RABOBANK: NET PROFIT EUR 1.3 BILLION, TIER 1 RATIO 13%
(Thomson Reuters ONE) - * Net profit at EUR 1.3 billion* Equity up 10% to EUR 37 billion* Tier 1 ratio higher, at 13%* Private sector loan portfolio up EUR 7 billion, at EUR 415 billion* Bad debt costs at 55 basis points due to adverse economic conditionsSolid results in unusual times"While some economists have spotted a swallow, I, for one, do not seean economic recovery yet. Many western countries are battling withrecession, including the Netherlands, which is experiencing its mostsevere economic decline since World War II. This has created seriousproblems for customers, which in turn is reflected in RabobankGroup's results. Despite difficult economic conditions, RabobankGroup has achieved solid results for the first six months of 2009,with net profit at EUR 1.3 billion and an improved capital position.Our Tier 1 ratio has improved towards 13%.In a market in which growth in both mortgage lending and corporatelending slowed down, the local Rabobanks succeeded in strengtheningtheir market positions. More loans were extended to food & agriclients by Rabobank International and De Lage Landen. The privatesector loan portfolio grew by 7 billion to EUR 415 billion. As aresult of lower levels of activity among our clients in the secondhalf of 2009, growth in lending is likely to level off further. Inaddition, bad debt costs are expected to continue to be higher thanthe long-term average. Interest income at local Rabobanks came undersevere pressure owing to fierce competition in the Dutch savingsmarket. Improved margins, accelerated execution of the Rabobank 2010Programme and further cost reductions are therefore absolutelynecessary, not only to maintain our sound capital position but alsoto be able to continue to service our clients well, now and in thefuture," says Piet Moerland, Chairman of Rabobank Group.Rabobank GroupNet profit amounted to EUR 1.3 billion. The Tier 1 ratio was 13.0%,above the already high target level of 12.5%. Return on equity was8.7%. Rabobank Group experienced a drop in the growth rate of bothnew mortgage business and corporate lending. The private sector loanportfolio grew by EUR 7 billion to EUR 415 billion. The economicdownturn results in higher allowances for bad debts. Becausebusinesses kept lower amounts of deposits at Rabobank, amounts due tocustomers dropped by 6% to EUR 285 billion, although savings depositsheld by private individuals increased by 4% to EUR 120 billion.Income saw a 9% rise to EUR 6.3 billion, which was attributable inparticular to a strong improvement in treasury results. Thanks to arange of cost-cutting measures, operating expenses decreased by 1% toEUR 3.7 billion.The organisation, which has about 60,000 employees (in FTEs),operates in 46 countries. The customer's interests are served basedon a long-term perspective.Domestic retail bankingAs a result of the economic downturn in the Netherlands, domesticretail banking suffered from lower growth in the loan portfolio andrising bad debt costs. The business did manage to strengthen itsleading position in private sector lending and the SME market. Thelocal Rabobanks and Obvion saw a 2% rise, i.e. by EUR 6 billion, intheir loan portfolio, to EUR 275 billion, with loans to SMEsincreasing by 5%. Amounts due to customers were up 3% to EUR 181billion. This influx allowed the local Rabobanks to largely fund thegrowth in their loan portfolios themselves. Margins on savingsdropped due to fierce competition. Profit was down owing to a fall ininterest income and a rise in bad debt costs. Net profit stood at EUR486 million. More and more local Rabobanks are introducing theRabobank 2010 Programme. This program offers options for innovationand improving customer service while cutting costs.Wholesale banking and international retail bankingIn keeping with the updated strategy, Rabobank International'slending to the Dutch corporate sector and the food & agri sectorincreased in the first half of 2009. Likewise, its internationalretail banking activities extended more loans. Lending to non-coreclients was scaled down. On balance, the private sector loanportfolio for wholesale and international retail banking fell by 1%to EUR 100 billion. Services on offer for globally operating clientswere broadened further. The outflow of corporate time deposits causeda drop in amounts due to customers. Income for Global FinancialMarkets was higher as a result of a strong increase in the clientturnover as well as falling interest rates. The economic downturn ledto some impairments at Participations and an increase in bad debtcosts. Net profit at Rabobank International rose by EUR 354 millionto EUR 428 million.Asset management and investmentIn the first half of 2009, the total inflow of assets into Robeco,Sarasin and Schretlen & Co was EUR 3 billion. The stock marketsrecovered slightly in that period. At the asset management division,assets under management and held in custody were up 6%, rising to EUR195 billion, thanks to a positive cash flow and positive investmentresults. The net loss amounted to EUR 9 million, against a net profitof EUR 131 million a year ago, disregarding the gain recognised onthe sale of Alex. The drop was related to the decline in ordinarycommission income from asset management and performance-related fees.LeasingAt De Lage Landen, Rabobank Group's leasing subsidiary, net profitfell