Financial developments
Eventful year closes with net profit of EUR 2 billion
Rabobank Group's results in 2013 were heavily affected by a few important
events.The sale of Robeco and the transition to the new pension scheme
had a non-recurring positive effect on the result.The settlements in
connection with the Libor investigations, much higher impairments at
Rabo Real Estate Group and the formation of provisions for reorganisation
atthe local Rabobanks as part oftheVision 2016 programme negatively
affected the result, as did the lower result from hedge accounting and the
higher value adjustments. On balance, the net result came to EUR 2,012
million, a modest decline of EUR 46 million compared to 2012. Solvency
remained as strong as ever, with a core tier 1 ratio of 13.5%. Return on eguity
came to 5.2%, and the loan-to-deposit ratio improved to 1.35.
Value adjustments amounted to EUR 2,643 million, or 59 basis points ofthe
average loan portfolio.This is a clear increase compared to the level in 2012,
and also well above the long-term average of 28 basis points. Amounts due
to customers and the Rabobank Group loan portfolio declined as a result of
the agreement to sell Bank BGZ. Amounts due to customers fell by EUR 4.9
billion, and stood at EUR 329.4 billion. Demand for loans was low, and
mortgage repayments increased.The euro moreover appreciated against
various currencies. Combined with the agreement to sell Bank BGZ, these
developments led to a 4% decline in Rabobank Group's private sector loan
portfolio to EUR 439.0 billion.
Progress in realisation of financial targets
EDTF recommendation 12 Rabobank Group's progress in the realisation of its strategic financial targets regarding
profitability, solvency and liquidity is described below:
The return on tier 1 capital - whereby the net profit is related to the level of tier 1 capital at
the beginning ofthe year - came to 5.2% in 2013 (5.4%). While this is well below the target
level, one has to remember that during difficult times for the Dutch economy and for
business, Rabobank, with its large market shares, cannot remain immune. The aim is to
improve our return to 8% in 2016, by concentrating fully on virtualisation of our services
and by managing the group divisions with a greater emphasis on profitability.
The core tier 1 ratio expresses the core tier 1 capital as a percentage ofthe risk-weiahted
assets. In 2013, this ratio rose from 13.1% to 13.5%. The volume of tier 2 capital increased, and
the capital ratio therefore also rose slightly. This ratio, which relates the qualifying capital to
the risk-weighted assets, came to 19.8% (19%). Rabobank intends to increase its capital ratios
over the coming years by improving its profitability and more specifically targeting the volume
of its risk-weighted assets. In practical terms, Rabobank Group's target is a core tier 1 ratio of
14% and a capital ratio of at least 20% by the end of 2016.
8 Annual Report 2013 Rabobank Group