Operating expenses unchanged
Total operating expenses were EUR 596 (594) million, virtually unchanged from 2007. Increased activities
resulted in a 6% rise in staff numbers, to 4,667 (4,411) FTEs.This contributed to the 2% rise in staff costs
to EUR 377 (369) million. Other administrative expenses decreased by 3% to EUR 188 (193) million, mainly
as a result of lower marketing and automation costs.
Impairment losses at 64 basis points
The growth in the loan portfolio and the worsened economic situation caused an 18% increase in the
item 'value adjustments' in 2008, to EUR 118 (100) million. In terms of basis points of the average loan
portfolio, the impairment losses were 64 (61) basis points.The impairment losses exceed the level of
2007 and are lower than the long-term average of 66 basis points.
Capital requirement and RAROC
Unlike Basel I, Basel II prescribes that the underlying value of lease objects be taken into account in
the calculation of the capital requirement. As a result, the capital requirement decreased by 35% to
EUR 1.1 (1.7) billion in 2008.The required economic capital, i.e. the internal capital requirement,
amounted to EUR 1.0 (1.1) billion. De Lage Landen achieved a Risk Adjusted Return On Capital (RAROC)
of 22.3% (24.2%).
Outlook
Despite the present uncertain conditions, De Lage Landen expects to increase its lease portfolio further
in 2009. The scarcity of funds and the price of risk will continue to rise. Expectations are that this will be
reflected in higher margins on new contracts. The deteriorating economic conditions could result in a
rise in impairment losses.
With less price competition, the present market conditions may benefit Vendor Finance. A more
selective acceptance policy and more stringent risk monitoring should result in an improvement of
Vendor Finance's performance. In the Dutch market, the various units within De Lage Landen will
increase their acting together at the customer interface. In addition, De Lage Landen aims to extend
its collaboration with Rabobank. Consumer Finance will pay special attention to the distribution of
loans through Rabobank. Finally, De Lage Landen believes it can meet the growth in the demand for
factoring products. Athlon Car Lease is looking into opportunities for upscaling in Europe.
48
Rabobank Group Annual Report 2008
