Corporate social responsibility (CSR)
embedded in service provision
Financial results
Income up 18%
Operating expenses up 24%
Value adjustments down 10%
Ambitions and outlook
Income by region in 2006
ID
America 31
Europe excluding
the Netherlands 30%
Netherlands 24%
Australia and
New Zealand 9%
Asia 6%
Rabobank International has embedded its
CSR policy in its professional services. In 2006,
guidelines were established with the aim to
explicitly consider the CSR performance of
corporate clients in the procedures for accepting
new clients and lending. Implementation was
started in Brazil, Indonesia and the Netherlands.
The guidelines are a tool for account managers
and credit analysts. Issues addressed include
corruption, human rights, working conditions
and the environment. This procedure will be
implemented globally in 2007 with the aim to
promote corporate social responsibility in
consultation with our (potential) clients.
Total income increased by 18% in 2006 to
EUR 2,622 (2,226) million. The margin on lending
by the wholesale banking business was under
pressure. Partly as a result of this, interest
income increased by only 12% to EUR 1,649
(1,477) million, despite strong growth in lending.
Income from Global Financial Markets
increased by 14%. Within Corporate Finance,
Leveraged Finance made a strong contribution
to results, thus offsetting the slight decline in
income from Structured Finance. The growing
demand for acquisition finance drove up
income at Leveraged Finance by 31%. Income
from Rabo Participaties and the Gilde funds
were considerably higher thanks to improved
results on exits and revaluations. This contributed
to the growth in other income. The international
retail banking business accounted for 19% of
total income. Income from retail activities
increased by 10% to EUR 506 (460) million.
ACCBank's income was under pressure
because of the fall in lending. Income from the
other retail banking activities increased as a
result of organic growth and the acquisition in
the USA. Community Bank of Central California
(CBCC) is consolidated in the figures as from
February 2006.
Operating expenses rose by 24% to EUR 1,586
(1,277) million. The expansion of activities caused
the number of staff to increase by 12% in the
year under review, to 6,684 (5,960) FTEs.
Approximately 260 FTEs are from the former
CBCC. The increase in the staffing level led to
staff costs rising by 14% to EUR 867 (760)
million. The integration of CBCC resulted in an
additional charge in 2006. Also, more project
costs were incurred for compliance with
Basel II and 'in control' projects. Partly owing to
the acquisition of CBCC and the increase in
regulations, other administrative expenses
were EUR 191 million higher at EUR 668 (477)
million. Depreciation of buildings and software
was higher, causing depreciation charges to
rise by EUR 11 million to EUR 51 (40) million.
In 2006, value adjustments were 10% lower
at EUR 234 (259) million as a result of healthy
global economic growth and further quality
improvement in the portfolio. The risk-related
costs were 40 (56) basis points of the average
risk-weighted assets, which means that
expenses were below the long-term average
of 60 basis points.
Within wholesale banking, Rabobank will focus
on strengthening its position in the Asia region
and expanding its Trade Commodity Finance
activities in 2007. Expansion in the Asia region
should ensure sufficient scale for building a
properly spread portfolio. Expectations for the
economic potential in this region are high,
44 Rabobank Group Annual Report 2006
