Financial results
Net profit up 22%
Ambitions and outlook for 2006
46 Rabobank Group Annual Report 2005
Core activities: real estate
The real estate activities realised a net profit of EUR 78 (64) million in
2005, a rise of 22%. The strong growth achieved by the Real Estate
Division last year translated into higher income and higher expenses.
Income rose 19% to EUR 150 (126) million and net interest income was
EUR 20 million higher at EUR 96 million, reflecting the vigorous growth
in the loan portfolio. The interest margin showed little change, thanks
partly to the higher level of redemptions and related penalty interest
payments by clients. Other income, which includes lease and rental
income and project results, was 8% higher at EUR 54 (50) million.
Total expenses rose 28% to EUR 41 (32) million. Due to the growth in
the number of FTEs and higher pension expenses, staff costs increased
by EUR 5 million to EUR 25 million. Other operating expenses increased
by EUR 4 million to EUR 16 million as a result of the strong organic
growth realised by the real estate division. Investments were raised last
year, particularly in the back office.
Operating profit before taxation grew by 15% to EUR 108 (94) million.
The outlook for the housing market is positive, although there is a
risk that interest rates will rise and this might affect price levels and
flowthrough. Rabobank Group expects that 2006 will be a difficult year
for the commercial real estate market. The predicted economic growth
will not be strong enough to absorb the present overcapacity in the
office market.
The focus in the development market will mainly be on inner city
redevelopment and growth in the Randstad area, i.e. the mid-west of
the country.
Margins for real estate financing will remain under pressure. The aim is
to offset this by means of further growth. Cautious steps will also be
taken in the establishment of complex financing structures.
Results (in EUR millions) 2005 2004 change
Interest
96
76
26%
Other income
54
50
8%
Total income
150
126
19%
Staff costs
25
20
25%
Other operating expenses
16
12
33%
Total expenses
41
32
28%
Gross profit
109
94
16%
Value adjustments 1 -
Operating profit before taxation
108
94
15%
Net profit
78
64
22%
Other data
31-Dec-05
31-Dec-04
Loans portfolio (in EUR billions)
7.8
6.7
16%
Land portfolio (in hectares)
2,000
1,790
12%
FTEs
331 291 14%
