Improving performance
Our output and impact
Domestic retail banking
Further economic recovery resulting in strong underlying profit
The net profit of the domestic retail banking division decreased from EUR 1,321 million in 2015 to
EUR 1,127 million in 2016. This decrease can be attributed to higher operating expenses, especially due
to a substantial increase of restructuring costs (EUR 325 million) and an additional provision following
Rabobank's adoption of the SME interest rate derivatives recovery framework of EUR 514 million.
This decrease was partly compensated by the low level of loan impairment charges. Corrected for the
additional provision following Rabobank's adoption of the SME interest rate derivatives framework
and for the restructuring costs, the domestic retail banking division's underlying profit increased by
EUR 268 million to EUR 2,366 (2,098) million compared to 2015.
In 2016 positive economic sentiment persisted, resulting in growth of the Dutch economy by
approximately 2.0% with an increase in both exports and domestic household expenditures and
dropping unemployment rates. However, businesses were still reluctant to invest in expansion.
Rabobank's domestic loan portfolio shrank 3% to EUR 275.8 billion. The portfolio decline was due to
the sale of parts of the mortgage portfolio and relatively high levels of extra repayments on customers'
existing mortgages. The amounts due to customers rose by EUR 8.1 billion to EUR 223.3 billion.
Economic developments and low mortgage interest rates led to rising prices and strong sales in the
Dutch housing market in 2016. The market share of Rabobank and Obvion in the Dutch residential
mortgage market rose to 20.5%. The market share in lending to the trade, industry and services (TIS)
sectors fell to 41.3%, while market share in private savings markets declined to 33.8% and the market
share in the food agri market amounted to 84.2%.
Staff costs fell significantly from EUR 2,134 million in 2015 to EUR 1,798 million in 2016. The reduction
of 6,076 FTEs (internal) is largely the result of the Performance Now programme, aimed at increasing
efficiency and client focus at the local Rabobanks. Part of this programme, the 'Digital Bank', was
introduced to accelerate the digitalisation of its services (more about digitalising services here).
Rabobank also rolled out the Banking for the Netherlands strategy (read more information here),
detailing the organisation's contribution to prosperity and well-being in the Netherlands.
In line with economic developments, loan impairment charges decreased to EUR 25 million.
Allowances previously taken for defaulted loans proved to be sufficient and newly defaulted loans were
limited. The loan impairment charges represent 1 basis point of average lending, which is far below the
long-term average of 23 basis points.
Contents Foreword Management report Corporate governance Consolidated Financial Statements Company Financial Statements Pillar 3
33 Our output and impact: improving performance
