Improving performance
Our output and impact
Rabobank
Rabobank booked net profit of EUR 2,024 million
The Dutch economy saw positive growth of 2.1% in 2016, with an increase in both household spending
and exports. Rabobank's private sector loan portfolio decreased by EUR 1.0 billion to EUR 424.6 billion,
excluding the restatement of the year-end 2015 private sector loan portfolio of EUR 8.3 billion. Despite
this decrease, in 2016 we still helped many of our retail and business customers by granting credit in
the form of a loan, a financial guarantee, a letter of credit or other lending-related financial instruments.
The decrease was mainly the result of several successful balance sheet reduction transactions.
Partly due to low interest rates on savings, the additional mortgage repayments remained high,
which also contributed to the contraction of the loan portfolio. Amounts due to customers increased
by EUR 10.1 billion to EUR 347.7 billion, excluding the restatement of EUR 8.3 billion of the year-end
2015 figure.
The economic upturn is reflected in the declining loan impairment charges, which fell by EUR 723 million
to EUR 310 million or 7 basis points of the average loan portfolio (the long-term average is 36 basis
points). Lower loan impairment charges had a positive impact on Rabobank's net profit. In 2015,
an impairment on goodwill associated with RNA in the United States lowered Rabobank's net profit
by EUR 604 million. This year's net profit was negatively impacted by non-cash impairments on
Rabobank's stake in Achmea of in aggregate EUR 700 million, higher administrative expenses due to
the additional provision for adopting the SME interest rate derivative recovery framework and higher
restructuring costs. Furthermore, net profit was negatively impacted due to the increased contribution
to the resolution fund and a first ex-ante contribution to the Deposit Guarantee Scheme (DGS) fund.
Rabobank's net profit decreased by EUR 190 million to EUR 2,024 million.
Rabobank's underlying operating profit before tax was EUR 4,090 (3,592) million, an increase of
EUR 498 million compared to 2015. In calculating this underlying profit a correction was made for
the impairments on Rabobank's stake in Achmea, the book profit on the sale of Athlon, the provision
for interest rate derivatives, restructuring costs, the fair value items hedge accounting and structured
notes, and for the 2015 goodwill impairment for RNA. The return on invested capital (ROIC) amounted
to 5.2% (6.0%).
Contents Foreword Management report Corporate governance Consolidated Financial Statements Company Financial Statements Pillar 3
Decrease in private sector loan portfolio
The sale of parts of the mortgage portfolio and early
repayments on residential mortgage loans contributed to the
decrease in the local Rabobanks' private sector loan portfolio in
2016. Obvion also sold part of a portfolio of Dutch residential
mortgages and securitised EUR 1 billion of its mortgage
portfolio. In this transaction the most junior tranches were
also sold to investors, resulting in off-balance sheet treatment.
At real estate financier FGH Bank, the commercial real estate
portfolio was further reduced and the sale of the real estate
financing activities of RNHB contributed to a decrease of the
loan portfolio. More information on these transactions can be
found in the chapter A more flexible balance sheet.
26 Rabobank Annual Report 2016
