1996 - GROWTH YEAR FOR RI General managers - NEW AGENDA WHAT'S NEWS Issue 2 February 1997 Last year saw an enormous growth in Rabobank International's balance sheet total, as well as income from investment and corporate banking.The 1996 gross profit, set to be officiaIly announced next month, was roughly NLG 575 million, against NLG 561 million the previous year, while the net advanced by an (adjusted) NLG 40 million to a provisional NLG 330 million, helped by lower-than-expected tax liabilities. Bert Bruggink: 'Solvency bas now become a scarce resource kThe tentative results all met or exceeded udgeted expectations, but there is little room for complacency, remarks Rabobank International's controller Bert Bruggink. For one thing, the year also saw an enormous growth in costs, not only because of the expansion of personnel, in parallel with our organic enlargement, but also because of investments in information technology (IT) associated with 're-wiring' the bank. 'Although we haven't seen the rate of profit increase on this scale before,' notes Bruggink, 'the growth in costs is a matter of real concern.' GROWTH LIMITS There has not yet been any significant change in the business mix as a result of recent strategie initiatives. Indeed, what was most notable about the 1996 result >'as the contribution to profits from 'trecht branch, and the offices in Australia and Asia. Growth was moderate in the US, while the European network, with the important exceptions of private banking and the London branch, made little if any contribution at all. This is significant in light of the limits to growth imposed by our solvency requirement. At the start of 1996 it stood at NLG 4.8 INTERNATIONAL GROEIT Het afgelopen jaar groeide ons balanstotaal fors. Het bruto resultaat steeg van NLG 561 min. vorig jaar naar ca. NLG 575 min. en het netto resultaat met ca. NLG 40 min. tot NLG .330 min.dankzij een lagere belastingdruk. Helaas stegen ook onze kosten fors, niet alleen door groei van het personeelsaantal, maar ook door de grote investeringen in informatie technologie. billion, and grew by NLG 800 million during the course of 1996. ROS FALL 'From the perspective of the market opportunities, we certainly could have grown more,' notes Bruggink. '1996 was the first year in Rabobank International's history when we had to apply the brakes to growth because our ability to grow the mandated regulatory set-aside couldn't keep pace.' Solvency has now become a scarce resource; no business unit can automatically expect to draw upon it to a greater degree than it contributes to our bottom line result. That a limitation in the growth of costs will be the single greatest priority for 1997 has been reiterated by Chairman Wijffels of late. Among other things, this year will see a relatively smaller increase in the solvency set-aside, from NLG 5.6 to NLG 6.3 billion. Moreover, because of an industry-wide mandated increase in solvency requirements, the return on solvency, which was 8.45 percent last year, is iikely to go down rather than rise towards the targeted 10 percent by the year 2000. REDUCING COSTS Thus, with a budgeted growth in the gross result in 1997 to NLG 650 million, and in net profit by NLG 50 million to NLG 380 million, 'the only way to achieve this goal will be to seriously limit our cost development,' says Bruggink. Another priority will be to focus on activities that do not necessarily require a 100 percent solvency set-aside to generate results. Progress will have to be made in shifting the business mix - presently about 75 percent corporate banking and 25 percent investment and private banking - towards the year 2000 target of 60-40. Fixed income, derivatives and money market activities will also play a role, as will structured finance on the corporate side, Bruggink says. In response to the increasingly regional character of our organization, Rabobank International will implement an important change in the existing system of General Managers Meetings. In 1997, there shall be two meetings: the General Managers meeting will now take place in the autumn (probably in November) and Regional Managers meetings will be scheduled in the early spring.The new structure is intended to provide a better balance between long- and short-term planning, both of which had to be addressed underthe previous regime. Under the new system, the spring Regional Managers meeting will focus on long term plans.The hope is to broaden the participation so that it allows regional officers as well as managers a chance to participate in the dialogue and offer the benefit of their front-line experience. At these meetings, the fine-tuning will take place between the plans of the focus groups and those of the offices.The General Managers meeting will focus on budget issues for the following year, and absorb input from the newly-formed focus groups as well.

Rabobank Bronnenarchief

blad 'What's news' (EN) | 1997 | | pagina 5