Savings accounts
Increase in Group equity
Tier I ratio: 10.8
BIS ratio: 10.9
Notes to the profit and loss account
Development in capital and
solvency ratios
14 Rabobank Group Annual Report 2003
At the end of 2003, the volume of savings was EUR 72 (66) billion, up 8%.
The stock market climate and the economic uncertainty led many
clients to opt for the security of a savings account.
Rabobank Group's reserves increased by EUR 2.4 billion to EUR 17.3
billion.This was the result of the addition of net profit and the issue of
Trust Preferred Securities on the one hand and goodwill being charged
to reserves on the other. At the end of 2003, Group equity amounted to
EUR 23.6 billion, an increase of EUR 2.4 billion. In addition to reserves, this
item comprises subordinated loans, the fund for general banking risks
and third-party interests.
The Tier I ratio and the BIS ratio are the most common ratios used in the
financial world to measure capital adequacy. The Tier I ratio expresses
the relationship between core capital and total risk-weighted assets. At
31 December 2003, the Tier I ratio stood at 10.8 (10.3).This is higher than
our long-term target of 10.The minimum requirement set by the
external supervisors is 4.The high capital adequacy ratio is one of the
main reasons for Rabobank Group's triple A rating awarded by both
Moody's and Standard Poor's.Total risk- weighted items increased by
EUR 17 billion to EUR 183 billion.This increase was largely due to the rise
in lending.The Tier I capital increased by EUR 2.5 billion to EUR 19.7
billion, almost wholly as a result of the increase in reserves.
The BIS ratio is calculated by dividing the total of Tier I and Tier II capital
by the total of risk-weighted assets.The BIS ratio was 10.9 (10.5),
comfortably exceeding the minimum requirement set by the external
supervisors of 8.0.
Rabobank Group reported a good financial performance in 2003. Net
profit increased by 12% to EUR 1,403 million. As a result, the long-term
target was attained despite not particularly favourable circumstances.
The net profit was realised on an increase in income and expenses of
8% and 7% respectively. In view of the circumstances, income growth
was relatively sizeable. Even if the effect of acquisitions is excluded,
(in EUR millions)
2003
2002
'If a client suffers damage, he needs to know that his
insurance is good.The Claims Service department
Tier I capital
19,660
17,202
therefore revolves around client satisfaction. Staff
Tier I ratio
10.8
10.3
have been trained in this particular aspect, to always
Tier I and Tier II capital
19,892
17,414
show an understanding for the client's situation, to be
BIS ratio
10.9
10.5
friendly, to give clear information and to settle the
