022
4,400
2,779
484
7,663
3,359
266
3,093
397
2,696
26%
1%
-82%
6%
-3%
1%
8%
-1%
20%
31
8
65.3%
9.7%
12.5%
69.5%
10.2%
14.4%
31-Dec-08
31-Dec-07
612.1
408.6
304.2
570.5
368.7
276.6
7%
11%
10%
19.0
22.3
21.3
20.5
-11%
9%
BIS ratio
Tier I ratio
13.0%
12.7%
10.9%
10.7%
60,568
54,737
Interest
Fees and commission
Other income
Total income
Staff costs
Other administrative expenses
Depreciation and amortisation
Operating expenses
Gross result
Value adjustments
Operating profit before taxation
Taxation
Net profit
Impairment losses (in basis points)
-8%
-75%
2%
Ratios
Efficiency ratio
Return on equity
RAROC
Balance sheet (in billions of euros)
Total assets
Due to customers
Capital requirements (in billions of euros)
Capital requirement
Economic capital
Capital ratios
11%
Income up 6%
In the year under review, total income increased by 6% to EUR 11,652 (11,022) million, with the rise in
income for the local Rabobanks and the asset management activities as contributors. Mainly due to
Rabobank International’s higher interest income, this result increased by 26% to EUR 8,517 (6,771) million.
Rabobank International’s interest income was higher as a result of growth in lending and higher margins.
In domestic retail banking, the increased competition in the savings market depressed the margin on
the amounts due to customers. Total commission income was 1% higher, at EUR 2,889 (2,857) million.
Other income fell by 82% to EUR 246 (1,394) million. The continuing turbulence in the financial markets
depressed Rabobank International’s trading results. On balance, the fair value changes of assets and
liabilities had a limited impact on earnings. Rabo Real Estate Group’s project results were also lower.
Income from the Eureko participation was negative. The sale of Alex and the consolidation of Bank BGZ
made positive contributions to earnings. In 2007, other income benefited from revenues from the sale
of activities at Sarasin.
15
Operating expenses down 1%
Total operating expenses were 1% lower, at EUR 7,611 (7,663) million, in 2008. Partly as a result of a
reduction of the bonuses, staff costs were 3% lower, at EUR 4,290 (4,400) million. From 2008, Bank BGZ
employees are included in Rabobank Group’s staff count. As a result, staff numbers at Rabobank Group
increased by 11% to 60,568 (54,737) FTEs. Staff numbers at the local Rabobanks and Robeco declined.
Other administrative expenses were 1% higher, at EUR 2,796 (2,779) million. Depreciation charges were
8% higher, at EUR 525 (484) million, partly because of higher depreciations of proprietary software and
increased amortisation of intangible assets.
Impairment losses at 31 basis points
Mainly as a result of the increase in the item ‘value adjustments’ at Rabobank International, this item
rose to EUR 1,189 (266) million in the year under review. This corresponds to 31 basis points of average
lending and is higher than the long-term average of 21 basis points.
Income tax at 3%
Income tax recognised in 2008 amounted to EUR 98 (397) million, which is equivalent to an effective
tax rate of 3.4% (12.8%). The results from equity investments such as those in the Gilde funds and the
equity investments in Rabo Private Equity, which are exempt from taxation, contributed to the lower
effective tax rate.
Net profit up 2%
Thanks in part to the performance in domestic retail banking, Rabobank Group realised a net profit of
EUR 2,754 (2,696) million. After deduction of minority interests and payments on Rabobank Member
Certificates, Capital Securities and Trust Preferred Securities III to VI, the sum remaining was EUR 2,089
(1,971) million.
RAROC
RAROC is the acronym that stands for Risk Adjusted Return On Capital, i.e. the risk-weighted return on
capital. RAROC supports the decision-making process by enabling a consistent assessment of expected
returns against risks present. In addition, RAROC is used for pricing on a transactional level as well as in
the loan authorisation process. In 2008, Rabobank Group realised a RAROC after tax of 12.5% (14.4%)⁶.
6) The RAROC has been calculated by relating net profit to average economic capital for the year.
16
www.rabobank.nl, www.obvion.nl, www.bizner.nl
Strong performance in turbulent market conditions
nk Group’s
08
banking
Private loan portfolio up 10% to EUR 268.3 billion
- Mortgages market share increased to 30%
- SME market share increased to 39%
- Food & agri market share stable at 84%
Amounts due to customers increased by 16% to EUR 175.6 billion
- Savings market share increased to 43%
Net profit up 13% to EUR 1.6 billion
- Efficiency ratio improved by 1.7 percentage points to 63.2%
- Impairment losses at 8 basis points and below long-term average
- RAROC 17.7%
59%
Share in Rabobank Group’s
net profit for 2008
in %
59%
Strategy of Rabobank Group
Contribution to Group strategy
All-finance market leadership in the Netherlands
- To strengthen our market leadership in all-finance market sections
- To strengthen our position in large cities
- Implementation of Rabobank 2010 programme
- To maintain food & agri market leadership in the Netherlands
Despite the great dynamics in the financial sector in 2008, the domestic retail
banking business - the local Rabobanks, Obvion and Bizner – showed a strong
performance. A stable market party, Rabobank welcomed many new clients.
Services were expanded further.
Driven by corporate lending, the loan portfolio grew by 10% to EUR 268.3 billion.
The SME market share increased to 39%. Rabobank Group strengthened its position
as the market leader in a contracting mortgages market with a market share of 30%.
Rabobank’s stability gave rise to a large inflow of funds, boosting its market share
in the savings market from 41% to 43%. Our primary focus on customer value was
rewarded, as it was a year ago, by high customer satisfaction among both private
individuals, private-banking clients and corporate clients. The Rabobank 2010
programme, which focuses on improvements in customer service through
differentiated distribution channels, was optimised further and was continued
energetically. Net profit from domestic retail banking was 13% higher, at EUR 1.6
billion. Because income growth outstripped operating expenses, the efficiency ratio
improved by 1.7 percentage points to 63.2%.
17
Rabobank 2010 programme to the next level
Our virtual era makes innovation and improvement in customer service possible at lower costs. To achieve
this, Rabobank developed its Rabobank 2010 programme. Process optimisation is an important element
of the programme. In 2007, a pilot was held at five local Rabobanks together with Rabobank Nederland,
and the programme was tested further at nine pilot banks in 2008. It is now available to other local
Rabobanks and meanwhile the programme has been launched by fourteen banks.
Strengthened market leadership in the Netherlands
The financial crisis and government interventions caused great changes in the Dutch banking landscape
in 2008. Due in part to its stability, Rabobank Group succeeded in expanding its leading market positions
in a number of areas including the savings market, which showed a 6% growth as a result of the negative
mood on the stock exchange. Despite the increased competition, Rabobank Group’s share of the savings
market, including Roparco, rose by 2 percentage points to 43%. The local Rabobanks saw a significant
inflow of new clients and savings.
Although the total Dutch mortgages market showed a 15% decline in 2008, Rabobank’s market share in
domestic retail banking increased to 30% (28%). Due in part to the success of the new Rabo Opbouw
Hypotheek, the market share of the local Rabobanks increased to 23.6% (22.4%). Although Obvion’s
market share declined during the final months of 2008, its market share for the year was 0.7 percentage
points higher, at 6.0%. Rabobank was the market leader in all SME sectors and its share of the total
SME market increased to 39% (38%). In the market for start-ups, its market share increased to 39% (38%).
In the agricultural sector, Rabobank remained the clear market leader, with a market share of 84% (84%).
The strategy of recent years to focus on young and larger agricultural enterprises resulted in larger
market shares among these enterprises in 2008. Rabobank has traditionally had a strong position in
the non-urban areas. However, the policy for growth in large cities, which was introduced in 2007,
has resulted in an improved market position in urban areas, with the market share in the SME sector
growing to 29% (27%).
Geothermal energy
in horticulture
Like most sectors of the Dutch economy,
horticulture is having a hard time. Due to high
gas prices and low product prices, many
horticulturalists are having difficulty to stay
afloat. Traditionally, Rabobank has supported the
sector in the profitable production of highquality vegetables and flowers. However, as a
sustainable bank, it would like to see this done in
energy efficient greenhouses. By investing in
these as well, the horticultural sector could free
itself from the fetters of fossil fuels. For example,
Rabobank, together with the governmental
authorities, is promoting the use of geothermal
energy - by pumping hot water to the surface - in
horticulture. Geothermal drilling could bring
great benefits to horticulture but it is very
expensive. Especially the potential cost of dry
wells are too high for any individual horticultural
business to bear, and Rabobank is looking into
possibilities that would help hedge the risk of
unsuccessful drilling.
18
Market shares
in %
45
2004
2005
2006
2007
2008
35
40
30
25
20
15
10
5
0
Mortgages
Savings
SME
Customer satisfaction again higher
Delivering customer value is a central value to Rabobank as a cooperative bank. High-quality services
must result in satisfied clients and this is what Rabobank again achieved in 2008. A survey by Blauw
Research shows that satisfaction with Rabobank is highest among private clients, with an average
score of 7.7 (7.5). This number 1 position is due to high scores for reliability, expertise, reputation and
sympathy. Internet users, through both onlineawards.nl and websitevanhetjaar.nl, voted www.rabobank.nl
as the best and most popular financial site of 2008. In a survey by the business periodical Incompany,
Rabobank again had a very high score for customer satisfaction, with Rabobank Private Banking in a
stable second place.
The higher-than-average customer satisfaction with Rabobank among SME clients is a clear
improvement on 2007. Reasons include expertise, faultless handling of banking transactions and ease of
use. According to Incompany, Rabobank continued to be the most favoured business partner in 2008.
Nearer to the client through multichannel services
Clients increasingly use virtual channels such as the Internet and the telephone for banking services.
In the autumn of 2008, Rabobank passed the milestone of 3 million active Internet clients. Rabobank
invests enthusiastically in furthering the development of Internet banking. Customer service through
virtual channels is an important element in the Rabobank 2010 programme. In 2008, Rabo Mobiel
launched the new Rabo SMS Betalen service. Using a simple process, clients can transfer amounts up to
EUR 150 to each other via their cell phones, regardless of which banks or telecom providers are involved.
Early in 2009, consumers voted Rabo SMS Betalen ‘Product of the Year’ for 2009 in the Services category.
Besides via the Internet and by telephone, Rabobank can also be accessed through the TV remote
control. Rabobank was the first bank in the Netherlands to offer TV banking via innovative platforms
such as Windows Media Center® and Wii®. Rabobank is conducting a number of experiments around
cell-phone video calls to see how this new phenomenon could be utilised properly and in a way that
respects the client’s privacy, from the banking hall, the offices or via the website.
Down-to-earth private banking
Rabobank offers private banking along cooperative lines by being near to the client, showing engagement
and emanating confidence. This approach, combined with dynamic market conditions, resulted in a
significant increase in both client numbers and amounts due to customers in 2008. The ‘Private banking
met beide benen op the grond’ asset campaign (‘Down-to-earth private banking’) was launched with
the aim of strengthening Rabobank’s positioning as a stable private bank. The campaign shows that
Rabobank is always ready for its clients and provides them with sound asset advice.
Increase in SME clients; successful services and campaigns
In 2008, Rabobank showed a strong performance in the market for the small and medium-sized
enterprises sector. The dynamic market conditions resulted in an increase in both client numbers and
amounts due to customers. The Rabo WelkomService® was developed especially for new corporate
clients. This service offers an orderly and simple switchover path, with personal account managers
overseeing the entire process for the client. In order to give corporate clients a quick overview of their
financial performance against that of industry peers, ‘Uw Cijfers en Trends®’ was introduced. This tool is
an extension of the familiar Rabobank Figures and Trends, which has been presenting up-to-date
industry knowledge for more than 30 years.
19
Loan portfolio growth from strong increase in corporate loans
In 2008, the domestic retail banking business achieved 10% growth of the private loan portfolio.
Total lending amounted to EUR 268.3 (244.1) billion, of which 69% was to private individuals, 21% to
the trade, industry and services sector and 10% to
the food & agri sector. Loans to private individuals,
300
virtually all of which are mortgages, increased by
Lending by sector
250
7% to EUR 184.5 (172.1) billion, although growth
200
Food & agri
was lower than in 2007 due to the cooling
150
TIS
mortgages market. Lending in 2008 was driven by
100
Private individuals
corporate financing. The increase in the number of
50
clients in the small and medium-sized enterprises
0
sector, combined with higher demand, caused
lending to the trade, industry and services sector
2004 2005 2006 2007 2008
(TIS) to grow by 21% to EUR 55.7 (46.1) billion.
