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Contents Foreword Management report Corporate governance
Consolidated Financial Statements
Company Financial Statements
Pillar 3
Underlying performance improvement on track
In 2016, net profit was impacted by several exceptional
items which increased the operating expenses. Also, the
operating profit before tax was pressured by an impairment on
Rabobank's stake in Achmea. Nonetheless, Rabobank's net profit
landed at EUR 2,024 (2,214) million in 2016. The ROIC amounted
to 5.2%, compared to 6.0% in 2015. The cost/income ratio
including regulatory levies was 70.9% (65.2%).
The underlying performance improvement is on track to
achieve the targets of the Strategic Framework 2016-2020, as
illustrated by the development of the underlying operating
profit before tax. The underlying operating profit before tax was
EUR 4,090 million, an increase of EUR 498 million compared
to 2015. In calculating this underlying profit, an adjustment
was made for the impairment on Rabobank's stake in Achmea,
the book profit on the sale of Athlon, the provision for interest
rate derivatives, restructuring costs and for the fair value items
hedge accounting and structured notes. The 2015 underlying
profit was also corrected for the goodwill impairment for
Rabobank National Association (RNA). In 2016, if we exclude
the regulatory levies, the underlying cost/income ratio stood
at 60.8% compared to 60.8% as well for 2015. The underlying
cost/income ratio including regulatory levies increased by
1.1 percentage points to 64.6% (63.5%).
Development of underlying operating profit before tax
Amounts in millions of euros
2016
2015
Operating profit before tax
2,718
2,869
Impairment Rabobank's stake in Achmea and
goodwill impairment RNA
700
604
Book profit on the sale of Athlon
(251)
Provision for interest rate derivatives
514
150
Restructuring costs
515
245
Hedge accounting and structured notes
(106)
(276)
Underlying operating profit before tax
4,090
3,592
A decrease in the number of employees is one consequence
of the major transition the bank is undergoing. Year-end 2016,
staff reduction at Rabobank is ahead of plan. In 2016, around
5,200 FTEs left Rabobank as a result of the large restructuring
programme Performance Now. The employee base will be
reduced by another around 7,100 FTEs before year-end 2018
after Performance Now has been fully executed.
In 2016, Rabobank reduced the employee base (including
external hires) by 6,446 FTEs to 45,567 FTEs. The target was
a reduction of 4,000 FTEs in 2016. The largest reduction in staff
numbers was at the local Rabobanks. During the second half
of 2016, the decline in the number of employees was truly
becoming evident, as was the rapid pace of staff reduction.
Besides the reduction in employees the sobering of fringe
benefits helped to bring staff costs down. The sale of Athlon
also reduced the number of staff by approximately 1,250 FTEs
in December. Read more about the impact of the transition
on staff and the replacement of personnel in the chapter
Developing human capital and talent management.
Employee base
in FTEs
52,013 5,191
31-12 Performance Athlon 31-12 Performance 31-12
2015 now 2016 now 2018
Careful asset re-allocation will contribute to higher income.
Rabobank has made choices about where capital can be used
most efficiently. This process reduced the balance sheet (read
more on this topic in the chapter Flexible balance sheet).
In applying portfolio management, Rabobank remained open
for all customers in the Netherlands, but has increasingly
attuned its margins to the risk profile of loans and credits
granted. Our focus remained on the all-round relationship with
the customer. We act as a financial linking pin in the interest
of the customer and are always committed to the solution
we recommend. We are now financing our customer's needs
through stringent use of our balance sheet in order to achieve
further balance sheet relief.
Looking back on financial targets 2012-2016
Three of the four financial targets from 2012 to 2016 were met.
The current Strategic Framework spans from 2016 to 2020.
For the year 2016, the fulfilment of the commitments has also
been compared to the previous objectives as set out in the
Strategic Framework 2012-2016. The objectives and the actual
figures for 2015 and 2016 are presented in the table below.
The loan-to-deposit ratio ended up at 1.22, compared to
a target of 1.30 or below. The common equity tier 1 ratio
improved to 14.0%, in line with the target of 14%. The total
capital ratio was generously above the target of at least 20%
Summary targets financial framework2012-2016
Amounts in billions of euros
Actual 2016
Target 2016
Profitability Return on tier 1 capital
5.8%
8%
Capital Common equity tier 1 ratio
14.0%
14%
Total capital ratio
25.0%
>20%
Liquidity Loan-to-deposit ratio
1.22
<1.30
24 Rabobank Annual Report 2016
