Rock-solid bank: performance
Real estate
The market for real estate finance pressures the result
Rabo Real Estate Group has been through a difficult period, however after
many difficult years the situation in the Dutch housing market has improved.
The number of residential transactions at Bouwfonds Property Development,
known as BPD since 1 January 2015, accordingly rose by 37% to 7,064.
Contrary to 2013, there were no heavy downward valuations on land
positions and land operations. The late cyclical nature of the real estate
funding market was however clearly shown in the bad debt costs at
FGH Bank, which at 364 basis points of the average loan portfolio were
again at a high level.The long-term average is 53 basis points.The level of
bad debt costs affected the result in 2014.The loss incurred at the real estate
segment declined from EUR 814 million in 2013 to EUR 263 million in 2014.
The loan portfolio at real estate financier FGH Bank declined to EUR 16.7
billion. Assets under management at Bouwfonds Investment Management
rose further by EUR 0.5 billion to EUR 6.4 billion. The phase-out of activities at
MAB Development is now at an advanced stage.The foreign branches have
now been closed and the Dutch office will close in March 2015. Rabo Real
Estate Group sold the PalaisQuartier in 2014, which was the largest real
estate project in its portfolio. The sale price of approximately EUR 800 million
led to a substantial book profit being realised and this transaction was one
of the largest in Europe in 2014.
Strategy
FGH Bank is to be integrated into Rabobank. The phase-out of MAB Development and KP
Investments is also planned. Clear decisions will be taken with regard to the strategic
reorientation of Bouwfonds Investment Management and Fondsenbeheer Nederland in the first
half of 2015. BPD continues to be an important activity for Rabo Real Estate Group and
Rabobank. Rabo Real Estate Group will continue to adapt to developments in the coming
period, within the context of Rabobank's shareholding.
Recovery in the Dutch housing market
After many difficult years, the situation in the Dutch housing market improved in 2014.
The Dutch economy recovered, and this led to increased disposable household income.
Families decided to use most of their income to reduce their mortgage debt. The decline in
house prices between 2008 and 2013 has led to a situation in which some households are in a
position of negative equity, that is, they have a mortgage debt that is higher than the value of
their home. The decision to make additional payments in 2014 was also to some extent driven
76 Annual Report 2014 Rabobank Group