Lending to the food & agri sector was 9% higher,
at EUR 28.1 (25.8) billion, with the primary agricultural sector accounting for the greater part. These loans
increased by 9% to EUR 23.5 (21.6) billion, with the fruit and vegetables sector and the dairy and animal
protein sectors as the main contributors.
Strong increase in amounts due to customers
A large inflow of new clients and assets in the year under review resulted in strong growth of the
amounts due to customers, by 16% to EUR 175.6 (150.8) billion. The growth was mainly in time deposits
for both private individuals and businesses. The increase in the amounts due to customers enabled the
local Rabobanks to finance their growth in lending completely on their own in 2008.
Amounts due to customers
180
176
172
168
164
160
156
152
148
144
140
2007
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2008
Financial results
Income up 8%
In 2008, total income was 8% higher, at EUR 6,401 (5,908) million, mainly due to growth in interest
income. The rise in lending and the amounts due to customers resulted in an 11% increase in interest
income, to EUR 5,005 (4,504) million. The margins on lending were higher because of higher risk costs
and higher funding costs, whereas the margins on amounts due to customers were depressed by
stronger competition in the savings market. Securities commission income was lower as a result of the
adverse stock market conditions. Commission income from insurances was likewise lower than in 2007.
Commission income from treasury services and payment services was higher. Total commission income
for 2008 showed a net decrease of 2%, to EUR 1,354 (1,379) million.
Operating expenses up 5%
Total operating expenses were 5% higher in the year under review, at EUR 4,044 (3,835) million. Staff costs
were 9% higher, at EUR 2,264 (2,072) million, as a result of higher cost of contractors, salary increases and
higher social insurance contributions. Staffing level in the domestic retail banking business declined by
1% to 28,953 (29,304) FTEs. Other administrative expenses were 1% higher, at EUR 1,639 (1,618) million.
20
The item ‘value adjustments’ increased by 37% in 2008 to EUR 199 (145) million. Due to the worsened
economic conditions, the loan losses were higher, particularly in the corporate loan portfolio. As a result,
the impairment losses were 8 (6) basis points of average lending, against the long-term average of 11
basis points.
Capital requirement and RAROC
In the calculation of capital requirement under Basel II, the risks associated with loans to private
individuals and corporate loans are estimated using the bank’s own risk models and taking account of
collateral. In 2008, the capital requirement was reduced by 48% to EUR 6.4 (12.2) billion, mainly because
of the implementation of the new rules for solvency, reflecting Rabobank’s low risk profile. The
economic capital, i.e. the internal capital requirement, amounted to EUR 8.7 (8.9) billion. In 2008,
domestic retail banking achieved a Risk Adjusted Return On Capital (RAROC) of 17.7% (17.3%).
Interest
Fees and commission
Other income
Total income
Staff costs
Operating expenses
Gross result
Value adjustments
Taxation
Net profit
2008
2007
Change
5,005
1,354
42
6,401
2,264
1,639
141
4,044
2,357
199
2,158
541
1,617
4,504
1,379
25
5,908
2,072
1,618
145
3,835
2,073
145
1,928
495
1,433
11%
-2%
68%
8%
9%
1%
-3%
5%
14%
37%
12%
9%
13%
8
6
63.2%
17.7%
64.9%
17.3%
31-Dec-08
31-Dec-07
309.7
268.3
175.6
277.7
244.1
150.8
12%
10%
16%
6.4
8.7
12.2
8.9
-48%
-2%
28,953
29,304
-1%
Ratios
Efficiency ratio
RAROC
Total assets
Due to customers
Capital requirement
Economic capital
21
Wholesale banking and international
retail banking
www.rabobank.com, www.bgz.pl, www.accbank.ie
nk Group’s
08
Net profit down due to financial crisis
ng and
ail banking
Private loan portfolio up 11% to EUR 100.7 billion
Savings at the Direct Banking activities up 30% to EUR 6.6 billion
Net profit down 92% to EUR 27 million
- Efficiency ratio 0.7 percentage points higher, at 85.5%
- Impairment losses at 93 basis points; higher than the
long-term average
- RAROC 0.5%
1%
net profit for 2008
in %
1%
-
-
-
-
Serving the top end of the corporate market in the Netherlands
Support to internationally active Dutch clients
Product supplier through local Rabobanks
Providing risk-bearing capital
- Broaden the product range and make knowledge available to food & agri clients
- Expansion of retail banking network in important food & agri regions
-Further development of sustainable energy and clean technology as product
specialisations
Partly due to the increase in lending in the international retail banking business,
the loan portfolio increased by 11% in 2008, to EUR 100.7 billion. The phasing-out of
activities in the financial markets resulted in a lower increase of total assets. Savings
at the Direct Banking activities were 30% higher, at EUR 6.6 billion. The volume of
international retail banking activities increased because we increased our stake in
the Polish Bank BGZ to a 59% majority interest. The financial crisis caused wholesale
banking and international retail banking’s net profit decreased from EUR 334 million
to EUR 27 million. Particularly, results from Global Financial Markets and the
impairment losses suffered negative effects. Income from the international retail
banking activities were 34% higher, at EUR 864 million.
Turbulent market
In 2008, the financial crisis went global and began to affect the real economy. This had a negative effect,
particularly on the results from the Global Financial Markets business entity and on the impairment
losses. Credit exposure related activities, especially, came under pressure, but the money market and the
fixed-income securities units showed strong results. The margins were higher because of a higher risk
premium charges. Regular lending, saw an increase in the number of clients with payment difficulties
as well, particularly in the Irish market.
22
Expansion of international retail banking
Early in 2008, Rabobank International increased its 46% stake in the Polish Bank BGZ to a majority
interest of 59%. This bank employs more than 5,000 staff and serves its Polish clients from approximately
250 branch offices. As a result of this majority interest, Bank BGZ’s position as a retail bank for private
individuals, the small and medium-sized enterprises sector and the food & agri clients can be
strengthened further. Together with Rabobank Polska, Bank BGZ can now work on the further
strengthening of its market position as one of the most important and largest players in the Polish
food & agri sector. Its network will be greatly expanded in coming years. The Polish state holds a
minority interest in Bank BGZ and was planning to sell its shares on the stock exchange in mid-2008.
It has postponed this in view of market conditions.
Strong performance by Rabobank’s foreign Internet banks
The Direct Banking activities in Belgium, Australia, Ireland and New Zealand delivered a strong
performance despite the turbulence in the market. In these uncertain times, many Belgian savings
clients decided to open an account at Rabobank. Client numbers grew also in Ireland, Australia and
New Zealand, albeit on a more limited scale. At year-end 2008, 293,000 (197,000) clients availed
themselves of the services provided by the four foreign Internet banks. As a result of these activities,
savings increased by 30% to EUR 6.6 (5.1) billion.
Corporate banking: services to internationally active clients expanded
In order to improve its services to internationally active Dutch SME clients, a project was started with
the aim of expanding the services and making them more easily accessible. This involves collaboration
with third parties. For example, Rabobank International started partnerships with Deutsche Bank and
with the Raiffeisen Zentralbank, in Austria, in 2008. Deutsche Bank fulfils the role of processor in cash
management and has opened its network to internationally active Rabobank clients. Raiffeisen
Zentralbank is to ensure improved facilitation of the total international service provision by local
Rabobanks in Central and Eastern European countries. Services to the internationally active Dutch SME
clients has since shown strong growth that is expected to continue in coming years.
Growth in retail portfolio contributes to loan portfolio increase
In the year under review, the private sector loan portfolio increased by 11% to EUR 100.7 (90.5) billion.
This growth is partly from international retail banking. The appreciation of the US dollar was a
contributor, but this was offset by the depreciation of the Australian dollar and the Pound Sterling.
The loan portfolio to private individuals increased by 43%
to EUR 5.5 (3.8) billion. Due in part to the consolidation
Lending by region
at year-end 2008
of Bank BGZ, loans to the food & agri sector were
America
37%
22% higher, at EUR 34.4 (28.1) billion, representing
Europe excluding the
34% of the private loan portfolio. Loans to the
Netherlands
31%
trade, industry and services sector (TIS) increased
Netherlands
16%
by 4% to EUR 60.8 (58.5) billion.
Australia and New Zealand
12%
At year-end 2008, 25% (24%) of the loan portfolio
Asia
4%
was from international retail banking. The volume
of this portfolio increased by 15% to EUR 24.9 (21.6)
billion. In Australia and New Zealand, the volume
100
of retail loans was 5% lower, at EUR 8.4 (8.8) billion,
Lending by sector
90
as a result of the depreciation of these currencies
80
by 17% and 21%, respectively. In Europe, the
Food & agri
70
TIS
volume of loans was 32% higher, at EUR 8.5 (6.5)
60
Private individuals
billion, mainly as a result of the consolidation of
50
Bank BGZ. At ACCBank, in Ireland, the loan
40
portfolio decreased by 5% to EUR 6.2 (6.5) billion.
30
The volume of the American retail portfolio
20
increased by 27% to EUR 7.6 (6.0) billion.
10
0
2004 2005 2006 2007 2008
23
Financial results
Interest
Fees and commission
Other income
Total income
Staff costs
Operating expenses
Gross result
Value adjustments
Taxation
Net profit
2008
2007
Change
3,156
304
-1,463
1,997
909
715
84
1,708
289
786
-497
-524
27
1,832
332
-175
1,989
890
772
53
1,715
274
16
258
-76
334
72%
-8%
93
2
85.5%
0.5%
86.2%
6.9%
31-Dec-08
31-Dec-07
420.2
100.7
399.9
90.5
5%
11%
8.6
6.2
6.1
4.7
41%
32%
15,223
9,957
53%
0%
2%
-7%
58%
0%
5%
-92%
Ratios
Efficiency ratio
RAROC
Total assets
Capital requirement
Economic capital
Mid-State Bank & Trust, an American bank, is consolidated in Rabobank International’s results since May 2007. As a result of the expansion of the
interest in Bank BGZ from 46% to 59%, this bank is consolidated from April 2008.
Income unchanged
Total income was virtually stable in 2008, at EUR 1,997 (1,989) million. Although some units within
Global Financial Markets performed well in the turbulent financial markets, income from this business
entity decreased by EUR 413 million to EUR -145 (268) million. The item ‘other income’, which largely
includes income from Global Financial Markets, fell by EUR 1,288 million to EUR -1,463 (-175) million.
Leveraged Finance was likewise affected by the turbulence, albeit to a lesser degree, and its income was
1% lower. Structured Finance saw a 37% rise in income. Commission income was 8% lower, at EUR 304
(332) million, partly as a result of lower commission income from securities brokerage.
The increase in spreads, the growth in lending in the international retail banking business, and the
increased activities in Corporate Banking all contributed to the 72% rise in interest income, to EUR 3,156
(1,832) million. Income from Corporate Banking was 15% higher. Of total income, 43% (32%) is from
international retail banking. Here, income increased by 34% to EUR 864 (646) million, partly as a result
of the consolidation of Bank BGZ. As a result of worsened economic conditions in Ireland, ACCBank’s
income was lower. The retail banks in Australia and New Zealand performed well.
Operating expenses unchanged
In the year under review, total operating expenses were virtually unchanged from 2007, at EUR 1,708
(1,715) million. Almost all of the growth in staff numbers is due to the consolidation of Bank BGZ. The
number of staff rose by 53% to 15,223 (9,957) FTEs. Partly as a result of a reduction of the bonuses
24
however, staff costs increased by only 2%, to EUR 909 (890) million. The decrease in non-banking
charges as a result of the sale of a few equity investments contributed to the 7% decrease in other
administrative expenses, to EUR 715 (772) million. Depreciation and amortisation charges were 58%
higher, at EUR 84 (53) million, partly because of higher depreciations of proprietary software and
increased amortisation of intangible assets.
Although Rabobank International was not directly affected by the failure of certain American banks in
2008, these events do reflect the unfavourable macroeconomic conditions. The Irish real estate sector
was hit hard in 2008. The financing provided by Rabobank International to this sector had a major
influence on impairment losses. The item ‘value adjustments’ rose by EUR 770 million to EUR 786 (16)
million. This corresponds to 93 basis points of average lending, which is higher than the long-term
average of 47 basis points.
