International retail banking operations
Financial results
36 Rabobank Group Annual Report 2004
Core activities
RNCC operates in all Rabobank's playing fields mentioned above, fulfilling
a strong supporting role to the local Rabobanks by means of regional
teams specialised in the various client groups. In 2004, RNCC developed
strongly as an innovative banker in fields such as acquisition financing,
financial logistics, weather derivatives and C02 emission rights.
The international retail banking operations showed strong growth in
2004. Lending by the international retail banking operations was 30%
higher at EUR 13.2 (10.1) billion. ACCBank, where lending grew by more
than 50%, accounted for the greater part of the increase. Retail operati
ons in Australia/New Zealand and the United States grew by 16% and
22%, respectively. Retail operations accounted for 28% of total lending
by the international banking business. This percentage is expected to
grow further in the coming years.
Lending provided by international retail banking operations
in EUR billions
6
5
4
3
2
1
2003
0
2004
Australia/
New Zealand
Europe
United States
New collaboration with banks in Poland and Turkey
Extending its international retail banking operations is an important
element in Rabobank Group's international (growth) strategy. Rabobank
International implements this strategy and is responsible for participating
interests and acquisitions made for this purpose. In its international
expansion in retail, Rabobank Group focuses on minor financial players
in high-potential countries who have strong rural positions in either the
agricultural sector or the small and medium-sized businesses sector, as
well as on private individuals. This strategy was pursued further last year
through organic growth and acquisitions.
Unfortunately, the planned acquisition of Farm Credit Services of America
(FCSA) announced in mid-2004 did not go ahead due to the heavy
political pressure put on this co-operative agricultural bank not to leave
the Farm Credit System controlled by the American government.
majority interest in BGZ. Also at the end of 2004, Rabobank Group
announced its planned strategic collaboration with Sekerbank in Turkey.
Established as a bank of sugar co-operatives, Sekerbank now also opera
tes outside the Turkish agricultural sector, offering financial services to
private individuals and small and medium-sized enterprises. Sekerbank
has 200 offices throughout Turkey. Here too, it is Rabobank's intention
to acquire a majority interest.
Result up 40%
Operating profit before taxation was 40% higher in 2004 at EUR 908 (649)
million. This excellent growth figure was due in part to higher income,
but mainly to the sharp decrease in value adjustments to receivables.
Total income increased by EUR 208 million to EUR 2,162 (1,954) million,
a rise of 11%. Good results from the sale by Gilde of a number of
participating interests boosted income from securities and participating
interests. Around 27% of income was earned in the Netherlands, 33%
was realised in the rest of Europe, 24% in America and the remaining
16% in the rest of the world.
Income from Corporate Finance declined by EUR 4 million to EUR 294
million. Income from Global Financial Markets was 12% higher at
EUR 531 (476) million, due in part to structured products such as Asset
Backed Inflation Bonds.
Income from the Equities product group rose by EUR 27 million to
EUR 105 million. After a few difficult years, the climate for shares
recovered slightly. Also, Equities responded well to the changing needs
of investing retail clients by offering guarantee products.
In 2004, income from international retail operations was EUR 370 (285)
million, representing 17% of total income. Of total income, 43% was
generated in the food agri sector.
Income by region
Rabobank Group was more successful in Europe in the past year. At the
end of 2004, it acquired a 35% interest in the Polish BGZ bank. BGZ has
300 offices throughout the country and is Poland's most important bank
in the agricultural sector. The longer-term intention is to acquire a
Total expenses were 16% higher at EUR 1,120 (967) million. The increase
is mainly attributable to higher staff costs and higher other operating
expenses, reflecting strong growth in international retail operations.
The number of FTEs rose from 5,252 to 5,499.
