Our performance
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Rock-solid bank
Being a rock-solid bank is a cornerstone of Rabobank's strategy.
We strive to do the right things extraordinary well, with
everyone taking ownership and remaining conscious of the risks.
Checking in on our financial targets
Rabobank's Strategic Framework 2016-2020 provides
meaningful targets and gives us direction for the next few years.
This framework will ensure we remain a rock-solid bank and that
we stay on track as we prepare for forthcoming regulations such
as the reform of Basel III, the minimum requirement for own
funds and eligible liabilities (MREL) and International Financial
Reporting Standards (IFRS) 9. The table below presents our
ambitions and the actual performance on our financial targets
as at 31 December 2017.
Summary targets financial framework 2016-2020
Amounts in billions of euros
Ambition
2020
31-12-2017
31-12-2016
Capital
Fully loaded
CET1 ratio
>14%
15.5%
13.5%
Total capital ratio
>25%
26.2%
25.0%
Profitability
ROIC
>8%
6.9%
5.2%
Cost/income
ratio (regulatory
levies included)
53%-54%
71.3%
70.9%
Funding and
liquidity
Wholesale
funding
-150
160
189
Important strides on our capital ambitions
To comply with stricter regulatory requirements, such as
the gradual implementation and phase-in of the Capital
Requirements Directive (CRD IV)/Capital Requirements
Regulation (CRR), and to improve our capital position under
this regulatory framework, we have set a very clear ambition
regarding Rabobank's capital ratios.
Following the progress we made in 2016, we strengthened our
capital ratios further last year. Our fully loaded common equity
tier 1 (CET1) ratio, that is our CET1 capital as a percentage of
our risk-weighted assets assuming the CRD IV/CRR regulation
fully applies1, was 15.5% (2016:13.5%) on 31 December 2017.
Our transitional CET1 ratio also improved to 15.8% from 14.0%
at year-end 2016.This increase means we have already reached
our 2020 target, a prudent situation given the final proposals of
the Basel Committee in December with regard to new capital
requirements for banks.
Our capital ratios benefited from the additional issuance of
EUR 1.5 billion in Rabobank Certificates (by 0.8 percentage
points) in January 2017, as well as from adding part of net profit
for the year to retained earnings (by 0.8 percentage points) and
from the balance sheet reduction measures we took.
Development of the CET 1 ratio
in 2017
OA15.5
13.5
31-12 Profit Issue Changes 31-12
2016 minus Rabobank in RWEA 2017
dividend Certificates and other
Our total capital ratio - our qualifying capital as a percentage
of risk-weighted assets - amounted to 26.2% (2016: 25.0%).
The same factors that bolstered our CET1 ratio also improved
our total capital ratio, as did the tier 2 issue of USD 500 million
in April 2017.That said, the total capital ratio improvement
was partly offset by the FX impact on tier 2 instruments and
by lower additional tier 1 capital. Due to the stricter regulatory
requirements certain capital elements will gradually cease to
qualify as tier 1 capital. In addition, we called several of the non
qualifying tier 1 instruments.
By further optimising our balance sheet and profitability, we
will continue to strengthen our capital ratios over the coming
period. In 2017, our risk-weighted assets decreased by EUR 12.9
billion to EUR 198.3 billion. For more information about the
development of our capital ratios, click here.
1 The bank uses models for each asset to determine the risk weight
depending on the asset's risk profile. The higher the risk weight, the
more capital the bank has to hold for the asset in question.
Rabobank Annual Report 2017 - Management report
66