In the calculation of the capital requirement under Basel II, the risks of Rabobank International are
weighted with greater precision. Due to the implementation of new solvability regulations and due to
the increase of the loan portfolio and the effects of the financial crisis, the capital requirement increased
by 41%, to EUR 8.6 (6.1) billion in the year under review. The required economic capital, i.e. the internal
capital requirement, amounted to EUR 6.2 (4.7) billion at year-end 2008. Rabobank International
achieved a Risk Adjusted Return On Capital (RAROC) of 0.5% (6.9%).
Nature and man in balance
The expanse of the Xingu river basin, in Brazil,
is a classic example of biological and natural
diversity. Here, human intervention is the cause
of numerous ecological and social issues. As a
global food & agri bank, Rabobank recognises
that the balance between food production and
nature poses a precarious and difficult challenge.
Against this backdrop, the bank is working with
farmers and Brazilian environmental protection
organisations on the Xingu basin’s restoration.
Financial mechanisms, developed for this
purpose by Rabobank, enable reforestation by
farmers to be financed from the sale of emission
rights created by newly planted trees. In 2008,
a pilot was performed on 32 hectares of land,
divided among eight farmers. In 2009, another
32 hectares will be restocked. If these project
phases prove successful, enterprises could be
involved in this mechanism on a larger scale and
application would also be within reach in other
regions in Brazil where Rabobank International
operates.
Photograph: Fábio Almeida Coelho, Aliança da Terra
25
www.robeco.com, www.sarasin.com, www.schretlen.com
nk Group’s
08
Higher profit; assets under management down due to
adverse stock market conditions nevertheless
Assets under management and held in custody for clients down
21% to EUR 184 billion
- Cash flow EUR 13 billion
- Loss on investments EUR 59 billion
Number of orders handled in the Netherlands up 5% to 4.7 million
- Net profit up 21% to EUR 438 million
- Impairment losses amounted to EUR 42 million
ent
16%
net profit for 2008
in %
Asset management
and investment
16%
-Offering, through various distribution channels, broad access to investment funds
and asset management services to clients of every kind
- Robeco operates in the Dutch savings market
- Offering products in the areas of sustainability and clean technology
The turbulence in the stock exchanges in 2008 also affected Robeco, Sarasin and
Schretlen & Co. The fall in share prices caused a 21% decrease in assets under
management and held in custody, to EUR 184 billion. The total asset inflow was
EUR 13 billion. The gain from the sale of Alex and the strong investment performance
on alternatives investments at Robeco boosted net profit from asset management
activities by 21% to EUR 438 million. Robeco wound down its fixed-income business
in the United States and strengthened both its presence in Asia and its distribution
activities in the Middle East. Sarasin achieved a record inflow of assets, received
several awards for its outstanding investment performance and expanded its
activities in Europe and the Middle East further.
Robeco’s services expanded
In 2008, Robeco expanded its fiduciary-management services to pension funds further. The basis of
Robeco’s fiduciary-management proposition is Corestone, an existing multi-manager selection specialist
in Switzerland that operates independently. This enables Robeco to offer an independent selection
of the best asset managers to pension funds and to provide a link between their assets and their
pension liabilities.
Robeco has drawn up a separate ‘Greater China’ strategy for China, Hong Kong, Taiwan and Singapore,
positioning Hong Kong as a gateway to Asia, where the Asia-Pacific oriented equity funds are managed.
In 2008, it opened a branch office in Singapore. The inflow of assets into Canara Robeco Asset Management,
the joint venture with the Indian Canara Bank that was launched in 2007, gained momentum.
26
Some bright spots in a negative investment year for Robeco clients
In 2008, the value of all equity investments plunged by double-digit percentages. There was some
comfort in the fact that the 54%⁷ drop in Robeco-managed equity portfolios was less than the
benchmark. With a return of -39.3%, the Robeco flagship fund lagged behind the benchmark return of
-37.2%. Investments in Emerging Markets lost more than 50% of their value. Robeco Emerging Markets
Equities dropped by 52.1%, slightly more than the benchmark. Key funds that outperformed the
benchmark included Robeco Hollands Bezit, which dropped by 47.5% versus 50.3% for the AEX index
including dividends, and Robeco Chinese Equities, at -46.5% versus -49.1%. With its flagship funds
Harbor International and Harbor Capital Appreciation, Robeco’s subsidiary Harbor Capital Advisors
outperformed the benchmark by 2.1% and 2.8%, respectively. Early 2008 the managers of the Harbor
International Fund earned one of the Morningstar’s US Fund Manager of the Year Awards. Also the asset
managers of the Harbor Bond Fund earned this award. Although a large majority of fixed-income funds
realised positive returns, only 31% outperformed the benchmark. Rorento’s return was -0.6%, against a
benchmark of 4.9%. The biggest redeeming factor was Robeco Lux-o-rente, whose absolute return of
17.2% represented a 6.2% outperformance of the benchmark.
In alternatives, Sage International achieved a -21.4% absolute return in US dollar terms. Transtrend
delivered very strong results, with a 29.4% absolute return in US dollar terms for the Diversified Trend
Program - Enhanced Risk USD. Robeco Multi Market Bonds likewise showed positive double-digit
returns for 2008.
New growth initiatives at Sarasin
In the year under review, Sarasin expanded its presence in its Swiss home market as well as in other
European countries and the Middle East. Together, Sarasin and AIG Private Bank founded a new bank,
branded ‘bank zweiplus’, for private clients with assets worth up to approximately EUR 300,000.
Sarasin holds a 57.5% interest in this new bank. At year-end, ‘bank zweiplus’ managed assets worth
around EUR 3.9 billion on behalf of more then 250,000 clients.
Sarasin strengthened its position in Germany by obtaining a full banking licence and opening a new
German head office in Frankfurt. It also entered the Spanish market providing its private banking
services out of Madrid and La Coruña and opened a branch in Ireland through its London subsidiary.
In the Middle East, Sarasin obtained licences for banking operations in both Qatar and Bahrain, and a
licence for advisory services in Oman.
Sarasin awarded for investment performance
In 2008, Sarasin was presented with several awards for its outstanding investment performance.
Based on the overall performance of its global range of investment funds, it was awarded the title of
Switzerland’s best asset manager by the EDHEC Business School, in France, and Euro Performance.
In the ‘Elite Report - the top asset managers’, published by the German financial newspaper
Handelsblatt, Sarasin was named one of the best private banks in German-speaking countries for the
sixth consecutive year. At the annual ‘Banker Middle East Awards’ ceremony, in Dubai, Bank SarasinAlpen was awarded the title of ‘Best Private Bank in the Middle East’ for the second time in a row.
Schretlen & Co
Schretlen & Co’s operations were affected by the negative mood on the stock exchanges. Some clients
went so far as to give up investing altogether. The number of clients declined by 2% to 5,978 (6,091).
While customer satisfaction remained high, it fell short of its 2008 level. In a survey held by the business
periodical Incompany, clients rated Schretlen & Co’s services with a score of 7.0 (7.3). Although less
satisfied with the price/quality balance and transparency, clients were highly satisfied with Schretlen
& Co’s expertise.
Decrease in assets under management and held in custody due to adverse stock
market conditions
In 2008 the adverse stock market conditions caused a 21% decline in assets managed and held in
custody for clients to EUR 184 (232) billion. Robeco now manages EUR 110.7 (145.8) billion in assets,
Sarasin EUR 46.9 (50.2) billion and Schretlen & Co EUR 6.8 (8.4) billion.
7) Percentages based on weighted assets; with the exception of alternatives, performance figures include asset management fees.
27
Assets under management
and held in custody for clients
at year-end 2008
Equity
Fixed income
Mixed
Money market
Alternatives
Real estate
Other
36%
33%
10%
8%
7%
4%
2%
Share indexes worldwide dropped by double-digit
percentages, with the AEX index 52% lower, the S&P
500 index in the US 38% lower and the Japanese
NIKKEI 225 index 42% lower. These price falls
resulted in a EUR -59 billion return on investments.
The appreciation of the US dollar and the Swiss franc
had a positive impact on assets of EUR 7 billion.
The total inflow of assets of EUR 13 billion was
mainly realised by Sarasin, whose clients
contributed EUR 9.7 billion. The inflow of assets
from clients of AIG Private Bank into the new ‘bank
zweiplus’ joint enterprise resulted in a cash flow of EUR 1.3 billion. At Robeco the huge inflow of assets
at Harbor Capital Advisors and Transtrend resulted in a positive cash flow. However a few of Robeco’s
traditional investment funds, such as Robeco Lux-o-rente and Robeco Flex-o-rente, showed an outflow
of assets because more clients in the Netherlands chose to invest in time deposits.
Early in 2008, Robeco decided to sell the fixed-income activities of Robeco Investment Management
in the United States (RIM FI USA) to Morgan Stanley Investment Management and Lehman Brothers.
In addition, Rabobank Group sold the online broker Alex. As a result of these disposals, assets under
management and held in custody were EUR 7 billion lower.
More securities orders handled in the Netherlands due to adverse stock market conditions
The unfavourable stock market conditions also affected the number of securities orders. In the
Netherlands, Rabobank Group handled 4.7 million orders for securities and in-house funds, compared
with 4.5 million in 2007, excluding the 3.7 million orders Alex handled. The number of orders handled
by the local Rabobanks decreased by 14%. For Rabobank Group, the total number of orders increased
by 5%, thanks to the substantial higher transaction volume at Robeco. Especially in the last months of
2008 there were a lot of trading activities.
Charity Desk
Increasingly, wealthy people want to use part of
their affluence for socially relevant causes. To
accommodate this, Rabobank Private Banking
and Rabobank subsidiary Schretlen & Co
established the Charity Desk in 2008. Special
advisers – called ‘charity managers’ – are helping
high net-worth clients find appropriate charities
for collaboration or donations. They also advise
on donations through annuities or by will.
The Charity Desk’s network comprises all local
Rabobanks, many clients and numerous charities.
Also, with a view to transparency, a special clients’
fund has been established within the Rabobank
Foundation. This clients’ fund enables donations
to be made to defined themes, for example
microfinance, fair trade, or care and well-being.
Other options include Donor-Advised Funds.
28
Changes in assets
managed and held in
custody for clients
250
240
230
220
210
200
190
180
170
160
2008
Other
Sale of RIM FI USA
Sale of Alex
Exchange results
Investment results
Cashflow
2007
150
Financial results
Interest
Fees and commission
Other income
Total income
Staff costs
Operating expenses
Gross result
Value adjustments
Taxation
Net profit
Number of orders in the Netherlands (in millions)
Assets under management and held in custody (in billions of euros)
2008
2007
Change
144
1,084
390
1,618
559
352
102
1,013
605
42
563
125
438
82
1,089
308
1,479
581
320
90
991
488
1
487
125
362
76%
0%
27%
9%
-4%
10%
13%
2%
24%
4.7
4.5
5%
31-Dec-08
31-Dec-07
184
232
-21%
3,620
3,468
4%
16%
0%
21%
Transtrend has contributed in full to Rabobank Group’s results since March, 2007.
Income up 9%
The gain from the sale of Alex and the Transtrend Diversified Trend Program’s strong investment
performance were the main drivers for the 9% rise in total income, to EUR 1,618 (1,479) million, in 2008.
Mainly due to the increase of interest income at Robeco, interest income was 76% higher, at EUR 144 (82)
million. The decrease in assets under management had a negative impact on the asset management
fees. This decrease was however offset by the Transtrend Diversified Trend Program’s strong investment
results. Since Alex has ceased to be consolidated as from 2008, income from securities brokerage
decreased sharply. In net terms, commission income was virtually unchanged at EUR 1,084 (1,089)
million. Other income was 27% higher, at EUR 390 (308) million, due to the gain from the sale of Alex.
In 2007, the main drivers of other income were gains from Sarasin’s disposal of its Luxembourg activities
and income from its brokerage business.
29
Total operating expenses increased by 2% in 2008, to EUR 1,013 (991) million, due to the expansion of
Sarasin’s activities. The sale of Alex and staff redundancies at Robeco caused a decrease in staff numbers.
Due, however, to the expansion of Sarasin’s activities, the total staffing level rose by 4% to 3,620 (3,468)
FTEs. Staff costs were 4% lower, at EUR 559 (581) million, as a result of a reorganisation at Robeco and
decreased bonuses. Other administrative expenses rose by 10% to EUR 352 (320) million, as a result of the
expansion of activities at Sarasin. Due in part to higher depreciation on intangible assets, depreciation
and amortisation charges were 13% higher, at EUR 102 (90) million.
