Outlook
Contents Management report Corporate governance Consolidated financial statements Financial statements Pillar 3
under other administrative expenses. In addition, the
integration of FGH Bank into Rabobank was accompanied by
the (temporary) hiring of externals. This added to an increase in
other administrative expenses by 19% to EUR 124 (104) million.
Depreciation was almost stable and came out at EUR 7 (9)
million.
Loan impairment charges 86% lower
The loan impairment charges in the real estate segment fell by
EUR 566 million to EUR 90 (656) million. In particular, the loan
impairment charges for commercial real estate are substantially
lower than for the same period last year. The economic recovery
saw the situation in the residential rental market improve,
whilst the property investment market saw foreign investors
make an appearance. The demand of property users for
offices remains historically low, whilst the available supply has
increased. In addition, retail property has seen an increasing
and high level of vacancies. There are also significant regional
differences. Both of these have caused a clear division in the
market, which has resulted in both additions and releases to
the loan impairment allowance. Loan impairment charges
amounted to 56 (364) basis points of average lending, against
a long term average of 89 basis points.
Regulatory capital declines
The regulatory capital or external capital requirement for the
real estate segment declined to EUR 1.1 (1.3) billion in 2015.
The credit risk fell as the result of the reduction in non-core
assets. The economic capital (the internal capital requirement)
fell slightly to EUR 1.4 (1.5) billion.
It is expected that the Dutch economy will continue to show
a positive trend in 2016.The domestic housing market is
expected to recover further in line with that. The recovery is
supported by the low interest rates and a growth in consumer
confidence, thanks to, among other things, more purchasing
power and increasing employment opportunities. We also
expect a positive movement in our activities and results at BPD
in the core countries of Germany and France. Bouwfonds IM
is expecting moderate growth in assets managed, especially
in residential investments. Providing there are no unforeseen
circumstances, the Rabo Real Estate Group is forecast to
continue its recovery. The theme for 2016 at FGH Bank is the
integration with Rabobank. Although the real estate exposure
will decrease, the real estate financing business will continue
to represent a substantial portion of Rabobank's activities in
the Dutch market. The result is for the real estate segment is
forecast to continue improving.
50 Rabobank Annual Report 2015
