Strategy and targets
Market and clients
The domestic retail banking business - the local Rabobanks, Obvion and Bizner -
had an excellent year, in both financial and commercial terms. Net profit was
24% higher, at EUR 1,349 (1,091) million. As income increased and expenses
were lower, the efficiency ratio improved by 3.6 percentage points to 66.2%.
In 2007, Rabobank Group succeeded in strengthening its position in the
mortgages market as well as in the savings market. In the mortgages market,
where competition remains fierce, the local Rabobanks and Obvion are the clear
market leader, with a combined market share of 28% (26%). Rabobank Group's
share in the Dutch savings market grew from 39% to 41%. Its share in the SME
market was unchanged at 38%. In the start-up market, Rabobank Group
succeeded in growing its market share by 5 percentage points to 38%. Lending to
the food agri sector also showed an increase. The local Rabobanks sold more
Alles in één Polis and Bedrijven Compact Polis insurance policies.
Having and keeping satisfied customers is priority number one for Rabobank.
Changing client needs call for a change in the services provided by the local
Rabobanks to their corporate and private clients in the future. The Rabobank
2010 project, which was started in 2007, is the response of the local Rabobanks
to the changing conditions.
- To be and remain the 'near-by bank' of the Netherlands, both in physical and virtual terms.
- To pursue market leadership in all financial services sectors in the Netherlands.
- To strengthen our position in large cities.
- Customer satisfaction score of at least 7.5.
- Annual net profit growth of 6 to 10%.
The turmoil in the financial markets affected the Dutch economy only slightly in 2007.
Consumer spending increased in the Netherlands, which benefited the corporate sector,
despite the higher interest rates in the money and capital markets and the decrease in
consumer confidence.
Increased consolidation changed the banking landscape in the Netherlands considerably in
2007. Rabobank however, remained true to itself and this was part of the reason why many
private clients opened Rabobank accounts and the numbers of corporate clients at the local
Rabobanks grew.
The higher interest rates caused demand for mortgages to be lower in 2007. The number of
mortgage switches was particularly lower. Partly as a result of this, the fierce competition in the
mortgages market continued, leading to lower mortgage margins for the local Rabobanks.
Due to the increased uncertainty and the rise of short-term interest rates, clients increasingly
opted for mortgages with a longer fixed-interest term. Currently, more than 50% of the clients
opts for a mortgage with a 15-year fixed-interest term or longer. As a result of the increasing
interest rates, more savings-based mortgages were granted and the demand for investment-
based mortgages declined.
From 1 January 2008, the Dutch government allows bank savings on easy fiscal terms.
In response, Rabobank has developed two new banking products: the Rabo
OpbouwHypotheek and the Rabo ToekomstRekening. The Rabo OpbouwHypotheek could be
an interesting product for new mortgage clients. The Rabo ToekomstRekening enables pension
savings or investments on easy fiscal terms for clients.
The positive economic development in 2007 caused a rise in sales in nearly all SME sectors.
Competition in the corporate lending market continued unabated in 2007. At the same time,
lending to the trade, industry and services sector grew by 16% tot EUR 46.1 (39.9) billion and
corporate time deposits grew by EUR 9.4 billion to EUR 13.8 billion.
40
Rabobank Group Annual Report 2007
