Financial results
Income up 2%
Operating expenses up 4%
Value adjustments down 21%
Ambitions and outlook
House hunting via Rabobank
In 2006, Rabobank acquired
Zoekallehuizen.nl, a search
engine that each day scans the
websites of nearly all estate
agents as well as the Internet
sites offering houses for sale by
owners As a result, Zoekalle-
huizen.nl presents the most
complete list of houses on offer
in the Netherlands from both
private individuals and estate
agents. As the Dutch market
leader in mortgages as well as
Europe's largest Internet bank,
Rabobank considers this acqui
sition a fitting complement to
its services. Via Zoekallehuizen.
nl, its clients get real and practi
cal assistance in finding their
dream house, for it's a fact that
most house hunters start their
search on the Internet. The
Zoekallehuizen.nl brand will
remain and the site will even
tually become a service offered
by Rabobank through its own
website.
thanks to the growth in lending to dairy
farming. Lending the horticultural entrepre
neurs declined. Businesses in this sector were
affected by higher energy prices.
Total income increased by 2% to EUR 5,551
(5,431) million, mainly due to higher commission
income. Despite the lower margin on mortgages
and a decline in penalty interests, interest
income was up 1% to EUR 4,226 (4,202) million.
Growth in lending offset the lower interest
margin. Because the local Rabobanks sold more
insurance policies, the associated commission
income increased by 4% to EUR 379 (364)
million. In addition, commission income from
corporate treasury products was the main
cause of the increase in total commission
income by 4% to EUR 1,259 (1,205) million.
In the year under review, customers placed
considerably more investment orders at the
local Rabobanks. Due to the introduction of
lower commission rates in 2006, this did not
result in an increase in securities commission
income. Other income increased by EUR 42
million to EUR 66 (24) million.
Total operating expenses were 4% higher in
2006, at EUR 3,877 (3,735) million. The growth
in staff numbers contributed to the 6% increase
in staff costs to EUR 2,118 (1,990) million. The
rise in staffing level was due particularly to the
need for compliance with more laws and
regulations. Projects under the Identification
(Provision of Services) Act and the Disclosure
of Unusual Transactions (Financial Services)
Act resulted in higher expenses. Likewise, the
mergers of the local Rabobanks resulted in a
temporary deployment of extra staff in 2006.
Other administrative expenses increased by
2% to EUR 1,607 (1,581) million. Depreciation
charges on property, plant and equipment
were lower, causing depreciation to decline by
EUR 12 million to EUR 152 (164) million.
The improved economic climate was a major
contributor to the 21% decline of the item
value adjustments to EUR 139 (175) million.
Risk-related costs fell to 10 (14) basis points of
the average risk-weighted assets and were thus
below the long-term average of 17 basis points.
Rabobank Group desires to be and remain the
best financial services provider for its clients.
Maintaining customer satisfaction and loyalty
are spearheads in this drive. Due to mergers,
the number of local Rabobanks is decreasing
further, although the number of physical
branch offices will remain virtually stable in
2007. In addition, new forms of distribution,
both physical and virtual, will be developed.
It is Rabobank's ambition to strengthen its
market leadership position further. Optimised
customer service remains the starting point for
2007. Rabo Mobiel will be extended further.
The local Rabobanks aim to maintain their
market leadership position in the mortgage
market and Obvion will expand its position in
the broker market. Rabobank Group expects to
strengthen its market position in consumer
credits, under De Lage Landen's direction.
Rabobank Group expects to grow its market
share in the small and medium-sized enterpri
ses sector and will focus on the 'entrepreneur
in private' as well as on start-up enterprises.
This will be combined with strengthening its
position in the large cities. In 2007, Rabobank
will again be a leader in food agri. This ambi-
34 Rabobank Group Annual Report 2006