Impairment losses EUR 42 million
The turbulence in the financial markets resulted at Sarasin in a few write-offs on financial institutions.
As a result, the item ‘value adjustments’ increased by EUR 41 million to EUR 42 (1) million.
30
Leasing
www.delagelanden.com
Satisfactory growth in loan portfolio
nk Group’s
08
Loan portfolio up 13% to EUR 23.3 billion
- Portfolio share of food & agri grows to 20%
Net profit unchanged at EUR 235 million
- Efficiency ratio improved by 1.0 percentage point to 58.7%
- Impairment losses at 64 basis points; below long-term average
- RAROC 22.3%
9%
net profit for 2008
in %
Leasing
9%
- To support Rabobank with lease and factoring products
- To grow market share in consumer credits
-To monitor and coach food & agri related producers, vendors
and distributors of capital goods
- To grow portfolio share of food & agri
Lease subsidiary De Lage Landen faced changed market conditions in 2008 that
forced it to be more selective in its acceptance of new financing applications.
Despite this, the loan portfolio increased by 13% to EUR 23.3 billion. The number
of lease cars in the portfolio rose by 6% to 211,000. In the Netherlands, De Lage
Landen was voted the most customer-focused provider of business finance.
Internationally, De Lage Landen won recognition through the ‘Vendor Lessor of
the Year Award’. Higher margins on new contracts reflected scarcity of funding
and higher risks. At EUR 235 million, net profit remains virtually unchanged
compared to 2007.
Rising risk prices and a more selective acceptance policy
The unrest in the financial markets affected all players in the lease market. In 2008, lower capital
availability caused the price of financing to go up. De Lage Landen on-charged the higher cost of
funding and the higher price of risk as part of its margins on new contracts. Portfolio growth levelled,
due to a more stringent acceptance policy. Athlon Car Lease saw a rise in the number of car lease
contracts but its second-hand car sales were slow. Good risk management is traditionally one of
De Lage Landen’s spearheads and this pays off when economic conditions get worse. Where possible,
De Lage Landen will tighten its risk management even further.
31
Leasing
Sustainable-Mobility Plan
With its fleet of around 125,000 lease cars in the
Netherlands, Rabobank Group’s lease subsidiary
Athlon Car Lease is a contributor to traffic and
therefore to CO₂ emissions. Therefore Athlon
develops products and services that help clients
make their car fleets more sustainable. 2008 Saw
the launch of the Sustainable-Mobility Plan.
This should result in less pollution and less
traffic. The plan stimulates clients to reduce
the need to travel, to use alternative means of
transport at certain times of the day, to lease
energy efficient cars, to maximise fuel efficiency
and to achieve savings from sustainable mobility.
Customer-focused organisation
Clients are satisfied with De Lage Landen’s services. The desired high customer satisfaction was
recognised in 2008 when Leasing Life Asset Finance, the leading international magazine for asset
finance, presented De Lage Landen with the ‘Vendor Lessor of the Year Award’. According to a survey
by Incompany, De Lage Landen was the most customer-focused business finance provider in the
Netherlands. Clients rated De Lage Landen with a score of 7.2 (6.8), with particularly high scores for
the items knowledge, service and result. A survey by Heliview showed a slight decline in the general
satisfaction among car lease clients with Athlon Car Lease, with a score of 7.2 (7.5).
Stronger position in Europe; further development of Athlon Car Lease
In its expansion abroad, De Lage Landen follows its internationally operating clients - and it also follows
Rabobank. The position in Europe was expanded further, particularly in the Central and Eastern European
region. In Hungary, Siemens Leasing and Siemens Finance were acquired in 2008. The Budapest branch
has since been operating as the regional head office for Central and Eastern Europe. From there, both
the car leasing activities and the vendor-finance activities in the region will be developed further.
The year 2008 also saw the start of the sale of vendor-finance products in Portugal. In addition, the
activities in Russia were boosted by the expansion of the joint venture, named Cargobull Finance, with
trailer manufacturer Schmitz Cargobull.
In the Netherlands, the integration of Athlon Car Lease and Translease was finalised. Their merged
activities will continue under the Athlon Car Lease brand, which is the second player in the Dutch car
lease market. Since 2008, Athlon Car Lease also operates in Portugal.
Increase in food & agri contributes to loan portfolio growth
De Lage Landen’s loan portfolio increased by 13% in 2008, to EUR 23.3 (20.7) billion. Around 2 percentage
points of growth was due to the appreciation of the US dollar. The 16% growth of the food & agri
portfolio increased the food & agri share of the total loan portfolio by 1% percentage point, to 20%.
The number of lease cars in the portfolio increased by 6% to 211,000 (199,000⁸). The car lease portfolio
increased by 6%, to EUR 2.8 (2.7) billion. The consumer loan portfolio was stable, at EUR 0.9 (0.9) billion.
8) The number of lease contracts at year-end 2007 has been restated. These numbers no longer include fuel contracts.
32
Loan portfolio
24
Other
Consumer finance
Transportation
Car leasing
Technology finance
Health care
Construction & industrial
Financial services
Office equipment
Food & agri
20
Loan portfolio by region
at year-end 2008
22
Europe
America
Asia/Pacific
18
16
59%
38%
3%
14
12
10
8
6
4
2
0
2004 2005 2006 2007 2008
Financial results
Interest
Fees and commission
Other income
Total income
Staff costs
Operating expenses
Gross result
Value adjustments
Taxation
Net profit
2008
2007
Change
530
61
424
1,015
377
188
31
596
419
118
301
66
235
518
52
425
995
369
193
32
594
401
100
301
67
234
2%
17%
0%
2%
2%
-3%
-3%
0%
4%
18%
0%
-1%
0%
64
61
58.7%
22.3%
59.7%
24.2%
31-Dec-08
31-Dec-07
23.3
20.7
13%
1.1
1.0
1.7
1.1
-35%
-9%
4,667
4,411
6%
Ratios
Efficiency ratio
RAROC
Loan portfolio
Capital requirement
Economic capital
Income up 2%
Total income increased by 2% to EUR 1,015 (995) million in 2008. Although the margin on new contracts
improved, the margin for the portfolio as a whole was lower. Interest income rose by 2% to EUR 530 (518)
million as a result of growth of the loan portfolio. Commission income was 17% higher, at EUR 61 (52)
million, due to higher brokerage commission income. The greater part of income from car leasing
activities is recognised under other income. Other income remains virtually stable, at EUR 424 (425) million.
33
Leasing
Operating expenses unchanged
Total operating expenses were EUR 596 (594) million, virtually unchanged from 2007. Increased activities
resulted in a 6% rise in staff numbers, to 4,667 (4,411) FTEs. This contributed to the 2% rise in staff costs
to EUR 377 (369) million. Other administrative expenses decreased by 3% to EUR 188 (193) million, mainly
as a result of lower marketing and automation costs.
The growth in the loan portfolio and the worsened economic situation caused an 18% increase in the
item ‘value adjustments’ in 2008, to EUR 118 (100) million. In terms of basis points of the average loan
portfolio, the impairment losses were 64 (61) basis points. The impairment losses exceed the level of
2007 and are lower than the long-term average of 66 basis points.
Unlike Basel I, Basel II prescribes that the underlying value of lease objects be taken into account in
the calculation of the capital requirement. As a result, the capital requirement decreased by 35% to
EUR 1.1 (1.7) billion in 2008. The required economic capital, i.e. the internal capital requirement,
amounted to EUR 1.0 (1.1) billion. De Lage Landen achieved a Risk Adjusted Return On Capital (RAROC)
of 22.3% (24.2%).
34
Real estate
www.raborealestategroup.com
Growth in loan portfolio and assets under management;
fewer houses sold
nk Group’s
08
Number of houses sold 34% lower, at 8,746
Loan portfolio up 22% to EUR 16.5 billion
Assets under management in real estate up 35% to EUR 6.8 billion
Net profit Rabo Real Estate Group down 65% to EUR 86 million
- Impairment losses: nil
3%
net profit for 2008
in %
Real estate
3%
-To maintain and strengthen market leadership in owner-occupied houses
and commercial real estate
- To increase sales of Rabobank mortgages for new housing projects
- To maintain market leadership in real estate financing
- To increase knowledge of real estate
- To offer differentiated real estate related funds to Rabobank clients
- To set up and expand agri related funds, together with Rabobank International
Rabo Real Estate Group faced worsened market conditions in 2008. Owner-occupied
houses became less affordable and consumer confidence in the housing market
decreased. This had a negative effect on the number of owner-occupied houses
sold. In 2008, Bouwfonds Property Development sold 8,746 owner-occupied houses,
compared with 13,173 in 2007. At FGH Bank, the loan portfolio increased by 22%
to EUR 16.5 billion and at Bouwfonds REIM, assets under management were up 35%,
at EUR 6.8 billion. In all, the generally deteriorated conditions resulted in a 65%
decrease in net profit for Rabo Real Estate Group, to EUR 86 million.
Changed market conditions in real estate
The effects of the deteriorating economic outlook also manifested itself in the real estate market. As a result
of the crisis, consumers were cautious. This created a mismatch between supply and demand and the
number of new houses for sale increased. In addition, owner-occupied houses in the Netherlands became
less affordable, partly as a result of higher mortgage interest rates. For the development activities, this
resulted in a decline in the number of owner-occupied houses sold and, to a lesser extent, pressure on
margins. In France, economic conditions likewise caused deterioration of the housing market.
For the financing activities, the uncertainty in the real estate market resulted in a decline in both the
number and the volume of transactions. FGH Bank nevertheless succeeded in maintaining its leading
35
Real estate
position in the Dutch real estate financing market. Because of the higher price of risk, FGH Bank’s interest
margin on new financing improved. Furthermore, there was a lower market demand for traditional real
estate investment products, and this depressed results for Bouwfonds REIM.
New brand policy
The real estate division reviewed its brand policy in 2008. The label Rabo Bouwfonds was changed into
Rabo Vastgoedgroep and, for the foreign markets, into Rabo Real Estate Group. To improve services to the
various customer groups, the Development division was split up into Bouwfonds Property Development
and MAB Development. Bouwfonds Property Development develops integral housing areas and smallscale multifunctional projects. As a developer of commercial real estate, MAB Development focuses on
the development of shops, offices, hotels and large-scale multifunctional projects.
Expanded collaboration with Rabobank
In 2008, Rabo Real Estate Group further intensified its collaboration with other Rabobank Group entities,
working even more closely with the local Rabobanks in the sale of new housing projects. This is very
important for growth of Rabobank’s market share in mortgages in large cities. It also built on the Eigen
Steen real estate project, which was started in 2007. Through this project, Rabo Real Estate Group relieves
the local Rabobanks from all their real estate activities. For the purpose of development projects for
new bank office buildings, a large number of agreements were made with local Rabobanks. In addition,
a number of initiatives together with Rabobank were launched through the Asset management division,
including the establishment of investment funds with an agri related character.
Sustainable building
awarded
With the project ‘New élan in the city’s heart’
a new, 200,000 m² inner city section arises on
Amsterdam’s Oosterdokseiland (Eastern Dock
Island) with high-quality and modern architecture.
MAB Development, which is part of Rabo Real
Estate Group, is involved as a developer. One of
the main attractions is the new Public Library.
This 28,000 m² building was awarded the title of
Amsterdam’s most sustainable public building at
the Sustainability Congress 2008. The building
makes full use of solar energy, double glazing
and sustainable materials. Furthermore, the
Public Library is easily accessible by bicycle and
by public transport. The building is connected to
a dedicated energy storage system that generates
heating and cooling in a sustainable manner for
the entire Oosterdokseiland area.
36
Fewer houses sold, particularly in the Netherlands
Number of houses sold in 2008
by country
The Netherlands
France
Germany
Other
68%
23%
7%
2%
Loan portfolio
18
The number of owner-occupied houses sold by
Bouwfonds Property Development declined due to
a fall of sales, particularly in the Netherlands and
to a lesser extent in France as well. In 2008, 8,746
(13,173) owner-occupied houses were sold, of
which 68% was in the Netherlands.
MAB Development completed 76,778 (223,782) m²
of commercial real estate. Due to the change in
market conditions, fewer real estate construction
projects were taken on in 2008. At year-end 2008,
MAB Development had 536,993 (570,970) m² of
commercial real estate under construction.
