Outlook for 2007
another significant increase because purchasing power will
rise again, employment will grow further and consumer
confidence is at a high level. Because of all this, economic
growth in 2007 might even turn out slightly higher than in
2006. Moreover, the market for owner-occupied houses is
likely to continue its favourable development.
However, economic recovery goes hand in hand with
tightening in parts of the labour market, with accelerated
wage increases as a probable result. It is anticipated that
such increases will be reflected in a rising inflation. Export
growth will be fairly strong in 2007, although at a some
what more moderate expansion rate than in 2006 because
world trade growth will be slightly lower due to a slow
down in growth in the United States. The interest rate curves
in both the United States and Europe clearly flattened in
2006. It is even likely that 2007 will show inverse yield curves
- with short-term interest rates higher than long-term interest
rates. This phenomenon is expected to be less pronounced
and of a shorter duration in Europe than in the United States.
For Rabobank, 2007 will be another year full of big challenges.
One of the key challenges will be to leverage the full
potential effectiveness of the scaled-up local Rabobanks.
An ambitious cost reduction policy will support income
growth to traditional levels and the imminent economic
boom will help this. On another note, we shall not stop
urging to address Dutch laws and regulations, which have
got out of hand and seriously impede efficient and client-
oriented operations.
Low interest rate margins are forcing us to cross-sell multiple
products from our range to our clients. Cross-selling will be
necessary for sustained income growth. Opportunities in
this respect include mortgages and insurance and this will
be one of the subjects of special internal focus in 2007.
In the Netherlands, Rabobank aims to further increase its
market share among large corporate clients and in private
banking. At the same time, we wish to maintain our leading
position in the market for private individuals and in the
small and medium-sized enterprises sector. The campaign
aimed at strengthening our position in the large cities, which
was launched in 2006, will be continued at full force in 2007.
Abroad, Rabobank will work hard this year to achieve its
ambition of becoming the world's largest food agri bank.
In addition, we aim to be a leader in investments in, and
funding of, various forms of renewable energy.
The year 2007 will be truly successful if top performances
are again achieved in the sports activities that we sponsor:
cycling, hockey and equestrian sports. Such top performance
can inspire us in achieving our own targets. With the
dedication of all our employees, I am confident that we
shall be able to outperform ourselves on 2006.
Finally, I thank our more than 56,000 employees, who
wholeheartedly commit themselves to our enterprise, and
wish them every success in achieving our ambitious targets
for 2007.
Bert Heemskerk,
Chairman of the Executive Board of Rabobank Nederland
Chairman's foreword 7
