happens that a customer can no longer meet his payment obligations. In most cases, the
customer and the bank find a solution together and the customer can continue to live in his
home. In a situation of arrears or the threat of arrears, Rabobank prefers to contact customers at
an early stage in order to discuss the situation and look for solutions. There may be possibilities
to allow the customer additional flexibility in the form of a repayment arrangement or the use
of a budget coach. In 2014, recovery was no longer a possibility for 0.40% of the mortgage
customers and there were no prospects of continuing the mortgage in a stable manner.
In these cases the homes had to be sold. The preferred option here is to do this in cooperation
with the customer by means of a private sale. Public auctions are only used in exceptional
circumstances.
Bad debt costs and write-downs
The size of the mortgage portfolio with payments more than 90 days in arrears reached its
peak in early 2014, and has declined since that time. This is firstly due to declining numbers of
customers with payments in arrears and secondly a greater number of longer term payment
arrears being resolved. These developments were due to a rise in employment and the recovery
in the housing market. Loans subject to impairment thus declined to EUR 685 (893) million.
The bad debt costs in the mortgage portfolio amounted to EUR 112 million in 2014, however
these remained very low at 5 basis points. An amount of EUR 128 million was written off in the
mortgage portfolio in 2014.
Residential mortgages
in millions of euros
2014
2013
Mortgage portfolio
205,008
209,142
Weighted average LTV
78%
81%
Size of payment arrears of between 30 and 90 days compared to total mortgage portfolio
0.35%
0.43%
Size of payment arrears of more than 90 days compared to total mortgage portfolio
0.73%
0.80%
Share of customers with interest-only mortgages compared to total mortgage portfolio
24.6%
25.3%
Residential mortgages
in millions of euros
2014
2013
Imoaired loans
685
893
Allowance
178
198
Cover rate
26%
22%
Bad debt costs
112
127
Bad debt costs (in basis points)
5.4
6.1
Write-downs
128
103
Trade, industry and services
Market share declines, lending is reduced
Rabobank Group's market share of lending to the sectors of trade, industry and services (TIS)
amounted to 39% in 2014 (44%). Lending by domestic retail banking to TIS declined by 10% in
2014 to EUR 56.6 (63.0) billion.This loan portfolio includes the commercial real estate portfolio
of domestic retail banking. Further details of the developments in this sector and portfolio are
given in the section Rock-solid bank: risk management.
Despite the improvement in the economy, some SMEs still had a difficult year. While disposable
household income rose slightly in 2014, consumption growth was slowed by debt repayment
and capital accumulation. Unemployment also remained at a relatively high level.
57 Rock-solid bank: performance
