Notes to financial results of Wholesale
banking and international Rural and
Retail banking
Outlook
Contents Management report Corporate governance Consolidated financial statements Financial statements Pillar 3
Total income fell by 9%
In 2015, the total income of the wholesale banking division
and international rural and retail banking business fell by 9%
to EUR 3,436 (3,793) million. Despite the growth of the loan
portfolio, net interest income fell. Due to the low interest
rate levels, the margin was under pressure and in addition in
2015 Bank BGZ no longer contributed to net interest income.
In 2014, Bank BGZ contributed to the result for about 9 months.
Net interest income fell by 6% to EUR 2,270 (2,416) million.
The sale of Bank BGZ also contributed to the decline of net
fee and commission income by 7% to EUR 513 (552) million.
Positive revaluations in the private equity portfolio and the
winding down of Rabobank's interest in the Agricultural Bank
of China positively affected the other inome.The contraction
in the illiquid assets portfolio positively affected the results
in 2014. On balance, other income fell by EUR 172 million to
EUR 653 (825) million.
Operating expenses fell by 4%
In 2015, despite the depreciation of the euro, operating
expenses at the wholesale banking and international rural and
retail banking division fell to EUR 2,331 (2,417) million.This was
associated with the sale of Bank BGZ in 2014.The lower number
of employees contributed to staff expenses falling by 4% to
EUR 1,123 (1,164) million. Especially at Rabobank Indonesia
and to a lesser extent at RNA and ACC Loan Management,
the number of employees decreased. Other administrative
expenses fell by 6% to EUR 1,101 (1,166) million as a result
of lower costs for IT and publicity. As a result of higher
depreciations on software, depreciations were up by 23% to
EUR 107 (87) million.
Impairment losses on goodwill
A goodwill impairment lowered the operating profit before
taxation by EUR 612 (26) million. This amount almost consisted
solely of the impairment on the goodwill with regard
to RNA in the United States of EUR 604 million.The loan
portfolio of RNA developed less favourably than expected
in 2015. Also the development of costs and stricter capital
requirements led to a deterioration in the outlook for RNA
during 2015. Both elements, combined with recent closings of
some divisions, gave rise to the adjustment of, among other
things, the growth parameters within the impairment test on
the goodwill.
Loan impairment charges rose by 25%
The loan impairment charges of the wholesale banking
division and the international rural and retail banking business
increased in 2015 by EUR 106 million to EUR 526 (420) million.
This increase was primarily for the account of the wholesale
banking division, where the loan impairment charges increased
to EUR 271 (160) million. In the Netherlands, for a number of
large clients an (additional) allowance was made due to late-
cyclic effects. In addition, a number of larger allowances were
made for clients in Latin America and in Asia. In Brazil, the
general allowance was increased due to the developments in
the sugar and ethanol industry. In addition, drought in Chile
had an impact on the loan impairment charges.The loan
impairment charges at ACC Loan Management were down
compared to recent years and came to EUR 138 (190) million.
The total loan impairment charges were 53 (44) basis points of
the average loan portfolio and were therefore still below the
long term average of 59 basis points.
Regulatory capital remained the same
The regulatory capital (the external capital requirement) for
the Wholesale banking and international Rural and Retail
banking division remained the same in 2015 at EUR 6.4 (6.4)
billion.The economic capital (the internal capital requirement)
amounted to EUR 7.7 (7.3) billion. This increase is mainly the
result of the elimination of the diversification between the
risk categories.
The Dutch economy is expected to grow in 2016 and continued
worldwide economic growth is also expected. However, levels
of growth will not be the same for all countries. Emerging
countries are seeing a slowdown in growth. A decline in
demand for raw materials in China has led to a decrease in
prices. In the United States, growth remains stable, while
growth in the euro area is catching up.This is good news for
the Netherlands, as more than two-thirds of the added value
of Dutch exports is realised in Europe and North America.
Read more about our worldwide economic projections in Vision
on 2016: International Economy.
Again in 2016, the wholesale banking and rural retail banking
businesses will focus on consolidating Rabobank's position
as leading bank for Dutch wholesale clients and supporting
local Rabobanks in their services, and also on consolidating
our leading position as a food and agri bank. If we disregard
39 Performance
