Corporate clients
Small and medium-sized enterprises
28 Rabobank Group Annual Report 2005
Core activities: domestic retail banking
In the year under review, private lending grew by 11% to 141.7 (128.0)
billion. The increase was mainly in mortgage loans, which grew by
EUR 14 billion to EUR 137.8 billion.
Fierce competition in the mortgages market
The enormous growth in the mortgages market confronting the local
Rabobanks in the year under review went hand in hand with unprece
dented competition. There was significant growth of 14% but because
this was outstripped by the market's growth rate, market share declined
from 20.6% to 18.9%. Obvion, the joint venture between Rabobank and
ABP pension fund that sells mortgages via the broker channel, saw a
decline of its market share by 0.5 percentage points to 4.1%. The com
bined market share of the local Rabobanks and Obvion was 23.0%
(25.2%) in 2005.
The growth in the mortgages market was realised mainly from mortgage
switches. Many clients took advantage of the historically low interest
rates and switched their mortgages to a lower rate. In 2004, this was
done frequently against a short-term fixed-interest rate but because of
the risks involved if interest rates rise, clients were stimulated in the year
under review to fix the interest rate for a longer period. Consequently,
new 20, 25 and 30-year interest rate periods were introduced, with
campaigns offering clients higher discounts if they were prepared to fix
their interest rates for a longer period. Likewise, in the final months of
2005 an identical rate was used for mortgages with fixed interest rate
periods of 6 to 11 years inclusive.
Rising market share in savings
The Dutch savings market grew by 5% to EUR 209 billion in 2005, with
the greater part realised in Internet savings. In the final months of the
year, fixed-term deposits fell because of the release of save-as-you-earn
accounts. In 2005, Rabobank Group's market share in savings rose by 0.8
percentage points to 39.4%, with the local Rabobanks accounting for
37.1% and Robeco Group's savings bank Roparco for 2.3%.
At year-end, Rabobank Group's total savings amounted to EUR 86.2
(78.3) billion, the greater part of which, EUR 77.7 (71.9) billion is entrusted
to the local Rabobanks.
Collaboration in the corporate segment pays off. In the 2005 edition of
Rabobank's Figures Trends publication, in which it analyses 75 branches,
collaboration was the central element. Around a quarter of all enterprises
participate in some sort of collaborative venture. By combining forces,
cost benefits can be realised and improvements in an enterprise's own
products and services range can be achieved.
In serving their corporate clients, the local Rabobanks work together
closely with the account managers and product specialists of Rabobank
Nederland Corporate Clients (RNCC), Rabobank International and De
Lage Landen. This produces a good mix of local knowledge and product
expertise. That this collaboration pays off is evident from the title 'Bank
of the Year' that Rabobank was awarded by corporate clients for the
quality of its professional services.
Corporate lending was EUR 3.5 billion higher in 2005, at EUR 59.1 billion.
This is a rise of 6%. The percentage of (highly) satisfied clients was also
higher, rising from 78% in 2004 to 80% in 2005.
A number of SME sectors (small and medium-sized enterprises) suffered
from unfavourable market conditions over the past years. SMEs with
their main focus abroad benefited from still-expanding exports but
those focusing on domestic consumers went through a difficult time.
For them, 2005 was another tough year, mainly because of a lack of
consumer confidence, declining purchasing power and price wars in
several sectors. In addition, there was a decline in customer loyalty.
Nevertheless, most SMEs adjusted to this economic situation by optimi
sing their internal processes and staff numbers. That there are sufficient
opportunities even in a difficult market is demonstrated by the fact that
75,000 start-up enterprises were recorded last year, particularly in pro
fessional services. The number of SMEs grew by 3.6% in 2005 to 690,000.
The number of clients at the local Rabobanks also increased, but the
increase was outstripped by the growth in the number of SMEs.
Market share among SMEs
Last year, the local Rabobanks were the clear market leader in the SME
segment. As reported in a market survey by TNS NIPO, their market
share declined slightly in 2005, by 2 percentage points, due to increased
competition. However, at 38% it remains solid. The expectations are that
due to the renewed focus of competing banks on small and medium-
sized enterprises, the local Rabobanks will have to do their utmost in
coming years to maintain their market share. The competition was felt
particularly keenly in the construction and the wholesaling sectors.
iDEAL: easier and safer payments via the Internet
The number of payments via the Internet has shown strong growth in
recent years. In order to guarantee security and to replace payments by
giro collection forms and single direct debit mandates, banks have
opted for a new payments standard. In collaboration with other large
banks, the new payments standard iDEAL has been introduced on the
Internet. iDEAL is an important innovation for corporate clients in the
retail segment that is developing strongly. It is anticipated that this new
standard will cause consumers to buy more via the Internet. An impor
tant benefit to corporate clients is the guarantee that payments are
received in time. This also applies to charity foundations, which use
iDEAL for the same reason.
