Domestic retail banking
Strategy and targets
Core activities Local Rabobanks and Obvion
Review of activities
Market and clients
29 Rabobank Group Annual Report 2004
Core activities
Despite the limited economic growth, the domestic retail banking ope
rations had a good year. Income was 4% higher, although the result was
under pressure due to higher additions to provisions for loan losses. The
result went up by 3%. The local banks lost some of their market share in
the important mortgages market. Obvion gained ground, but this could
not prevent the Group's total market share from declining to 25.2%.
In recent years, more and more clients switched to Internet banking.
Not only did the www.rabobank.nl website get the most hits in 2004,
in December users voted it the best financial website of the year. The
clients' changing needs - greater use of direct channels and personal
contact when it suits the client - have resulted in a strategic change in
the branch policy. The number of branches will decrease in the future,
reflecting changing demand. However, this will be more than compen
sated by an increase in the number of points of contact, such as cash
dispensing machines.
Competition in financial services remained fierce in the Netherlands.
Consequently, profit margins on financial products were low and market
shares were under pressure. The economy showed some slight growth
in 2004, mainly thanks to increased exports. The consumer confidence
needed for continued growth was insufficient, however. Consumers
were uncertain and kept a tight hand on their purses, leading to a signi
ficant increase in savings.
Despite the ailing economy, the mortgage market developed favourably.
Total lending in domestic retail banking was 10% higher in 2004 at
EUR 184.1 (167.7) billion.
Private individuals account for 69% of lending, the trade, industry and
services sector for 20% and the agricultural sector for 11%.
Lending by sector
Private individuals 69%
W TIS 20%
W Agricultural 11%
Private clients
The local Rabobanks offer a comprehensive package of financial services
to private clients, enabling them to take out mortgages, make payments
and savings, as well as to invest and take out insurance. In the area of
investments, the Rabobanks work closely with Robeco. Schretlen Co
provides asset management services to wealthy clients of local banks.
Interpolis is responsible for the insurance products, both life and non-life,
such as the All-in-One Policy. Lending to private individuals was 12%
higher last year at EUR 126.3 (113.2) billion.
Market share in mortgages under pressure
Thanks to the low interest rates in the capital markets and despite
low economic activity, the mortgages market as a whole grew in the
Netherlands, especially as a result of mortgage switching. In the year
under review, mortgage lending by the domestic retail banking
operations grew by 12% to EUR 124.9 (111.2) billion. The market growth
rate outstripped that of the local Rabobanks: their market share in
mortgages declined from 21.6% in 2003 to 20.6% in 2004. Obvion, a
joint venture between Rabobank and ABP pension fund that sells
mortgages via the broker channel, saw an increase of its market share
from 4.1% to 4.6%. Obvion has been showing strong growth in recent
years. The combined market shares of the local Rabobanks and Obvion
was 25.2% (25.7%) in 2004, with Rabobank Group remaining the clear
market leader in the mortgages market.
Pursue market leadership in all Customer satisfaction rating of at
financial services sectors in the least 7.5
Netherlands. Increase the number of physical
Be and remain the physical and points of contact to approx. 3,200
virtual 'near-you' bank in the Efficiency ratio of 67%
Netherlands.
