The outlook for Rabobank Group
RAROC down 0.6 percentage points
Risk Adjusted Return on Capital (RAROC) is used to weigh return and risk in a consistent manner.
RAROC is also used for pricing at transaction level and in the loan approval process. RAROC is
calculated by relating the net profit to the average economic capital. As a result of the decline
in net profit offset by a decline in the average economic capital in comparison to 2013, the
RAROC after tax was down 0.6 of a percentage point at 7.8% (8.4%).
RAROC
RAROC is calculated by relating the net
profit to the average economic capital
during the year.
Amounts in billions of euros
RAROC
Economic capital
2014
2013
2014
2013
Domestic retail banking
8.2%
8.6%
8.8
9.1
Wholesale banking and international retail banking
10.2%
0.6%
7.3
7.0
Leasing
31.2%
30.6%
1.5
1.4
Real estate
-15.5%
-42.9%
1.5
1.9
Total
7.8%
8.4%
23.4
23.2
We wish to be a rock-solid bank, now and in the future. Our focus in 2015 will therefore expressly
concentrate on return and the volume of the risk-weighted assets in order to retain or bring our
capital ratios to the desired levels. We will continue to serve our core customers, a wide customer
group in the Netherlands and international food and agri customers, however we will reduce
our lending to non-core customers. We will continue as ever to strive to strengthen our market-
leading position in the Netherlands and our leading role in the international food and agri
sector. We wish to further increase customer satisfaction and we will strive to further restore
our reputation.
We expect to see modest net growth in amounts due to customers, and this should contribute to
the desired improvement in the loan-to-deposit ratio. The contribution of Bank BGZ to the result
is significantly lower due to our remaining holding of slightly less than 10% and we also expect
the tax burden to return to a more normal level in 2015. On the other hand, we also anticipate a
further reduction in costs at the local Rabobanks as a result of Vision 2016. We expect to see a
further recovery in the result of our real estate business and lower bad debt costs in the
Netherlands. While the resolution levy in relation to SNS will disappear, there will be permanent
annual contributions to the European resolution fund and the deposit guarantee system in
its place.
53 Rock-solid bank: performance
