Other administrative expenses up 11%
Decrease in value adjustments to receivables
Profit appropriation
69 Rabobank Group Annual Report 2004
Notes to the profit and loss account
Other administrative expenses were 11% higher at EUR 2,335 (2,101)
million. The increase is largely attributable to provisions. The greater
part of additions to provisions related to the restructuring programmes
at Rabobank Nederland, which involved an amount of EUR 120 million.
The item value adjustments to receivables is used to account for loan
losses. Rabobank Group determines value adjustments to receivables by
way of a general provision based on a long-term weighted average of
the actual losses expressed as a percentage of outstanding loans, with
the most recent years being given the highest weightings. In the year
under review, value adjustments to receivables decreased by EUR 50
million to EUR 525 million. This decrease is almost entirely due to inter
national wholesale and retail activities as a result of the international
economic recovery. However, the addition for domestic retail banking
operations showed a relatively large increase, partly reflecting a greater
number of bankruptcies. The addition as a percentage of the average
risk-weighted assets of the banking activities improved by 6 basis points
to 29 (35).
Operating profit before taxation
Operating profit before taxation was 20% higher in 2004, at EUR 2,809
(2,348) million.
Net profit up 12%
Taxation amounted to EUR 957 (712) million in 2004. The tax burden
was 34.1%. Deferred tax assets, including those relating to the Fund
for general banking risks, were adjusted in connection with the lowering
of the Dutch corporate income tax rate in 2005 from 34.5% to 31.5%.
After taxes and third-party interests of EUR 316 million, net profit
amounted to EUR 1,536 million, up 12% on 2003.
The net profit, after distribution payments to holders of Rabobank
members' capital and Trust Preferred Securities, has been added to
reserves to the extent to which it is classified as such. This strengthens
the financial basis for the further development of Rabobank Group and
the creation of customer value in the future.
