Value adjustments by group entity
Bad debt costs by group entity
Impaired loans and allowance for loan losses
Any loans, amounts due from banks and credit-related obligations that have been provided
for qualify as impaired. At year-end 2012, this involved an amount of EUR 11,203 (9,958)
million. The allowance for loan losses stood at EUR 3,842 (3,222) million, which corresponds to
a 34% (32%) coverage of impaired loans. Over and above these allowances, additional
coverage was raised through collateral and other securities. Rabobank Group applies the one-
obligor principle, which means that the exposure to the debtor and all counterparties
belonging to the same group is taken into account. In addition, the full exposure to the client
is qualified as impaired, even if adequate coverage is available for part of the exposure in the
form of collateral. Finally, Rabobank Group always takes allowances at an early stage within
the rules of IFRS. At year-end 2012, impaired loans corresponded to 2.4% (2.2%) of the private
sector loan portfolio.
in millions of euros
2012
2011
Domestic retail banking
1,329
648
Wholesale banking and international retail banking
621
686
Leasing
147
144
Real estate
237
129
Other
16
-1
Rabobank Group
2,350
1,606
in basis points of average lending
2012
2011
Domestic retail banking
44
22
Wholesale banking and international retail banking
59
73
Leasing
53
58
Real estate
124
69
Rabobank Group 52 37
Driven by the further economic decline, particularly in the Netherlands, value adjustments
rose relatively sharply in the second half of 2012; expressed in basis points of average lending,
bad debt costs stood at 49 in the first half of 2012 and at 55 in the second half of the year.
The ten-year average (period 2002-2011) is 25 basis points. This movement was seen primarily
at the local Rabobanks and the Dutch real estate activities. Expressed in basis points of
average lending, bad debt costs were down on 2011 for Rabobank International and the
leasing business. Rabo Real Estate Group is still faced with a property market under stress,
which again resulted in a near-doubling of value adjustments, just as in 2011.
in millions of euros 31-Dec-2012 31-Dec-2011
Impaired loans Allowance Impaired loans Allowance
Domestic retail banking 5,317 2,027 4,559 1,543
Wholesale banking and
international retail banking 3,456 951 3,493 999
Leasing 905 488 832 474
Real estate 1,525 376 1,066 205
Other 0 0 8 1
Rabobank Group 11,203 3,842 9,958 3,222
55 High level of creditworthiness: risk management
