Rock-solid bank
Ample capital and liquidity buffers determine financial solidity.These buffers are necessary
enabling conditions and essential for retaining a high rating and good access to professional
funding. As a result of the introduction ofthe Capital Requirements Regulation (CRD IV), capital
and liquidity buffers are subject to more stringent requirements. In the past 25 years, lending
growth outpaced that of amounts due to customers and reserves. Rabobank consequently had
to rely on capital market funding to a extent. In the future, the growth of amounts due to
customers and the annual addition from net profit to reserves will determine the scope for
growth in lending. We want to target our lending at the food and agri sector throughout the
world and at a broader customer group in the Netherlands.This will contribute to help amounts
due to customers to grow faster than lending.
Rabobank's capital buffer consists of retained earnings, Rabobank Certificates, supplementary
tier 1 capital and tier 2 capital. Rabobank's capital strategy is focused on increasing the relative
proportion of retained earnings and tier 2 capital.The share of retained earnings increases by
virtue of profit appropriation. To that end we must focus throughout the Group on restraint and
cost control. Although Rabobank does not seek to maximise profit, healthy profit growth is
necessary for ensuring continuity, security and selective growth. By expanding total capital with
tier 2 capital by means of new issues, the relative proportion of Rabobank Certificates and
additional tier 1 capital in total capital will automatically be reduced. Increasingly, the additional
tier 1 instruments issued in the past are excluded in determining capital ratios.Therefore we will
issue new instruments in the years ahead that do qualify as tier 1 capital.
The Rabobank Group aims to achieve the following concrete financial targets by the end of
2016 in the areas of profitability, solvency and liquidity:
return on tier 1 capital of 8%;
common equity tier 1 ratio of 14% and capital ratio of more than 20%;
loan-to-deposit ratio of 1.3.
Financial targets
Strategic Framework
Target for
year-end 2016
Actual 2014
Contribution to target in 2015
Profitability
Return on tier 1 capital
8%
5.2%
- Further implementation and execution of Vision 2016
will result in a decrease ofthe costs of local Rabobanks
and Rabobank Nederland.
- Improvement ofthe return on invested capital at all
other divisions.
Solvency
Common equity tier 1 ratio
Capital ratio
14%
20%
13.6%
21.3%
- Composition of capital changes: relatively more
retained earnings and tier 2 capital and relatively less
Rabobank Certificates and additional tier 1 capital.
- Divisions will be managed strictly on the basis of their
capital requirement.
Liquidity
Loan-to-deposit ratio
1.30
1.33
- Selective growth in lending.
- Diversification of sources of funding.
- Focus on stable funding.
Meaningful cooperative
The cooperative model is the foundation under the Rabobank organisation. Almost two million
customers in the Netherlands are members of their local Rabobank. They have the opportunity
to voice their views and participate in decision-making on the policy ofthe local Rabobank
through a members council, thereby ensuring that the local Rabobanks remain in touch with
the community of which they are part/Cooperative banking'is based on four focus areas that
are connected with the financial products and services of Rabobank: a long-term relationship,
commitment to a better world, participation and solidity.
13 Strategy