16
14
Loan portfolio growth in the first months
of 2008
12
10
8
6
4
2
0
2004 2005 2006 2007 2008
FGH Bank’s new granted loans amounted to
EUR 4.8 billion in the year under review. The gross
loan portfolio increased by 22% to EUR 16.5 (13.5)
billion. This growth was realised mainly in the
first months of 2008. The net loan portfolio, after
syndications, increased by 17% to EUR 14.6 (12.5)
billion. Repayments amounted to EUR 2.2 billion.
Investment financing makes up 76% of the portfolio.
Growth in assets managed due to acquisitions
Assets under management in real estate by Bouwfonds REIM increased by 35% in 2008, to
EUR 6.8 (5.1) billion. The increase was partly due to the acquisition of cable company CAIW’s network, in
order to strengthen the Rabo Bouwfonds Dutch Communication Infrastructure Fund, and the
acquisition, by IEF Capital, of a shops portfolio from Unibail-Rodamco. The acquisition of a real estate
related loan portfolio was another contributor to this portfolio growth.
Financial results
Income down 31%
In 2008, total income fell by 31% to EUR 459 (670) million. Interest income was 9% lower, at EUR 78 (86)
million, despite higher interest income at FGH Bank as a result of portfolio growth. Commission income
increased by 74% to EUR 33 (19) million, thanks to higher asset management commission income at
Bouwfonds REIM. The decline in the number of owner-occupied houses sold depressed other income.
Other income was 38% lower, at EUR 348 (565) million, due to lower project results.
Total operating expenses were 3% higher in 2008, at EUR 363 (352) million. Staff numbers rose by 3% to
1,743 (1,700) FTEs. As a result, staff costs increased by 1% to EUR 220 (217) million. Other administrative
expenses were 7% higher, at EUR 131 (122) million, due in part to higher costs of both automation
and advice.
37
Real estate
Interest
Fees and commission
Other income
Total income
Staff costs
Operating expenses
Gross result
Value adjustments
Taxation
Profit for the year Rabo Real Estate Group⁹
Minority interest
Net profit Rabo Real Estate Group⁹
Other results
Net profit Real estate
Number of houses sold
Other information (in billions of euros)
Loan portfolio
Assets under management
2008
2007
Change
78
33
348
459
220
131
12
363
96
96
20
76
-10
86
-62
24
86
19
565
670
217
122
13
352
318
2
316
70
246
3
243
-89
154
-9%
74%
-38%
-31%
1%
7%
-8%
3%
-70%
8,746
13,173
-34%
31-Dec-08
31-Dec-07
16.5
6.8
13.5
5.1
22%
35%
1,743
1,700
3%
-70%
-71%
-69%
-65%
-30%
-84%
9) The items ‘Result Rabo Real Estate Group‘ and ‘Net profit Rabo Real Estate Group’ correspond with the results as published by Rabo Real Estate
Group. The item ‘Net profit Real Estate division’ is net of amortisation and financing charges and the effects of the harmonisation of accounting
principles due to the acquisition of parts of Bouwfonds.
38
Insurance
www.rabobank.nl, www.interpolis.nl, www.eureko.net
surance
008
Number of non-life and health insurance policies up; fewer
life insurance policies sold
Sales of Alles in één Polis insurance policies up 2% to 1,297,000
Sales of Bedrijven Compact Polis insurance policies up 5% to 195,000
Sales of ZorgActief Polis health insurance policies up 24% to 150,000
Total insurance commission earned by local Rabobanks down 6%,
at EUR 354 million
11%
89%
Breakdown of insurance
commission in 2008
in %
Life
Non-life
11%
89%
-To strengthen our market leadership by offering non-life, health and life
insurance policies from Interpolis through local Rabobanks
-To maintain insurance market leadership in the Dutch food & agri sector
through market leader Interpolis
- To align Eureko’s international expansion with existing Rabobank operations
The local Rabobanks sell non-life, health and life insurance policies, most of which are
supplied by Interpolis. Thanks in part to the constructive collaboration with Eureko,
the number of Alles in één, Bedrijven Compact and ZorgActief insurance policies
sold increased further. Total insurance commission earned fell by 6% to EUR 354
million as fewer life insurance policies were sold. Non-life insurance commission was
up 5%, to EUR 314 million. 2008 saw the launch of the new ‘Glashelder’ advertising
campaign with ‘Helder Moment’ as the motto, through which Rabobank and Interpolis
aim to make clients consider more carefully the things they should and should not
insure. The new insurance solutions ‘InterpolisZekerVanJeZaak’ for small businesses
enjoyed a successful launch. Early in 2009, Rabobank contributed EUR 400 million
to the strengthening of Eureko’s capital, thus bringing Eureko back to its desired
solvency level.
Rabobank largest Dutch insurance agent, high customer satisfaction at Interpolis
In the Netherlands, the local Rabobanks are the largest insurance agent. At least one in five private
Rabobank clients has insurance cover from Interpolis, and one in four among corporate clients. In 2008,
Interpolis launched a new ‘Glashelder’ advertising campaign with ‘Helder Moment’ as the motto.
Focusing on prevention, the campaign supports Interpolis’ and Rabobank’s aim to identify risks together
with their clients, after which clients may take deliberate decisions as to what they wish to insure.
This also prevents duplicate insurance. In addition, Interpolis wishes to distinguish itself in the event
of a claim by truly solving the problem rather than just reimbursing the loss.
39
Insurance
Bright Moment
The Dutch are found to have far more insurance
policies than other Europeans. This raises some
question marks. In response, Interpolis started a
new element of its ‘Crystal-clear’ campaign in
2008, entitled ‘Bright Moment’. Together with the
client and Rabobank, Interpolis maps out all the
client’s risks, enabling him to make a conscious
choice as to what to insure and what not to
insure. This also puts an end to his being doubly
insured. Interpolis aims to deliver products and
services that clients really need. Many years ago,
it set the standard by using everyday language
in its policy documents and to say to clients
claiming: ‘No need to produce the receipts’.
Clients appreciate this crystal-clear approach, as
is apparent from the growth seen by Interpolis in
the mature insurance market in recent years.
The local Rabobanks and Interpolis aim for high customer satisfaction. To ensure high-quality and
swift client service, the systems of local Rabobanks and Interpolis have been interlinked. Interpolis has
been awarded high ratings for customer satisfaction, particularly for its speedy and accurate claims
processing. In addition, it was presented with the ‘Customer Contact Award 2008’ from the Customer
Contact Magazine in recognition of its customer contacts organisation.
Private clients
In spite of fierce competition in the non-life insurance market, the number of Alles in één insurance
policies sold by local Rabobanks increased by 2% in 2008, to reach 1,297,000 (1,272,000). The number
of clients holding three or more sections in this policy increased from 52.6% to 54.4%. The number of
motor and legal expenses insurance policies, as part of the Alles in één Polis policy, was up from 2007,
whereas the demand for multi-trip travel insurance was lower. The ‘Partner & Kind verzekeringen’
insurance policies, which were introduced in 2007 as part of the Alles in één Polis policy, showed some
growth. Non-life insurance policies are increasingly taken out through direct channels, such as
telephone and the Internet.
Client demand for investment-based insurance fell in 2008 as the debate on fee transparency of these
products raged and the stock exchange sentiment dropped. The fall in the number of life insurance
policies sold was also due to the launch of bank savings products by local Rabobanks. The number of
clients holding Interpolis’ ZorgActief Polis health insurance policy rose by 24%, to 150,000 (121,000),
due in part to the fact that Rabobank members enjoy a premium discount. Another contributor was the
introduction, in late 2008, of the StudentenZorgverzekering health insurance, a competitively priced
policy that offers supplementary cover for students.
Corporate clients
Competition in the insurance market for the small and medium-sized enterprises segment was
exceptionally fierce. Nevertheless, the number of Bedrijven Compact Polis policies sold by the local
Rabobanks increased by 5%, to 195,000 (185,000). As part of the Rabo OndernemersPakket (Rabo
Entrepreneur Package), business start-ups are granted a premium discount on Interpolis’ most
important insurance policies. This prompted more new businesses to purchase insurance products.
A new insurance solution for small businesses was launched in 2008, named ‘Interpolis ZekerVanJeZaak’.
This package offers quick and comprehensive cover for all business risks, while clients receive their
policies in digital format. Entrepreneurs can gather information about risks and insurance products
through either a face-to-face advice meeting or via the Internet, Using online advice modules,
calculations and scans, they can generate a quick and clear overview of their business risks. For example,
the ‘RisicoScan Verzekeren’ (Insurance Risk Scan) identifies the most frequent risks for 75 branches of
industry and suggests measures that entrepreneurs can take to cover these.
40
Risk management
www.rabobank.com/ir
Extremely strong financial position
Ample liquidity position
EUR 20 billion raised in long-term funding
Impairment of distressed assets amounts to EUR 570 million
Impact of EUR 653 million on net profit due to impairments of indirect exposure to monoline insurers
The financial crisis has brought home once more that risk management is a core
banking competency. Rabobank Group pursues a prudent risk policy that entails a
moderate risk profile. As a result, Rabobank Group was well able to withstand even
the turbulent conditions in 2008 and maintain its capital ratios at a high level.
After obtaining permission from the Dutch Central Bank, Rabobank Group has been
using the most advanced calculation methods since 1 January 2008 for the capital
requirement under Basel II for credit, market and operational risks.
General
In the first half of 2008 the financial crisis continued unabated, followed by a sharp deterioration in the
second half of the year. Virtually all sectors of the financial market were affected, as was the broader
economy. For the AEX, for instance, 2008 was the worst year on record and the prospects for economies
worldwide are cause for great concern. Nationally and internationally, governments intervened in the
financial sector by means of nationalisations, capital injections and the provision of all kinds of
guarantees. The financial crisis not only affects the real economy: its consequences also impact on the
market prices of various financial assets. Even when the creditworthiness of certain assets is not in
doubt, there are significant adverse effects on prices due to the overall market sentiment and because
in many markets sellers often still outnumber buyers. Some financial assets, to a value of EUR 12.0 billion,
in fact no longer have an active market, and this has resulted in adjustments to their accounting
treatment. Since all financial assets have to be recognised at fair value, this has impacted directly on the
carrying amounts of these assets. At year-end 2008, the total negative revaluation of the portfolio of
available-for-sale financial assets with debt instruments amounted to EUR 407 million after tax and was
recognised directly in equity.
At Rabobank International, the Global Financial Market activities resulted in a mixed performance.
Some activities suffered losses while others had a very successful year. Partly due to the continuing
financial crisis and the associated forecasts, some changes were implemented at Global Financial
Markets in the first half of 2008, resulting in the reduction of non-customer related activities in
particular. In the year under review, adjustment proposals were also put forward within Rabobank
Group to update its Strategic Framework.
Asset Backed Commercial Paper conduits
In the first quarter of 2008, two Asset Backed Commercial Paper (ABCP) structures – i.e. collateralised
investment vehicles – were phased out, in part following the introduction of the new Basel II regulation
41
Risk management
that became applicable to Rabobank Group as of 1 January 2008. As a consequence, the ABCP
outstanding as of the end of 2008 decreased to EUR 17.5 (23.0) billion, mainly for funding own
originated loans and customer loans and receivables. Since the introduction of IFRS these structures
have been included in the consolidated group balance sheet, and they are also part of the bank’s
liquidity risk management. In the fourth quarter, limited use was made of the Commercial Paper
Funding Facility launched by the US Federal Reserve to support the commercial paper market.
Type
Programme
Solvency management
Atlantis
Neptune
Erasmus
Nieuw Amsterdam
1997
1997
2000
1999
Tempo
2007
Client facilitation
Securities arbitrage
Total
Launched
Amount outstanding
(in EUR billion)
31-Dec-08 Underlying portfolio
9.8 Own originated loans
1.1
2.5 Predominantly customer
loans and receivables
2.7
AAA and AA Asset Backed
Securities
1.4
17.5
As early as in the first quarter of 2008, due to the scarcity of funding opportunities for Structured
Investment Vehicles – i.e. off-balance sheet investment vehicles – the remaining SIV Tango assets
managed by Rabobank were taken on the balance sheet. This put an end to the active existence of this
SIV. Following its inclusion on the balance sheet, the size of this portfolio shrunk as a result of currency
effects and selling to EUR 3.8 billion as at the end of 2008. Otherwise, Rabobank no longer has any
investments in SIVs.
Structured credit
An important element of the bank’s liquidity risk management is to maintain a large portfolio of liquid
and/or central bank eligible assets that can be used, if necessary, to generate liquidity very quickly.
Rabobank Group’s trade and investment portfolios have a limited exposure to more structured investments.
