Chairman's foreword
A year of hopes and fears
A successful result
Market leadership in the Netherlands
Corporate social responsibility
7 Rabobank Group Annual Report 2004
Chairman's foreword
Rabobank Group has its roots in the Dutch agricultural sector. Founded
over a century ago, we have since become the uncontested market lea
der in numerous business areas. But our ambitions stretch even further.
We also want to be the global number 1 in food agri. That ambition
is spelled out in the theme of this Annual Report, which illustrates the
role we are playing as a financial link in the food chain throughout the
world today. A number of new, concrete initiatives have been taken in
order to strengthen that role: from Poland to Utrecht and from China to
the west of the USA. These are steps that made 2004 a special year for
Rabobank Group.
The year 2004 can probably best be described as a year spent between
hope and fear. Fear reigned in the financial markets because of the oil
price volatility fuelled by the crisis in Iraq and its unpredictable conse
quences for the world economy. Disaster struck, not only in large parts
of Asia after the tsunami, but also in Africa and the Middle East, where
smouldering and blazing political trouble spots just cannot be resolved.
Yet, there was a glimmer of hope. Despite all the gloominess, world
trade increased significantly. The economy in Europe too, seemed to
turn around and head in a more positive direction again. Growth was
still meagre however, both in our European neighbour states and in
the Netherlands itself, and leaned mostly on strongly increased exports.
Confronted with a government cutback policy that was too strict as well
as badly timed, Dutch consumers still kept a tight hand on their purses,
although they did spend slightly more than in 2003.
Amidst this unpredictability, Rabobank Group achieved a successful
result. Net profit was 12% higher, which was in line with the long-term
target. The Group performed well across the board. Despite the ailing
economy, domestic retail banking operations - the bulk of which is
performed by the local Rabobanks - held up well in 2004. Wholesale
banking operations, including the international retail banking operations
integrated therein, showed another marked result improvement.
The insurance business likewise showed a marked growth in profit before
taxation, continuing the trend of 2003. Results on asset management,
leasing and real estate equally showed a handsome increase.
These achievements further strengthened the foundation on which we
can build our ambitions. Rabobank Group wants to be the all-finance
market leader in the Netherlands and important steps were taken in
the year under review in order to underpin our influential position even
further. These steps included the internal bundling of strengths to
increase our share of the market for wealthy private individuals,
reinforcing the basis for successful operations in the corporate market,
and launching a focused campaign to increase our market share in large
cities, particularly among ethnic minorities. Market leadership in all-
finance also requires a leading position in the insurance market. A first
step in that direction was made with Rabobank Group's collaboration
agreement with Eureko/Achmea, which was concluded early in 2004.
This agreement takes the form of a 5% interest in Eureko Group's capital
and the start of intensive collaboration in healthcare insurance between
our insurer Interpolis and Zilveren Kruis Achmea.
World's number 1 in food agri
The investments aimed at being the world's number 1 in food agri
were increased in the year under review. For example, at the end
of 2004 we acquired a 35% interest in the Polish Bank Gospodarki
Zywnosciowej (BGZ) for the sum of approximately EUR 150 million.
With 300 offices throughout the country, BGZ is the most important
bank in the Polish agricultural sector. Our wish for accelerated growth
in the USA received a setback when the planned take-over of Farm
Credit Services of America fell through in the end. Flowever, we have
not changed our goal to become one of the major financiers of farmers
and ranchers in the USA in the coming five years, by means of organic
growth and smaller acquisitions.
In order to be a global leader in sustainable development, Rabobank
Group wants to give corporate social responsibility (CSR) an even higher
profile. It is vital to embed firm principles in the reality of day-to-day
business. This includes incorporating relevant CSR standards in the
lending process and other forms of service provision, making our
operations more sustainable, increasing our market share in sustainable
financial products and stimulating the social involvement of Rabobank
staff. Abroad, this social involvement is put into practice via the Rabobank
Development Program (RDP). This programme, which was launched last
year, brings together various activities, some of which have existed for
some time, and new initiatives. The Rabobank Foundation - which
celebrated its 30th anniversary in 2004 - has supported numerous
projects in developing countries for more than three decades in order
to help the local population on their way to economic independence.
This effort received some new impulses. After the tsunami, action was
taken via the Foundation to rebuild affected areas. In addition, a new