We do not shun dilemmas
Continued financial soundness
Economic outlook
Outlook for Rabobank Group
At the same time, 2007 was not without issues. Examples include the Bouwfonds affair,
the OpMaat Hypotheek, the Rasmussen issue and the significant shift in the Dutch banking
landscape. When we are successful, we are in the limelight. But this does not mean that we
make ourselves invisible the moment when difficult issues arise. And when we take a firm
position on any issue, we say so publicly.
I can be brief about the Bouwfonds affair. The issue existed even before we acquired parts
of Bouwfonds. Naturally, I regret that Rabobank Group's newly joined unit attracted negative
publicity. Still, we are confident about the competitive strength of the new Rabo Bouwfonds
combination and the perspectives it offers. The OpMaat Hypotheek issue did not cause us to
lose our heads. We have consistently pursued our policy of face-to-face discussions, offering
tailored solutions to our clients. Because Rabobank pursues long-term relationships with its
clients, the clients' interests and Rabobank's relationship with its clients come first. To us, our
ongoing duty of care is an integral part of the way we do business with our clients.
Now for the Rasmussen issue. In last year's Tour de France, the Rabobank cycling team had
victory within reach. My ticket for Paris had been booked. And then suddenly, out of the
blue, there was this courageous decision by Theo de Rooy and Rabobank. There are no
winners with such decisions - at best, they command respect in the longer term. Despite this
much-discussed event, our professional Rabo cycling team still had an excellent year, with
good results in many prominent races and tours. It was victorious in the Tour of Spain, also
known as the Vuelta, for the second consecutive year. The young talents too, showed their
best. This gives us a great deal of confidence in the future results of our efforts; not only in
the wonderful cycling sport, but also in field hockey and in equestrian sports.
There were some dramatic changes in the Dutch banking landscape. As a result, we gained
a significant number of new customers, and savings grew strongly. However, the new Fortis
ABN AMRO combination will be a formidable competitor in the future and the new situation
will benefit Rabobank for a limited period only. Meantime, we must seek to strengthen our
position, particularly in the corporate market.
Overall, and despite the credit market crisis, 2007 was a good year for Rabobank Group.
To be sure, the crisis dit not leave our operations untouched but we still met all our financial
targets. Growth in net profit was 14%, which was above our annual 12% target. The Tier I ratio,
which testifies to our excellent solvency position, was 10.7. This is above the target of 10.
Return on equity, at 10.1%, likewise exceeded the 10% target.
It is anticipated that the banking crisis will affect world economy development in 2008.
Together, the large banks, most of which have global operations, took in 2007 losses totalling
over EUR 100 billion. This has led to an unmistakable weakening of their respective solvencies,
as a result of which fewer loans can be granted and higher margins will be negotiated.
It is expected that the Netherlands, too, will see some effects of this in 2008. Taking into
account the soundness of the Dutch economy, we anticipate that our country, with economic
growth of around 2.75%, will remain in first position in Europe.
For 2008, I am moderately optimistic about the world economy. A significant economic
slowdown in the United States will be inevitable in the first half of 2008, possibly even a
recession. This might result in economic slowdown in Europe, Asia and South America as well.
Rabobank's economists assume 2% growth for Europe and 6% to 7% growth for Asia. Also, we
anticipate that the stock exchange indexes will not rise from their closing levels for 2007.
The local Rabobanks made a strong contribution to Rabobank Group's results for 2007.
For 2008, we anticipate continued strong competition in the mortgages market and increasing
competition in the savings market. For maximum synergy benefits, we intend to focus even
more on further integration of our recent acquisitions. Globally, we will continue our focus
on growth as a leading food agri bank. Following the subprime crisis, Rabobank Group will
review its various activities within Global Financial Markets.
