Rabobank
Group, annual
results 1987
RaDo
band
For the Rabobank Group, 1987 was characterized by a substantial
increase in profit before provision and taxes, which had been de-
creasing in the previous two years. While the rise in income by near-
ly 4% was slightly higher than in 1986, the growth in expenses was
constrained at 2% as against 6% a year earlier. Profit before provi
sion and taxes consequently went up by 7% (1986: down by 2%) to
f 1,487 (1986: f 1,390) million. After deducting a transfer to the
provision for general contingencies of f 477 million (equal to last
year's) on the one hand, and substantially (40%) higher taxes on the
other, the net profit remaining was up by 1% at f 692 (1986: f 685)
million. Consolidated total assets exceeded those of a year earlier
by more than 4% and stand at f 145.5 billion (1986: f 139.7 billion).
Issue I/April 7, 1988
Profit before provision and
taxes up by 7% to f 1,487 million
Net profit higher by 1% to reach
f 692 million
Renewed strong growth of 6% in
lending
Lending
As was the case in 1986, the year
under review saw vigorous growth
in lending operations. Under the
condition of price stability in the Dutch
economy, total private sector loans out-
standing rose by 6% (1986: 8%) to f 99.1
billion. Contributions came from rises in
the agricultural sector (3%}, trade, industry
and services sectors 6% and private individ
uals 8%. Measured in terms of Dutch guil-
ders, international lending was naturally
under pressure from the depreciation of
the US dollar. However, despite this ad-
verse influence, growth was evident. Only a
small and steadily declining portion of the
foreign loan portfolio was invested - most-
ly in the interbank sphere - in the so-called
debtor countries. By far the largest part
concerned Europe and North America. The
financing of foreign public authorities is de
clining in favour of international concerns
and goods traffic. Fierce international com-
petition notwithstanding, branches abroad
were able to achieve significant growth in
lending operations. The Rabobank's opera
tions abroad now account for 21% of its to
tal assets.
Attracting funds
The rise in funds entrusted was con-
siderably lower than expected. This was at-
tributable to a disappointing performance
in the area of savings which feit the ad-
verse impact of tax regulations. The growth
in funds entrusted was insufficiënt to
cover the needs of lending operations,
which meant that substantial borrowings
had to be contracted on the domestic and
international money and capital markets.
Aggregate funds entrusted and borrowed
rose in 1987 by 4.6% to f 108.2 billion
(1986: 5.3% to f 103.4 billion).
Income and expenses
In the past year, too, interest margins
were under pressure. Thanks to larger
volumes, net interest nevertheless in-
creased by nearly 4% to f 3,763 million
(1986: f 3,630 million). Commission went
up by more than 8% to f 635 million (1986:
f 586 million). The reason was a further ex-
pansion in activities on all major fronts
(such as insurances, payment transactions
and securities). Other income was affected
by the stockmarket crash in the fall. It
amounted to f 130 million (1986: f 154 mil
lion). Total income reached f 4,528 million
(1986: f4,370 million).
Total expenses came to f 3,041 million
(1986: f 2,980 million). The rise in costs
could be constrained by cost control, mod
erate personnel growth and a change in the
calculation of pension premiums. The
number of employees of the Rabobank
Group went up by 679 (1986: 1,425) to
32,646 (1986: 31,967). Of these, 620
(1986: 600) are employed at the Group's
19 foreign offices. Particularly the increase
in loans, the higher commissions and the
The press conference. Herman Wijffels, chair-
man of the Executive Board (second from the
left) and Henry KI aren beek, vice chalrman (cen-
tre) together with thelr advisers.
limited growth in expenses were cause tor
satisfaction.
Prospects
The expectations for 1988 are that
lending operations, the core business of
the cooperative Rabobank Group, will not
lag far behind the high 1987 level. Fewer
adverse external - especially tax - condi-
tions are foreseen in attracting savings in
the current year.
Barring unforeseen developments,
some increase on the 1987 results ap-
pears feasible for 1988.
Key figures 1)
Amounts (in millions of guilders) 1987 1986
4.528
3.041
1.487
Total assets 145.535
Reserves 2) 8.383
Loans and advances
to the private sector 99.081
Funds entrusted 108.152
Income
Expenses
Profit before provision
and taxes
Addition to provision for
general contingencies
Taxes
Minority interest
Net profit
Numbers of
Member banks
Members (in 000)
Offices
- branches
- agencies
Employees
Savings accounts (in 000)
Payment accounts (in 000)
Current accounts (in 000)
Loans (in 000)
139.689
7.723
93.40
103.353
4.370
2.980
1.390
477
316
2
692
922
805
2.293
1.071
32.646
8.745
3.670
500
1.135
477
226
2
685
930
820
2.345
1.114
31.967
9.020
3.550
500
1.070
1) Owing to some changes in definitions,
some amounts included will vary from informa-
tion disclosed in earlier annual reports.
2) After appropriation of net profit.