Universal country banking
Direct Banking
Financial results
Increase in net profit
35 Rabobank Group Annual Report 2005
Core activities: wholesale banking and international retail banking
National Bank. This enables Rabobank NA to offer retail products outside
California and to give optimum support to the commercial operations
of Rabo AgriFinance - which operates mainly outside California.
Rabo AgriFinance's main activity is to grant business and mortgage
loans to the top end of the agricultural segment, while Rabobank NA
offers a broad range of services to retail clients.
Activities in Brazil expanded
Rabobank has operated in Brazil since 1995 and has developed a pro
found knowledge of the food and agri sector and has built up a strong
brand name. In the year under review, Rabobank expanded its activities
in this country further by opening new offices focused on serving the
larger agricultural enterprises. Its product range includes financing,
deposits and currency, and commodity derivatives.
Rabobank's universal country banking operations are in Ireland and
Poland. The banks in these countries focus on the distribution of all
round banking products to farmers, small and medium-sized businesses
and private individuals in rural areas. Universal country banking started
in 2002 with the acquisition of ACCBank in Ireland. A next step followed
at the end of 2004, with the acquisition of a 35% interest in Bank
Gospodarki Zywnosciowej (BGZ) in Poland. Rabobank attaches great
value to speedy integration of the new universal banking operations in
its existing operational and financial structure, with due regard for their
own identity in the local markets. In addition, the exchange of know
ledge receives a great deal of attention.
ACCBank Ireland
From its inception, ACCBank has had close links with the agricultural
sector. In addition, the bank focuses on small and medium-sized busi
nesses and on private services in Ireland. The range of services provided
to small and medium-sized businesses includes real estate financing,
leasing, deposits, investments and financial planning.
Since its acquisition by Rabobank, lending by ACCBank rose from
EUR 2.7 billion at 31 December 2002 to more than EUR 6.5 billion at the
end of 2005.
Rabobank Group acquired a 35% interest in BGZ
With the acquisition of a 35% interest in the Polish Bank BGZ in 2004,
Rabobank made its first major step towards Eastern Europe.
BGZ is the most important bank in the Polish agricultural and food-
processing sector. In view of its agricultural background, BGZ offers
Rabobank excellent perspectives for further expansion of its country
banking operations.
BGZ has a market share of around 3% in Poland. A rationalisation of the
bank's management and policies was carried out last year. Important
board positions have been strengthened. The new management team at
once implemented a rigorous risk management structure that conforms
to Rabobank standards. The new strategy focuses primarily on maintai
ning BGZ's leading position in the food and agri sector. Another aim is
strong expansion of the operations for retail and small and medium-
sized businesses.
The growing use of the Internet across the world has made Internet
banking an increasingly important distribution channel for Rabobank.
Internet banking makes it possible to offer savings products, investment
funds and loans on a widely dispersed basis. Owing to its strong tradition
and knowledge in this area, Rabobank maintained its high ranking
among Europe's best Internet banks.
Rabobank started direct banking in Belgium in 2002. Last year, it launched
Internet banking operations in Ireland. In Belgium and Ireland, more than
50,000 clients now use the bank's Internet banking services. Early in 2006,
Rabobank opened its Internet bank in New Zealand.
In a challenging market, Rabobank succeeded in achieving a 3% growth
of net profit, to EUR 573 (555) million, in international wholesale and
retail banking in 2005. The efficiency ratio improved from 60.0% to
57.4%. In addition, the tax burden decreased. Net profit was affected by
an increase of the item value adjustments.
Total income was down 2% at EUR 2,226 (2,261) million, mainly due
to fewer major exits by Gilde funds compared with 2004 and the
consolidation of a number of Gilde participaties.
Income was higher at Global Financial Markets, thanks to the issue of
structured products such as the Rabo Performance Clicker and the Asset
Backed RentePlus Obligatie. Corporate Finance reported lower income
in 2005, but in international retail operations, the growth in lending more
than outweighed the effects of narrower margins and income in 2005
was higher. Over 20% of total income is now generated by retail banking.
The food agri sector accounted for 26% of total income and 55% of
total income was generated in Europe, 29% in North and South America
and the remainder in Asia, Australia and New Zealand.
Total expenses decreased 6% to EUR 1,277 (1,357) million. The increase
in the number of FTEs from 5,499 to 5,960 had only a limited effect on
staff costs, because it occurred mainly in the closing months of 2005.
Other operating expenses were lower, due to the deconsolidation of a
number of equity investments by Gilde funds.
