Factoring
Financial results
Income up 17%
Ambitions and outlook
Operating expenses up 26%
Value adjustments down 16%
In mid-2006, a strategic reorientation of De Lage Landen's
factoring activities took place. The Factoring unit will be
given more prominence as Rabobank's factoring specialist.
The activities, processes and systems will be arranged so as
to be able to service clients smoothly and quickly. By offering
services in account management, portfolio monitoring and
marketing, De Lage Landen is to support Rabobank in its
offer of complementary banking products.
The 17% increase in income to EUR 842 (719) million was
mainly attributable to the growth in other income. Interest
margins were depressed by the higher short-term interest
rate, causing interest income to decline by 1% to 507 (514)
million. Commission income was virtually unchanged at
EUR 49 (47) million. A significant part of income from car
lease activities is accounted for under other income.
The acquisition of Athlon particularly contributed to the 81%
increase in other income to EUR 286 (158) million.
De Lage Landen is optimistic about further growth of its
activities in 2007. Although the pressure on margins is
expected to continue, so should the growth of the lease
portfolio. De Lage Landen is looking at opportunities for
further international expansion of its leasing activities.
As a result of the acquisition of Athlon, the car lease activities
will account for a larger proportion of total net profit in
2007. Synergies will be leveraged further. Consumer
Finance is still in its early phase and its contribution to net
profit will be limited for the foreseeable future. Likewise,
Factoring's contribution to the result is expected to be
modest.
For more information
www.delagelanden.com
The increase in regulations required a lot of effort and
involved high expenses in 2006. Operating expenses
increased by 26% to EUR 494 (392) million, largely due to
higher staff costs. The staffing level rose, particularly as a
result of the acquisition of Athlon - approximately 790 FTEs,
excluding CARe - as well as organic growth of the activities
and the increase in regulation. The staffing level grew by
36% to 4,128 (3,045) FTEs, with staff costs rising by 25%
to EUR 305 (244) million. 2006 saw additional marketing
expenses related to the start-up of the Consumer Finance
activities, which contributed to the 26% increase in other
administrative expenses to EUR 168 (133) million.
Depreciation charges were EUR 6 million higher at EUR 21
(15) million, mainly due to higher software depreciation.
The improved economic conditions and the ongoing
improvement in risk control resulted in lower value adjust
ments, which fell by 16% to EUR 77 (92) million. Compared
to 2005, risk-related costs declined to 45 (65) basis points of
the average lease portfolio, which is below the long-term
average of approximately 70 basis points.
Results (in EUR millions)
2006
2005
change
Interest
507
514
-1%
Fees and commission
49
47
4%
Other income
286
158
81%
Total income
842
719
17%
Staff costs
305
244
25%
Other administrative expenses
168
133
26%
Depreciation
21
15
40%
Operating expenses
494
392
26%
Gross profit
348
327
6%
Value adjustments
77
92
-16%
Operating profit before taxation
271
235
15%
Taxation
65
57
14%
Net profit
206
178
16%
Risk-related costs (in basis points)
45
65
-31%
Efficiency ratio
58.7%
54.5%
31-Dec-06
31-Dec-05
Lease porfolio (in EUR billions)
18.9
15.4
23%
Europe
11.0
7.5
46%
America
7.6
7.6
0%
Asia-Pacific
0.3
0.3
24%
FTEs
4,128
3,045
36%
Leasing 53
