Chairman's foreword Decline in profits due to economic adversity Earnings from divisions in 2012 For Rabobank, 2012 was a difficult year without any economic recovery. The Dutch economy contracted more in 2012 than foreseen at the beginning of the year. The year was characterised by a drop in consumer spending, rising unemployment, falling house prices and a lack of business investments. The debt crisis caused uncertainty in the financial markets. The drop in earnings was relatively strong in the domestic retail banking division in particular due to higher value adjustments, lower interest income and mounting operating expenses. In addition, Rabo Real Estate Group delivered a significantly worse performance and the bank tax weighed down profit by EUR 196 million. Total net profit for 2012 saw a 20% drop on 2011, landing at EUR 2,112 million. Our solvency and liquidity positions remained robust: the core tier 1 ratio rose to 13.2% and the tier 1 ratio to 17.2%. We have our strong capital position to thank for the fact that we once again managed to raise adequate funding for our activities in the international financial markets over the past year. Our international reputation has not been tarnished. Sustainability and socially responsible business practices have become an integral part of a business's licence to operate. The call for transparency and accountability is rising, especially in the financial sector. The role of banks and their position in society are under scrutiny and this will not change in the years to come. After all that has happened, banks need to win back the trust of consumers. We, too, have to work to strengthen the trust of our members and customers. We have declared 2013 'The Year of the Customer', in which community involvement, transparency and accountability will be priorities. Rabobank is broadly recognised and acknowledged as an exceptional player in the market. In terms of our history, structure, governance and objectives, we are, in fact, fundamentally different from other banks. Thanks to our cooperative structure, we offer an unparalleled and robust institutional framework for members and customers to seek dialogue with us about shared interests such as the sustainable economic development of local communities. This is how we make a positive impact on social issues that directly affect our customers. The lack of economic recovery translated mainly into a drop in earnings from domestic retail banking. Businesses in all sectors of industry suffered from the poor economy, but those active in construction and real estate, transport, retail, glasshouse horticulture, and maritime shipping and inland navigation were hit particularly hard. This was reflected in value adjustments, which were up EUR 681 million to reach EUR 1,329 million (i.e. 44 basis points, which is higher than the long-term average of 13 basis points). The loan portfolio sawa 4% growth to EUR 306.5 billion thanks primarily to the consolidation of Friesland Bank. Amounts due to customers were up 7% to EUR 213.9 billion. Although the integration of the Friesland Bank operations demands a lot, the project is progressing as planned and will be completed in 2014. There was a fall in interest income. Operating expenses were up at the local Rabobanks due to the costs associated with the implementation and enforcement of stricter rules and regulations. As a result, the efficiency ratio worsened from 57.4% to 59.8%. Net profit from domestic retail banking fell by 30%, dropping to EUR 1,304 million. Despite the challenging economic climate, Rabobank International had a relatively good year, posting a profit of EUR 704 million, a 10% drop on 2011. Lower interest spreads and higher operating expenses put pressure on earnings, but they were offset, in part, by gains from the sale of shares in Indian-based Yes Bank. Rabobank has been the leading bank for Dutch wholesale clients since 2011The loan portfolio showed slight growth in 2012, which was generated most of all in the food and agribusiness sector. We have also gained a reputation in 2 Annual Report 2012 Rabobank Group

Rabobank Bronnenarchief

Annual Reports Rabobank | 2012 | | pagina 3