This structured credit exposure amounts to EUR 9 billion, by far the largest part of which is AAA-rated.
Due to the further deterioration of the US housing market, some related investments, Residential
Mortgage Backed Securities (RMBSs) and Collateralised Debt Obligations (CDOs) have been impaired
and the resulting loss charged to profit. For the whole of 2008 this involved an amount of EUR 418
million after tax. For a liquidity facility granted by the bank that was partly secured by subprime related
assets, an additional provision was formed amounting to EUR 152 million after tax.
Structured credit exposure at
year-end 2008 in billions of euros
Non-subprime RBMS
CDO/CLO and other corporate
exposures
Commercial real estate
Other ABS
ABS CDO
US subprime
Structured credit exposure rating
distribution at year-end 2008
4.3
2.5
1.3
0.9
0.3
0.2
AAA
AA
A
Below A
90%
5%
1%
4%
Monoline insurers
In a number of cases, monoline insurers are the counterparty to credit default swaps that hedge the credit
risk of certain investments. In most cases, solvency objectives are the main reason for the existence of
these hedges rather than the credit quality of these investments. The ongoing deterioration of the US
mortgage market further undermined the creditworthiness of these monoline insurers in 2008 as well,
42
which adversely affected the rating of these institutions. Counterparty risk relating to these monoline
insurers arises because the value of the credit default swaps with these counterparties increases, due to
the fair value of the underlying investments decreasing, or because other insured investments can lead
to payment claims against these insurers. The table below gives an overview of this. Value adjustments
amounting to EUR 245 million after tax were already recognised in the first half of the year. In the second
half, additional value adjustments amounting to EUR 148 million were recognised via profit and loss.
On top of that a generic provision is formed of EUR 260 million after tax. The remaining counterparty
risk resulting from this as at the end of 2008 amounts to EUR 1,729 million.
Principal
31-Dec-08
Counterparty risk
before value
adjustments 31-Dec-08
Value adjustments
charged to profit
(before taxes) 2008
Counterparty risk
after value
adjustments
31-Dec-08
In EUR million
Monoline insurer rating
US RMBS-related
AAA / AA
A and lower
2,051
1,322
357
965
AAA / AA
A and lower
3,003
2,651
778
633
1
246
777
387
Total
Generic value adjustments
Total value adjustments
After tax
7,705
2,733
604
400
1,004
653
2,129
-400
1,729
Non-US RMBS-related
Based on the positions at year-end 2008 as reflected in the table, a further downgrade to CCC of the
A or lower rated monoline insurers would have an impact on net profit of EUR 355 million, and the
defaulting of CCC rated monoline insurers would have an impact of EUR 64 million. The generic provision
formed is sufficient to counterbalance most of this potential impact.
As regards the exposures mentioned, an actual exposure to a monoline insurer would arise only in the
event of the investments actually defaulting and a claim having to be filed with the monoline insurers
under the insurance they issued. Actual losses would be incurred only if both the investment and the
monoline insurer concerned were to default.
Leveraged finance
The Rabobank International leveraged finance portfolio amounted to EUR 3.4 (3.2) billion at year-end
2008. It is a diversified portfolio consisting of a large number of relatively small positions, notably in
Dutch and other West European businesses. The primary focus of the leveraged finance activities is on
Rabobank clients and the food & agri sector.
Credit risk and Basel II
EAD (Exposure at Default), PD (Probability of Default) and LGD (Loss Given Default) are important Basel II
parameters which are increasingly being used in the context of credit risk. The EAD is defined as the
bank’s expected exposure to the client in the case of a default. As of the end of 2008, the EAD of
Rabobank Group’s credit portfolio amounted to EUR 515 (465) billion. The EAD includes the future
usage of unused credit lines.
In its financing approval process, Rabobank Group uses the Rabobank Risk Rating, which reflects the
counterparty’s PD over a one-year period. The EAD-weighted average PD of Rabobank Group’s private
sector loan portfolio amounted to 1.46% (1.55%) at year-end 2008. The weighted average PD of Rabobank
Group’s total loan portfolio was 1.30% (1.39%). This lower PD is not only the result of a change in the PD
of debtors, but also of policy changes and the implementation of new models.
It should be noted that the PD only reflects the extent to which the bank expects that clients can
meet their contractual obligations. The PD says nothing about the potential loss, because in many cases
Rabobank Group has obtained additional collateral. This is reflected in the LGD, which also takes
restructuring perspectives into consideration. LGD is defined as the best estimate of the loss in case the
debtor is in default, and is expressed as a percentage of EAD. At year-end 2008, LGD percentage of
Rabobank Group’s total portfolio was 21.6% (21.4%).
43
Risk management
Provisions for loan losses
In millions of euros
31-Dec-08
Impaired loans
international retail
banking
Leasing
Other
Rabobank Group
Allowances
31-Dec-07
Impaired loans
Allowances
2,831
1,398
1,935
1,303
3,182
379
182
6,573
1,536
256
109
3,299
1,191
323
21
3,470
778
242
32
2,355
The loans for which an allowance has been taken are impaired loans and amounted to EUR 6,573 (3,470)
million at year-end 2008. The allowance for bad debts amounted to EUR 3,299 (2,355) million at year-end
2008, corresponding to a 50% (68%) coverage. It is to be noted that Rabobank Group takes allowances
at an early stage and applies the one-obligor principle, meaning that the exposure of all counterparties
belonging to the same group is taken into account. In addition, the full exposure vis-à-vis the client is
regarded as impaired, even if full coverage is available for part of it in the form of collateral. Impaired loans
as a percentage of private-sector lending amounted to 1.6% (1.0%) as at the end of 2008.
Liquidity risk based on three pillars
Since the start of the financial crisis in the summer of 2007, liquidity risk has been a prominent factor in
the financial markets and one of the biggest risks for banks. Owing to the lack of confidence, markets
were unable to operate properly. Banks collapsed and central banks and governments had to intervene,
sometimes through nationalisation, to prevent further problems. Retaining the confidence of both
professional market parties and private clients proved to be crucial.
Cooperative risk profile
A cooperative bank should operate a prudent
risk policy and adopt a moderate risk profile.
Risks have an effect on Rabobank Group’s
results and capital, directly or indirectly. Within
Rabobank Group, the primary objective of risk
management is the protection of the bank’s
financial strength. The Group Risk Management
department has, together with the Group
entities, developed new risk models based
on the guidelines of the Basel II accord, which
came into force on 1 January 2008. ‘Proper
management of the required capital at risk
ensures our solvency. The use of risk models,
combined, obviously, with common sense,
contributes to the strengthening of our position
in the financial market and enables us to confirm
the confidence of financial authorities, rating
agencies and investors. Thus, we protect the
triple A-status that we, as a solid cooperative
bank, have been building on for decades’,
says Pieter Emmen, who heads Group Risk
Management.
44
For Rabobank Group liquidity risk has always been an important risk type. Accordingly, our policy is
to match the maturity of the funding with that of the loans. Long-term lending is funded by means of
stable retail funding, amounts due to customers, and long-term professional market funding. The three
pillars Rabobank Group relies on to manage this risk proved their usefulness in 2008. Not at any time did
the turbulence in the financial markets lead to liquidity problems for Rabobank Group. The first pillar
sets strict limits to the maximum outgoing cash flows of our wholesale banking business. This prevents
excessive dependence on the professional market. To this end, the bank measures and reports on a daily
basis which incoming and outgoing cash flows are to be expected over the next thirty days. In addition,
limits have been set for such outgoing cash flows, for each currency and location. In order to be
prepared for possible crises, detailed contingency plans have been drawn up.
Via the second pillar, a large buffer of readily marketable securities is being held. If necessary, these
assets can be used for borrowings from central banks, in repo transactions or direct sellings in the
market, as a way of generating liquidity. In 2008, various central banks eased the acceptance criteria
of collateral. Over the past years, part of Rabobank Group’s mortgages portfolio has been securitised
(internally), making it eligible for refinancing with the central bank and thus serving as an extra liquidity
buffer. Since this concerns internal securitisations for liquidity purposes only, they are not reflected in
the economic balance sheet, but they do add to the available liquidity buffer.
Via the third pillar, 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. This prevents Rabobank Group’s overdependence from a single source of funding.
Liquidity risk management
Several methods have been developed to measure and manage liquidity risk. Methods used include the
CA/CL method (Core Assets/Core Liabilities). This analysis is based on the cash flow schedule of all assets
and liabilities. Using various time periods, a quantification is made of the assets, unused facilities and
liabilities that will probably still be or appear on the balance sheet after assumed and closely defined
stress scenarios have occurred. These remaining assets and liabilities are referred to as core assets and
core liabilities, respectively, and their interrelationship is the liquidity ratio. Given the highly conservative
weightings used, a ratio below 1.2 is considered adequate. In 2008, this was again the case for the
scenarios used.
The Dutch supervisory authority also provides extensive guidelines for measuring and reporting the
liquidity position of Rabobank Group. Its liquidity position measured according to these guidelines is
more than adequate, with the available liquidity exceeding the requirement by 20% on average.
45
Risk management
Responsible banking for
a sustainable future
www.rabobank.com/csr
One of the cornerstones of the Rabobank Group Strategic Framework is a highquality policy for corporate social responsibility. Within this scope, Rabobank
continued to develop their CSR policy and activities in 2008. Rabobank’s efforts
included cascading social responsibility and sustainability through their financial
services offering. Four central themes were defined for the CSR activities of the
Rabobank Group that come with specific performance indicators. Making clear
CSR choices, defining themes and all such related matters bolster Rabobank’s
stability and boost their cooperative profile.
High-quality CSR policy is a strategic choice
Pursuing a high-quality CSR policy is an explicit strategic choice for the Rabobank. The Rabobank aspires
to be among the Top 3 of sustainable banks globally. The Rabobank has fleshed out their policy based
on four central themes, which are aimed at farther-reaching integration of CSR into their day-to-day
financial services provision. The Rabobank takes a proactive approach to issues that affect their CSR
performance. The Rabobank seek dialogue with their stakeholders on matters impacting the Rabobank
or issues that they can influence. This is one of the unique selling points of the Rabobank.
Focus on four central CSR themes
Rabobank Group defined four central themes in 2008 in order to give further body to the strategic
choice for a high-quality CSR policy: introducing sustainability to food & agri chains, encouraging new
production methods and renewable energy sources, promoting economic participation and diversity,
and fostering social cohesion and solidarity. These themes are a logical progression from Rabobank’s
roots in society and are in keeping with our core values of integrity, respect, professionalism and
sustainability, which lie at the base of the Rabobank Group Code of Conduct. The themes have also
been linked up to key social trends and market developments. The trends that Rabobank has identified,
partly based on talks with stakeholders, include: commodity shortages, climate change, food security, a
higher standard of living, ageing and urbanisation, and increased pressure from special-interest groups.
Market developments that affect CSR policy are confidence in the financial sector, oversight,
transparency of services, duty of care, the 24-hour economy, and independent, assertive
and critical clients.
Introducing sustainability to food & agri chains
Rabobank Group aims to introduce sustainability to food & agri chains by applying the five Food &
Agribusiness Principles: adequate and safe food production, sustainable use of natural resources, a
responsible society where public welfare is key, ethical treatment of animals, and awareness among
consumers and citizens.
Encouraging new production methods and renewable energy sources
Rabobank Group seeks to innovate production methods and develop and use renewable energy
sources, thereby placing less of a burden on the natural resources of future generations. As we run
Rabobank Group as a responsible business, we also want our own business processes to fall into line
with this. All core activities should be marked by this theme, which is also at the innovative heart of all
financial services that we provide to our clients. Examples are found in the areas of cleantech,
sustainable building, sustainable mobility, and socially responsible investment and asset management.
46
Promoting economic participation and diversity
Rabobank Group wants to create equal opportunities and economic participation for all people.
This central theme is rooted in Rabobank’s cooperative history. We promote participation and diversity,
for instance by developing financial services for specific target groups, such as young people, the elderly
or people with disabilities.
Fostering social cohesion and solidarity
Rabobank Group means to foster a ‘good life and good business’. The local Rabobanks annually
distribute cooperative dividend to civil-society groups and projects. Rabobank also actively runs social
funds such as the Rabobank Foundation and the Share4More employee fund. Rabobank Development
undertakes commercial banking activities globally in areas where there are relatively few banks.
Employees are encouraged to harness their knowledge and skills by volunteering for Rabo Development
or the Rabobank Foundation. The group entities individually also promote community investment.
