Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
4.3 Credit risk
Credit risk is the risk that a counterparty is unable to meet a
financial or other contractual obligation vis-a-vis the bank.
Credit risk is inherent to granting loans. Positions in tradeable
assets such as bonds are also subject to credit risk. Rabobank
restricts its credit risk exposure by setting limits for loans to an
individual counterparty, or a group of counterparties, as well
as for loans to countries. The four-eyes principle is also a key
factor when granting loans. A multi-level committee structure
is put in place to make decisions on major credit applications.
The competent committee is chosen on the basis of the size of
the loan. Decisions on the largest loans are made by the highest
level committee, the Central Credit Committee Rabobank
Group (CCCRG).
The credit risk exposure relating to each individual borrower is
further restricted by the use of sub-limits to hedge amounts at
risk, not all of which are disclosed in the statement of financial
position, and the use of daily delivery risk limits for trading
items such as forward currency contracts. Most of the resulting
items are tested against the limits every day.
in millions of euros
2017
2016
Total loans and advances to customers
432,564
452,807
Of which:
Loans to government clients
2,319
3,329
Reverse repurchase transactions, securities borrowing agreements and settlement accounts
12,895
16,321
Hedge accounting adjustment
6,386
8,606
Loans to private sector clients
410,964
424,551
This can be broken down geographically as follows:
The Netherlands
298,583
73%
304,723
72%
Rest of Europe
28,493
7%
28,895
7%
North America
41,831
10%
45,985
11%
Latin America
12,467
3%
13,680
3%
Asia
8,076
2%
9,624
2%
Australia
21,191
5%
21,315
5%
Africa
323
0%
329
0%
Total
410,964
100%
424,551
100%
Breakdown of loans by business sector
Private individuals
197,990
48%
201,234
47%
Trade, industry and services (TIS)
115,192
28%
121,336
29%
Food Agri
97,782
24%
101,981
24%
Total
410,964
100%
424,551
100%
Once a loan has been granted, it is continually subject to credit
management as part of which new information, financial
and other, is reviewed.The credit limits are adjusted where
necessary. Rabobank obtains collateral or guarantees for the
majority of loans.
4.3.1 Lending
Rabobank has a significant market share in lending to private
individuals; these loans account for 48% of private sector
lending.These loans have a low risk profile as evidenced by the
losses actually incurred, of 1 basis points (excluding one-offs)
in 2017. In 2017, the proportion of the private sector lending
allocable to the food and agricultural sectors was 24% and the
proportion of private sector lending allocable to trade, industry
and services was 28%. The loans to trade, industry and services
and loans to the food and agricultural sectors are spread over
a wide range of industries in many different countries. None of
these individual sector shares represents more than 10% of the
total private sector lending.
Rabobank Annual Report 2017 - Consolidated financial statements
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