Contents Foreword Management report Corporate governance Consolidated Financial Statements Company Financial Statements Pillar 3
Liquidity risk:
The risk that a bank will not be able to fulfil all its payment and repayment obligations
on time, as well as the risk that it will at some time be unable to fund increases in
assets at a reasonable price, if at all.
Loan impairment charges:
Costs consisting of the amounts added to the loan impairment allowance and charged
to the profit and loss account. Loan impairment charges represent the balance of
addition, release and earnings after write-offs. Loan impairment charges are generally
expressed in basis points of average lending.
Loan-to-deposit ratio:
Ratio of lending related to due to customers.
Materiality:
Relevant topics that may reasonably be considered important for reflecting the
organisation's economic, environmental and social impacts, or influencing the
decisions of stakeholders.
Market risk:
Risk related to value changes in the trading portfolio due to price changes in the
market which affect factors such as interest rates, shares, credit spreads, currencies
and certain types of goods.
Operational risk:
The probability of loss caused by inadequate or deficient internal processes, people or
systems, or by external events.
PD (Probability of Default):
The likelihood that a counterparty will default within one year.
Qualifying capital:
Capital determined based on the regulator's requirements. For Rabobank, this
represents the sum of the tier 1 capital, subordinated debts and share of non-
controlling interests less transitional provisions.
RAROC (Risk Adjusted Return
On Capital):
Risk-based profitability measurement framework which ensures that earnings and
risks can be consistently weighted against each other.
Regulatory capital or external
capital requirement:
The total capital classified by the regulator as risk-bearing capital, consisting of the
tier 1 and tier 2 capital.
Return on tier 1 capital:
Net profit related to the tier 1 capital as at 31 December of the previous financial year.
Risk-weighted assets:
The assets of a financial institution multiplied by a weighting factor, set by the
regulatory authorities, reflecting the relative risk related to these assets. The minimum
capital requirement is calculated based on the risk-weighted assets.
Solvency:
Sustainable agriculture:
A company's ability to meet its financial obligations.
Agriculture with a focus on sustainability and innovations. Innovations that will
ultimately result in structural increases of sustainable food supply.
Sustainable development:
Sustainable development is development which meets the needs of current
generations without comprising the ability of future generations to meet their own
needs (UN Brundtland Commission Report, 1987).
Sustainability Bond:
Funds allocated to loans provided to SMEs with sustainability certifications on
products, processes or buildings.
395 Glossary of terms
