m m
Financial developments
Total income up 7%
Interest
Fees and commission
Financial targets
Other income
Other administrative expenses
Operating expenses up 10%
Staff costs
Total income grew by 7% in 2006 to EUR 10,049 (9,363)
million, with particularly strong increases in commission
and other income.
Interest income increased by 3% to EUR 6,472 (6,261) million.
Fierce competition in the domestic mortgages market caused
interest margins to narrow. Due to the higher interest rates,
clients felt less inclined to settle their mortgage loans
prematurely. Income from penalty interest declined.
Likewise did the margins in wholesale banking and leasing
operations decline. Increased lending, however offset the
tighter interest margin.
The improved investment climate resulted in an increase in
assets managed and held in custody. Commission income
increased by 11% to EUR 2,296 (2,060) million, mainly due
to higher asset management and insurance commission.
- Annual net profit growth of at least 12%.
- Tier I ratio of at least 10.
- Return on equity of at least 10%.
Net profit up 13% to EUR 2.3 billion
Income up 7% to EUR 10.0 billion
Private sector lending up 17% to EUR 324.1 billion
Savings up 4% to EUR 89.5 billion
Tier I ratio down to 10.7 (11.6) due to acquisitions
Return on equity 9.4% (9.7%)
Operating expenses up 10% to EUR 6.9 billion
Other income rose by 23% to EUR 1,281 (1,042) million.
Other income includes trading results and the results on
available-for-sale financial assets and equity investments.
The trading results and the results on available-for-sale
financial assets are relatively volatile, because these items
are heavily influenced by exchange-rate and interest-rate
movements. The growth in car lease activities resulting
from the acquisition of Athlon contributed to the growth
in other income. In addition, income from the participations
in the Gilde funds was higher in 2006.
The growth in activities caused an increase in other admini
strative expenses. These expenses, which include the costs
of marketing, offices, accommodation and IT, went up by
20% to EUR 2,429 (2,031) million. Compliance costs for the
increase in laws and regulations were higher in 2006, as
were allocations to reorganisation and legal provisions.
Total operating expenses increased by 10% to EUR 6,887
(6,242) million, with staff costs accounting for 60% of total
costs.
The increase in the staffing level and standard salary
increases caused staff costs to go up by 6% to EUR 4,117
(3,880) million. Various acquisitions and the increase of
the bank's interest in Sarasin resulted in strong growth of
around 3,400 FTEs. The staffing level was also higher due
to both organic growth and more regulations. In 2006,
Rabobank Group's total number of employees grew by
11% to 50,573 (45,580) FTEs.
Net profit by Group entity
in EUR millions
1,200
1,000
2005
800
2006
600
400
200
0
Domestic
retail banking
Wholesale
banking and
international
retail banking
Asset
management
and
investment
Leasing Real estate
Financial developments 19
