Business conditions and general economic conditions
EDTF 3 The profitability of Rabobank could be adversely effected by a worsening of general
economic conditions in the Netherlands and/or globally. Banks are still facing persistent turmoil
in financial markets. Factors such as interest rates, exchange rates, inflation, deflation, investor
sentiment, the availability and cost of credit, the liquidity of the global financial markets and the
level and volatility of equity prices can significantly affect the activity level of customers and the
profitability of Rabobank Group. Also, a prolonged economic downturn could adversely affect
the quality of Rabobank's loan portfolio by increasing the risk that a greater number of its
customers will be unable to meet their obligations. This could pressure profit margins and
therefore affect the realisation of targets and observance of the established risk appetite.
Effect of government policy and regulation
Rabobank's businesses and earnings could be negatively affected by the fiscal or other policies
and other actions of various governmental and regulatory authorities in the Netherlands, the
European Union, the United States and elsewhere. Supervision at European level has changed
as a result of the introduction of common ECB supervision via the SSM. A new European
resolution authority, the Single Resolution Board (SRB), has also been formed that will take
further measures to guide the process of liquidation of banks.
Capital requirements
Rabobank is subject to the risk, inherent in all regulated financial businesses, of having
insufficient capital resources to meet the minimum regulatory capital requirements. Rabobank
is facing the challenge of continually increasing capital requirements that force the bankto
manage its risk-weighted assets meticulously and optimise its balance sheet. At the same time,
the bank is searching for ways to improve its services to customers and fulfil its social role in
supporting economic recovery and growth through the provision of credit.
ICTand cybercrime
Technological developments offer new possibilities for interaction with customers. They can
contribute to efficiency improvements, by making services better and more cost-effective.
Technology is an important element in Rabobank's vision for achieving more effective customer
service and lower costs through automated processes, for example.
This evolution towards a more technology-based front and backoffice presents opportunities,
however it will also change Rabobank's risk profile. Increased dependence on IT increases the
risk of system failures and can lead to financial and material reputational damage, but this also
forms a growing source of risk with respect to cybercrime.
Combining easy access to systems and programs for customers with the highest possible level
of information security and with 24/7 availability continues to be a key challenge.
Service continuity is paramount. In addition to Distributed Denial of Services (DDoS) attacks
and hacking and phishing, the installation of malware designed to commit fraud and steal data
is increasing. This has a wide range of goals: fraud, extortion, system disruptions for the purpose
of robbing money and/or privacy-sensitive data, or data corruption.
86 Annual Report 2014 Rabobank Group
