Notes to the profit
and loss account
I
Income up 11%
Operating expenses up 8%
68 Rabobank Group Annual Report 2004
Notes to the profit and loss account
Rabobank Group's net profit grew by 12% in 2004 to EUR 1,536 million.
In previous years, interest income growth was often the main driver of
result improvements. In the year under review however, interest income
was under pressure. The higher result of 2004 was largely due to other
income, as well as to lower value adjustments to receivables.
In the year under review, total income increased by 11% to EUR 10,055
(9,018) million. The growth percentage was boosted by acquisitions and
Interpolis' accounting policy change. Organic income growth was 7%.
Interest income up 5%
Interest income in 2004 was EUR 6,249 (5,956) million, a rise of 5%.
The increase is lower than in previous years and also lower than the 7%
growth in private sector lending. The levelling-off of growth in interest
income is attributable to a lower interest margin. The interest margin
was squeezed, reflecting fierce competition in the mortgages and
savings market and a closing gap between short-term and long-term
interest rates. In addition, many clients repaid their mortgages prema
turely in previous years as a result of the low interest rates in the capital
markets and then refinanced them at a lower interest rate. This yields
extra income in the short term, but lower interest income in the longer
term. These effects are now being felt.
Commission up 14%
In the year under review, total commission increased by EUR 260 million
to EUR 2,112 (1,852) million, a rise of 14%.
Securities brokerage
Securities brokerage in 2004 was EUR 342 (297) million, up 15% on
2003. The greater part of the increase came from Alex. Despite the
decline in the number of orders, commission earned by Alex increased.
Commission income of the local Rabobanks also increased.
Asset management fees
Asset management fees consist for the greater part of management fees
received from the investment funds, but they also include placement
fees. Asset management fees were 18% higher at EUR 456 (385) million.
Commission
in EUR millions
2,250
2,000
1,750
1,500
■a Insurance
1,250
Services
1,000
Securities
750
Asset management
500
■SI Funds transfers and foreign
250
exchange arbitrage
0
Other
2000
2001
2002
2003
2004
Results on financial transactions up 84%
Results on financial transactions increased by EUR 142 million in the
year under review to EUR 312 (170) million. This is a rise of 84%. Results
on financial transactions are realised mainly by the wholesale banking
business. The increase mainly reflects the favourable results on the
trading portfolio.
Operating expenses rose by EUR 489 million in 2004 to EUR 6,732 (6,243)
million, a rise of 8%. Adjusted for non-recurring charges for provisions
and acquisitions, organic growth in expenses was 4%.
Staff costs up 7%
Staff costs increased by EUR 259 million in 2004 to EUR 4,029 (3,770)
million, a rise of 7%. Besides regular salary increases and a non-recurring
payment, three percent points of the increase can be attributed to
higher additions to the pension provisions. Rabobank Group's workforce
decreased by 633 FTEs to 50,216 FTEs.The number of job positions
declined particularly at the local Rabobanks, Rabobank Nederland,
Robeco and Interpolis, while De Lage Landen, the wholesale activities
and international retail activities, among others, saw the number of job
positions increase.