by 58% to EUR 47 million in the first half of 2009. The globalrecession suppressed clients' appetite for investment and caused baddebt costs to rise. Clients had poorer credit ratings, which resultedin fewer loans being granted. Margins on new contracts improved. Theloan portfolio grew by 1% to EUR 24 billion. Other income was downdue to the decline in the second-hand car market.Real EstateAdverse conditions continued in the property market. Rabo Real EstateGroup sold fewer homes due to reluctant customers. Bouwfonds PropertyDevelopment sold 2,636 homes in the first six months of 2009,compared with 3,384 homes sold in the first half of 2008. FGH Bankmore or less managed to stabilise the volume of its loan portfolio atEUR 17 billion, with higher margins on new loans and low bad debtcosts despite the recession. Net profit for Rabo Real Estate Groupwas down 27%, dropping to EUR 68 million.InsuranceThe local Rabobanks sell a wide range of - mostly Interpolis -insurance products. The close ties with Interpolis were a factor inthe increase in the number of Alles in één Polis insurance policiesand ZorgActief Polis health insurance policies sold. The localRabobanks sold more non-life insurance policies in the first half of2009. This resulted in a 1% increase in commission income, to EUR 186million, despite the drop in commissions from life insurance policiesby EUR 5 million.Risk managementThe current difficult economic circumstances have proved that riskmanagement is a core banking competency. Rabobank Group pursues aprudent risk policy that entails a moderate risk profile. Althoughthe impact of the economic downturn could be felt, and was evident inthe form of higher bad debt costs, Rabobank Group overall remainedvery strong in the first half of 2009. Impairment losses on illiquidassets amounted to EUR 254 million after taxation. With a Tier 1ratio of 13%, Rabobank Group's capital position remained robust, andits liquidity position remained more than adequate. Furthermore, thefull-year target volume for long-term funding had already been raisedby the end of the first half of 2009.Corporate social responsibilityCorporate social responsibility is an explicit strategic choice forRabobank Group. CSR is applied in all core activities of itsfinancial services as well as in its business operations.In order to explain how we operate in the food & agri market, we haveformulated five Food & Agri Business Principles.http://www.rabobank.com/content/news/news_archive/053-Annualsustainabilityreport2008.jspDuring the first half of 2009, Rabobank International started todiscuss these principles with its stakeholders. Robeco and Sarasinhave also continued to integrate CSR into their asset managementprocesses. As part of this, Robeco defined a policy for theintegration of ESG (environmental, social and governance) factorsinto the investment process. Sarasin decided to switch to asustainable investment style for its asset management activities,which it has offered to some of its clients since 2009. The value ofassets of Rabobank Group clients that are managed in a sustainablemanner continued to rise. At De Lage Landen, a Business PrinciplesCommittee advises the Executive Board on the application of CSRprinciples and business ethics. Rabo Real Estate Group also continuedto integrate CSR into the services it provides.Lower rate of economic contractionThe global economic slump bottomed out in the first quarter of 2009and the rate of economic decline has since then eased in almost allcountries. Nevertheless, most western economies are still inrecession. We expect that the negative economic dynamics - risingunemployment and falling corporate profits - that are currentlyaffecting many countries will continue to have an adverse effect onglobal economic trends in the upcoming quarters. Furthermore, it isnot yet clear whether the financial system will recover sufficientlyto support an economic upsurge. Although a partial upswing in worldtrade and industrial production might bring economic growth in thenext few quarters, Rabobank's Economic bureau expects broadereconomic recovery to be slow in most countries until 2010.During the first six months of the year, economic activity in theNetherlands was significantly lower across the board. We expect thesituation to stabilise in the second half of the year, but a newpredicament has arisen: as industry and international trade arerecovering from the severe economic downturn of the previousquarters, domestic spending is still falling. Spending will remainunder pressure next year as well, partly because of risingunemployment. As the global economy is expected to experience onlymoderate growth in 2010, next year's exports will not yet be able toprovide the Dutch economy with the strong driver it so desperatelyneeds. In short, while we still have a rocky road ahead of us, itlooks as if economic activity is slowly rising, leading us out of theeconomic depression.Visit www.rabobank.com/reports for more information on our reports.www.rabobank.com/pressroomFor enquiries: Rabobank Group Press Information OfficeRaymond Salet, tel. + 31 30 216 28 32 or r.salet(at)rn.rabobank.nlRoelina Bolding, tel. + 31 30 216 4304 or r.bolding(at)rn.rabobank.nlhttp://hugin.info/133178/R/1337159/318552.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 26.08.2009 - 11:00 Uhr
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