Integrating CSR into financial services
Integrating CSR into our everyday financial services offering is another pillar supporting our high-quality
CSR policy. The various developments at group entities illustrate our further commitment. Rabo Real
Estate Group has drafted a CSR Charter to help the divisions shape their CSR policy. Obvion has explicitly
embedded CSR in its core values and a new mission statement. In line with the UN Principles for
Responsible Investment, Robeco adopted a draft ambition statement to the effect that CSR principles
should be progressively implemented in its investment process. Fleshing out these principles is the
most important aspect of the sustainability targets for 2009 and 2010. Sarasin and Schretlen & Co also
placed more focus on CSR ambitions in their targets for the next few years. De Lage Landen bolstered
its CSR management structure.
Focus on key performance indicators
Rabobank Group adopted one or more key performance indicators for each central theme in 2008.
This not only helps to steer progress on the themes, but also to measure their integration into the core
processes as well as the results of our CSR efforts. The indicators comprise only part of the broad CSR
Diverse and inclusive
Rabobank Vlietstreek-Zoetermeer and some
forty other parties, including the Zoetermeer
municipality, business enterprises and labour,
income and care organisations, have joined
hands in the promotion of diversity and
inclusiveness, both in the Zoetermeer labour
market and within their own operations. In that
context, the ‘Diversity and inclusiveness in
business’ covenant was signed at the office of the
Rabobank Vlietstreek-Zoetermeer in December
2008. It was the official kick-off for intensive
public-private partnership that should result in
leverage of Zoetermeer’s labour reserve in the
period 2008-2010. Rabobank VlietstreekZoetermeer has made available its locations and
other facilities, participates in the ambassadors’
network and facilitates an employers’ platform.
In addition, the bank is leveraging its expertise in
helping other businesses achieve their diversity
targets.
47
Responsible banking for a sustainable future
Introducing sustainability to food & agri chains
-Decision-making by the Rabobank Group Credit Policy Committee on policies pursued in the
food & agri sector.
-Application of food & agri sector policy to asset management.
Encouraging new production methods and renewable energy sources
-Extent of sustainable loans in billions of euros and as a percentage of total lending.
-Extent of sustainably managed assets in billions of euros and as a percentage of total managed assets.
-Carbon footprint in tonnes of carbon emissions per FTE.
Promoting economic participation and diversity
-Microfinance in millions of euros in countries other than the Netherlands (Rabobank Foundation and Rabo
Development portfolios) and as a percentage of total funding outside the Netherlands.
-Microfinance in billions of euros for SME start-ups and first-time home buyers, as well as guarantee facilities for
businesses in the Netherlands, and as a percentage of total funding in the Netherlands.
Fostering social cohesion and solidarity
-Number of employees involved in, and number of hours spent, volunteering and working on initiatives
developed by both the Rabobank Foundation and Rabobank Development.
-Cooperative dividend and donations contributed by Rabobank Group overall in millions of euros.
Result
-Global CSR rating.
field and show Rabobank Group’s focus on issues that matter. The performance indicators will be fleshed
out in 2009 and linked up with targets that will need to be achieved with effect from 2010.
Key CSR results in 2008
We achieved a lot in 2008 in the way of further embedding CSR into our core business processes.
Bolstering chain sustainability via Food & Agribusiness Principles
In 2008 we took the initiative to define Food & Agribusiness Principles, which illustrate how Rabobank
Group goes about its business in the international food & agri market. The Principles address such issues
as adequate and safe food production, sustainable use of natural resources, a responsible society where
public welfare is key, ethical treatment of animals, and awareness among consumers and citizens.
The principles are a natural progression from Rabobank’s deep commitment to clients operating in
agriculture, horticulture and cattle-farming. In 2008 we found ourselves faced with a global need for
stepping up all sustainability efforts in food & agri chains because commodity prices soared due to
growth in consumer spending and demand for biofuels.
Increasing sustainability of production chains through responsible lending
Rabobank has defined policies for several CSR-sensitive sectors, which help us take a socially responsible
approach to the potential impact of our funding. These sector policies will be discussed in internal
sessions, after which we will hold an external consultation round with different stakeholders, such as
clients, NGOs and academics.
Stakeholder dialogue for sustainable production
In 2008 Rabobank actively participated in sector-wide international roundtables, including the Round
Table on Responsible Soy, the Round Table on Sustainable Palm Oil, the Better Cotton Initiative, the
Better Sugar Initiative and the Round Table on Sustainable Biofuels. On both Rabobank’s and the
stakeholders’ initiative, talks involving a range of CSR issues were also held with key players. Ideas on the
new palm oil policy were exchanged, for instance, with academics from all over the world, Friends of the
Earth, Oxfam Novib and the Worldwide Fund for Nature.
48
Ethics Committee
The Ethics Committee celebrated its tenth anniversary in 2008. This advisory body, which is led by the
Chairman of the Executive Board, offers its opinion on moral dilemmas to all echelons of Rabobank Group.
Over the past decade, the Committee has applied ethical criteria to more than 150 business cases. In 2008
the Committee ruled on 14 real-life situations. Discussions focused on whether or not we should fund a
provider of short-term loans and a private forestry company that offers investments in robinia plantations.
In addition, we discussed the welfare of sheep on long-distance transports to halal slaughterhouses.
Engagement in asset management and investment
Rabobank Group wants to make businesses more sustainable by seeking dialogue and discussing CSR
proposals in shareholders’ meetings or backing such proposals. Robeco represents several parties via
the Robeco Engagement Service, for instance, which allows it to truly exercise influence. Robeco voted
at 1,792 shareholders’ meetings and talked with 86 enterprises about their sustainability and corporate
governance policies in 2008. Rabobank Private Banking is working on improving the transparency of
CSR information on investment products in asset management.
Renewable energy
Rabobank developed a plethora of initiatives in the field of renewable energy in 2008, one of which
was the investment by Rabo Ventures in Econcern, a European renewable energy group. Another was
the co-financing of the Princess Amalia Wind Farm in the North Sea. Rabobank Nederland is closely
involved in initiatives for applying geothermal heat in greenhouse horticulture, and Rabobank Westland
contributed EUR 10 million to various renewable energy projects. Rabo Groen Bank and Rabobank
Oost-Achterhoek provided financial backing to Haagwinden, the largest onshore wind farm in the
Netherlands. Rabo Groen Bank saw its lending portfolio grow to more than EUR 3.4 billion in 2008,
most of which was attributable to renewable energy. Athlon Car Lease introduced sustainable mobility
programmes and strengthened its ties with Netherlands Railways in terms of the Railways Business Card.
Sarasin, Robeco and Rabobank International published several studies on renewable energy and
climate impact. In addition, Rabobank wrote a report on water shortages and investments in efficient
water usage in agriculture, which was presented at the annual Duisenberg lecture during meetings of
the International Monetary Fund and the World Bank.
Code of Conduct and integrity
In 2008 we assimilated the Rabobank Group Code of Conduct, which sets out the cohesion between,
and justification of, our CSR activities, into several HR instruments, such as performance management,
the standard job profile and the leadership profile. Rabo Real Estate Group integrated the existing codes
of conduct of the group entities into a single harmonised code in 2008. This new code, which describes
three integrity principles, will be cascaded through the organisation in 2009. These principles are:
preventing (the semblance of ) conflicts of interest, avoiding (the semblance of any form of ) fraud,
corruption and bribery, and being discreet and tactful when handling confidential information.
Growing employee commitment to CSR
Worldwide, Rabobank employees are committed to the communities in which they live and work.
Employees of our local Rabobanks spent approximately 75,000 hours volunteering, Rabobank
International employees 11,382 hours and employees of other group entities 4,872 hours. The number
of local Rabobanks that encourage their employees to volunteer increased by 14 percentage points in
2008, rising to 61 percent. In addition, 25 of our local Rabobanks offered the services of 1,700 employees
in total, who spent more than 10,000 hours volunteering in 2008 within the context of the nation-wide
Make a Difference Day (MADD), a volunteering initiative Rabobank has supported since 2005.
Economic participation and diversity
A bank for all people, Rabobank wants its financial services to be accessible for everyone. In developing
countries, Rabo Development and the Rabobank Foundation contribute to the development of the
banking sector and to establishing savings and loans cooperatives.
Rabo Development helps rural banks active in developing countries to transform themselves into
professional, modern financial institutions. It forms alliances with partner banks, taking a strategic
minority interest, and helps them develop along the lines of Rabobank in the Netherlands. As the focus
is on long-term development, short-term profitability is of minor importance. The partner banks differ
49
from other banks as their market is specifically rural areas. Partner banks remain independent and
benefit from Rabobank’s capital, expertise, products, network and management abilities. To this end,
Rabo Development makes use of the knowledge and experience of staff from all parts of the organisation.
Experts in the areas of credit management, risk management, product development, distribution, ICT and
HR are frequently sent on assignments. In total more than 250 people were sent on assignments in 2008.
The strategic alliances enable a large section of the population to access financial services provided by
the partner banks, and at the same time reinforce Rabobank’s global position in the food & agri sector.
Currently there are six partner banks. In 2008, Rabo Development acquired minority interests in Banco
Regional in Paraguay and Banque Populaire du Rwanda. In earlier years, Rabobank Group had acquired
interests in the National Microfinance Bank, in Tanzania, Zambia National Commercial Bank, United Rural
Cooperative Bank of Hangzhou, in China, and Banco Terra, in Mozambique.
But access to financial services is not a given for everyone, not even in the Netherlands, for instance
for those who have physical disabilities or a lack of skills. Rabobank also wants to be there for these
groups. That is why we place particular focus on first-time home buyers, for instance, and on other
vulnerable groups on the housing market. Rabo Real Estate Group has developed facilities to make
home ownership possible and affordable for first-time buyers.
Rabobank also provides broader access to loans by offering a range of products based on state
guarantees and guarantees provided by Stichting Garantiefonds Rabobanken, our own guarantee fund.
Access to savings products and payment services for vulnerable client groups has been improved, for
instance by introducing the Random Reader Comfort, which allows the elderly, people with a visual
impairment and the motorically challenged to make use of our online banking services. In addition, 750
cash dispensers were equipped with a speech function for visually impaired and low-literacy users.
Besides this, people aged 60 and over were introduced via training sessions to Rabo Mobiel, the talking
e-purse and online banking. Through the Thuisadministratieproject (home accounting project),
Rabobank assists people who are prevented by circumstances to keep their records in good order.
In 2008 local Rabobanks and Robeco co-organised courses to teach young people and school-going
children to become financially literate and not rack up too many debts. De Lage Landen and Obvion
published leaflets educating consumers about the various aspects of consumer loans and mortgages.
Funds bolster cohesion and solidarity
At Rabobank, we feed some of our profits back to society in the form of cooperative dividend.
Our cooperative dividend amounted to EUR 41.5 million in total in 2008. Of this amount, EUR 20.4
million was distributed by the cooperative funds of the local Rabobanks, EUR 17 million by the
Rabobank Foundation, EUR 3.7 million by the Project Fund and EUR 122,500 by the Herman Wijffels
Innovation Award; our employees contributed the remaining EUR 308,450 via the Share4More Fund.
The Rabobank Foundation supports vulnerable and underprivileged groups in Dutch society as well as
being active in 25 developing countries. The Project Fund contributes to innovative, sustainable projects
with economic and social relevance, and the Herman Wijffels Innovation Award stresses the value that
we place on innovation and sustainability. The Share4More employee fund helps to improve the position
of women, children and disabled persons in developing countries. The national funds are more and
more looking to align their foreign activities to the commercial operations undertaken by Rabobank
Development and Rabobank International.
Rabobank Nederland, Rabobank International and the other Group entities spent EUR 3.8 million on
community investment in 2008.
Rabo Real Estate Group offers facilities, expertise and human resources on a not-for-profit basis via
Fondsenbeheer Nederland with the aim of promoting a sustainable society. The independent social
investment funds it supports, which are linked to social property and the quality of the environment,
are active in the areas of listed buildings (Nationaal Restauratiefonds), nature conservation (Nationaal
Groenfonds), public housing (Stimuleringsfonds Volkshuisvesting Nederland) and industrial heritage
(Nationale Maatschappij tot Behoud, Ontwikkeling en Exploitatie van Industrieel Erfgoed).
50
Rabobank Group’s CSR strategy
CSR in society: trends and issues
-Sustainable conduct as the standard for
financial services
-Scarcity of natural resources, which
contributes to financial and social
instability
-Environmental degradation caused by
pollution and climate change
-Increasing need for more sustainable
production
-Strong growth in renewable energy
resources
-Companies devoting more attention to
all their stakeholders
CSR as part of our business:
mission and core values

CSR results
Rabobank Group strategy for 2009-2012
-Integration of CSR into financial
products and services, and real estate
-Sustainable innovations in food &
agribusiness, SME and large businesses
- Microfinance in developing countries
-Sustainable own business operations
regarding HR and the environment
- Employees committed to CSR
-Donations and sponsorship as social
dividend
- High CSR ratings
-Cooperative identity
-Market leader in all-finance services in
the Netherlands
- Global food & agri bank
- High credit rating
- High-quality CSR policy



-Rabobank Group aims to serve the
economic interests of its members and
clients
-It does so on the basis of its four core
values, which are respect, integrity,
professionalism and sustainability
-It wishes to contribute to the
sustainable development of society in
economic, social and ecological terms

Four central CSR themes for 2009-2012
High quality CSR policy
-Introducing sustainability to food & agri
chains
-New production methods and
renewable energy
- Economic participation and diversity
- Social cohesion and solidarity
- Focus on four central CSR themes
-Integrating CSR into core business and
business operations
-Internal and external debates and
dialogue about issues and cases
-Integrating Annual Sustainability Report
and Financial Annual Report
51

Annual figures
Consolidated balance sheet
2008
2007
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
7,105
33,776
11,576
7,896
66,759
426,283
31,665
497
3,455
3,728
5,870
1,038
298
1,619
10,555
2,129
43,218
29,179
18,133
26,089
372,968
50,355
859
4,558
3,183
5,572
1,105
419
1,565
11,159
Total assets
612,120
570,491
52
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 company
Capital Securities and Trust Preferred Securities III to VI
Minority interests
Total equity
Total equity and liabilities
53
Annual figures
2008
2007
23,891
304,214
135,779
77,230
8,644
24,797
875
227
474
371
2,159
578,661
46,332
276,610
141,812
31,097
10,518
27,303
1,167
202
851
896
2,294
539,082
20,074
6,236
26,310
3,510
3,639
33,459
612,120
19,684
6,233
25,917
2,779
2,713
31,409
570,491
Consolidated profit and loss account
For the year ended 31 December
2008
2007
Interest income
Interest expense
Interest
27,245
18,728
8,517
29,356
22,585
6,771
3,400
511
2,889
3,394
537
2,857
(26)
(1,155)
(51)
1,478
11,652
753
(515)
64
1,092
11,022
Staff costs
Operating expenses
Value adjustments
Taxation
Net profit
4,290
2,796
525
7,611
1,189
2,852
98
2,754
4,400
2,779
484
7,663
266
3,093
397
2,696
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
2,089
316
94
100
155
2,754
1,971
299
17
106
303
2,696
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
54
Consolidated statement of changes in equity
Equity of Rabobank
Rabobank
Capital
Nederland and local
Member
securities
Minority
Rabobanks
Certificates
and TPS
interests
Total
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
Transferred to net profit for the year – available-for-sale
financial assets
Costs of issue of Capital Securities
Total income and expense for the year recognised directly
in equity
Net profit
Total income and expense
Payment on Rabobank Member Certificates and Trust
Preferred Securities III to VI (TPS)
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
-
-
(17)
-
315
(17)
153
1,971
2,124
299
299
(187)
123
(64)
(809)
303
(506)
(843)
2,696
1,853
-
(299)
-
(123)
1,007
-
(422)
1,007
134
19,684
415
10
6,233
2,779
(415)
(550)
2,713
(406)
31,409
At 1 January 2008
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
Transferred to net profit for the year – available-for-sale
financial assets
Costs of issue of Capital Securities
Total income and expense for the year recognised directly
in equity
Net profit
Total income and expense
Payment on Rabobank Member Certificates, Trust
Preferred Securities III to VI (TPS) and Capital Securities
Issue of Capital Securities
Share premium
Other
At 31 December 2008
19,684
6,233
2,779
2,713
31,409
(1,898)
(1)
(32)
(337)
-
(91)
472
56
(1,426)
(1)
(32)
(372)
511
-
-
(12)
-
511
(12)
(1,757)
2,089
332
316
316
(103)
194
91
528
155
683
(1,332)
2,754
1,422
(115)
173
20,074
(316)
154
(151)
6,236
(194)
835
(1)
3,510
243
3,639
(510)
835
39
264
33,459
55
Annual figures
Consolidated cash flow statement
For the year ended 31 December
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 and to 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
Dividends received from associates and financial assets
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 flows 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
56
2008
2007
2,852
3,093
525
1,189
(12)
84
2
1,155
51
484
266
(9)
(698)
(6)
515
(64)
(12,999)
17,603
(40,670)
7,731
(53,315)
68
(15,330)
7,610
(7,097)
3,335
(18,044)
71
46,133
27,604
(6,033)
(1,874)
(789)
12,948
2,253
4,403
14,598
13,746
(131)
(833)
893
6,802
(181)
1
(1,638)
893
(16,508)
(431)
18
(559)
398
(21,443)
19,889
2,456
15,156
(6,861)
823
(510)
(46)
267
4,976
2,129
7,105
990
(422)
(10)
558
499
1,630
2,129
27,088
18,219
28,831
21,620
Business segments
Wholesale
banking and
Asset
Domestic retail
international
management
banking
retail banking
and investment
Leasing
Real estate
Other¹⁰
Total
For the year ended 31 December 2008
External income
Income from other segments
Total income
Segment expense
Operating profit before tax
Income tax expense
Net profit
10,351
(3,950)
6,401
4,243
2,158
541
1,617
(4,474)
6,471
1,997
2,494
(497)
(524)
27
1,796
(178)
1,618
1,055
563
125
438
1,742
(727)
1,015
714
301
66
235
1,102
(675)
427
394
33
9
24
1,135
(941)
194
(100)
294
(119)
413
11,652
11,652
8,800
2,852
98
2,754
For the year ended 31 December 2007
External income
Income from other segments
Total income
Segment expense
Operating profit before tax
Income tax expense
Net profit
7,849
(1,941)
5,908
3,980
1,928
495
1,433
(1,882)
3,871
1,989
1,731
258
(76)
334
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
963
(958)
5
95
(90)
(269)
179
11,022
11,022
7,929
3,093
397
2,696
10) Including elimination of inter-segment items for segment profit or loss.
57
Annual figures
Profile
Rabobank Group is an international financial service provider operating on the basis
of cooperative principles. It comprises 153 independent local Rabobanks and their
central organisation Rabobank Nederland and its subsidiaries. Rabobank Group
employs around 61,000 FTEs in 45 countries. Its operations include retail banking,
wholesale banking, asset management, leasing and real estate. It serves some 9.5
million clients around the world. In the Netherlands, its focus is on all-finance
services and, internationally, on food & agri. The Rabobank Group entities have
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 and Moody’s. In terms of Tier I capital, Rabobank Group is among the world’s
twenty largest financial institutions.
Local Rabobanks, Rabobank Nederland and Rabobank International
The independent local Rabobanks make up Rabobank Group’s cooperative core business. Firmly rooted
in society, committed, near-by and a leader, each has its own work district. Clients can become members
of their local Rabobank. In turn, the local Rabobanks are members of Rabobank Nederland, the supralocal
cooperative organisation that advises and supports the banks in their local services. Rabobank Nederland
also supervises the operations, sourcing, solvency and liquidity of the local Rabobanks. With around
1,100 branches and nearly 3,100 cash dispensing machines, the local Rabobanks form the densest
banking network in the Netherlands. Together, they employ nearly 29,000 FTEs. In the Netherlands,
the local Rabobanks serve approximately 7.5 million clients, both private and corporate, offering a
comprehensive package of financial services.
Rabobank Nederland is the holding company of a number of specialised subsidiaries in the Netherlands
and abroad. Rabobank Nederland employs more than 6,000 FTEs. Rabobank International is Rabobank
Group’s wholesale bank and international retail bank. It employs more than 15,000 FTEs world-wide and
has branches in 27 countries.
Mission and ambition
Rabobank Group works for the common interest of people and communities, with the objective to
achieve their present and future ambitions by supplying the best possible financial solutions and by
strengthening mutual collaboration. Based on its commitment, Rabobank Group aims to be a driver and
an innovator that contributes to the sustainable development of prosperity and well-being. Based on
this mission, Rabobank Group’s ambition is to be the largest, best and most customer-driven 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 major food and agriculture countries. For this purpose, Rabobank Group uses the
expertise it has accumulated in the Netherlands over many years. In addition, Rabobank Group aims at
global excellence in sustainable entrepreneurship, as would befit its identity and position in society.
Rabobank Group works hard to embed corporate social responsibility in its core activities even further.
The Rabobank values
Rabobank’s stance in the world is defined by core values that are derived from its mission and ambition:
respect, integrity, professionalism and sustainability. All Rabobank Group entities have endorsed these
core values as the preconditions for our actions.
58
-Respect: Rabobank Group works with others on a basis of respect, appreciation and commitment.
-Integrity: Rabobank Group aims to be fair, honest, careful and reliable in all its actions.
- Professionalism: Rabobank Group serves its clients with high-quality knowledge and facilities.
It strives to maintain that high quality – anticipating where possible on clients’ future needs – and to
offer its services in an efficient manner.
-Sustainability: Rabobank Group aims to contribute to the sustainable development, both economically,
socially and ecologically, of society. It achieves this through, among other things, the Rabobank
Foundation, which is funded by Rabobank Group as a whole and helps disadvantaged groups, both
at home and abroad, with the aim of giving them the perspective of becoming self-supporting.
In addition, Rabo Development has been established with the aim of supporting, with both people
and means, the development of partner banks in emerging countries.
Based on these core values, Rabobank Group offers all the financial services needed by clients as they
participate in an economy-driven modern society. Rabobank respects the culture and traditions of
the countries where it operates without losing sight of its own objectives and values, and laws and
regulations.
Rabobank Group
Situation at 1 January 2009
9.5 million clients
1.7 million members
153 local Rabobanks
Rabobank Nederland
Support of local Rabobanks
Rabobank Group staff functions
Rabobank International
Private individuals
Food & agri
Corporate Social Responsibility
Small & medium-sized enterprises
Wholesale banking
Investor Relations
Private Banking
International retail banking
Long Term Funding
Other staff units
Other support units
Labels
Asset management
Leasing
Real estate
Insurance
Housing
Business
Robeco
De Lage Landen
Rabo Real Estate Group
Eureko (39%)
Obvion
Bizner
Schretlen & Co
- Athlon
- Bouwfonds Property
- Interpolis
Moviq
Rembrandt F & O
Sarasin
- Freo
IRIS
- Crediam
Orbay
Development
Zoekallehuizen.nl
- MAB Development
- FGH Bank
- Bouwfonds REIM
- Fondsenbeheer
Nederland
The local Rabobanks 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 organisation chart. In the Netherlands, Rabobank Nederland facilitates the local Rabobanks, including the development of new products and marketing support. It performs staff functions 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.
59
Profile
Colophon
Published by
Rabobank Nederland Communications
Materials used
This document was printed using environmentally friendly materials.
The ink was mineral oil-free Novavit® Easy Mix Bio and the paper 130 and 300 gram Arctic the Volume (FSC certified).
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.
Our reports
Rabobank Group publishes the following reports in both Dutch and English:
- Annual Summary 2008 (March 2009)
- Annual Report 2008 (April 2009)
- Consolidated Financial Statements 2008 (April 2009)
- Annual Sustainability Report 2008 (April 2009)
- Financial Statements Rabobank Nederland 2008 (April 2009)
- Interim Report 2009 (August 2009)
All reports are available online at:
www.rabobank.com/reports and www.rabobank.com/jaarverslagen
Contact
jaarverslagen@rn.rabobank.nl
Photography
The covers of our reports and page 7 of this report contain edited photographs. The photographic concept consists of two layers:
an environment layer and a people layer, with the people in the foreground overlapping the various living and work environments.
This emphasises the diversity in people and communities, as well as their interdependence. It is in the context of this diversity and
interdependence that that Rabobank operates: reliable to people and committed to their way of living.
Hier FSC logo plaatsen
60
Annual Summary 2008
Rabobank Group
13693 04 2009
www.rabobank.com/reports
Rabobank Group
Annual Summary 2008

Annual Summary Rabobank Group

Transcription

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