Notes to the financial results of Rabobank
Financial results of Rabobank
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Provision Rabobank National Association (RNA)
On 2 January 2018 Rabobank announced that its California-
based subsidiary has taken a provision of EUR 310 million in
2017.This decision anticipated on an expected settlement
connected to previously disclosed investigations. RNA has
been under investigation since 2013 by the U.S. Department
of Justice and other U.S. authorities for possible violations of
the U.S. Bank Secrecy Act and other regulations and statutes in
relation to its historical AML compliance programme, and the
Office of the Comptroller of the Currency's ('OCC') examination
of that programme in the past. RNA has been cooperating with
the authorities during their investigations, and in February 2018
these discussions have been settled for an amount in line with
the provision taken.
Net profit landed at EUR 2,674 million
The decrease in the number of employees and lower restructuring
costs had a positive impact on the result, whereas in 2016 the
gross result was negatively impacted by the impairment on our
stake in Achmea and the provision for the interest rate
derivatives recovery framework. The add-on provision of EUR 51
million taken in 2017 was needed to cover for the latest insights
and statutory interest. Gross profit in the reporting year was
affected by the EUR 310 million provision taken by RNA.
The loan impairment charges decreased to minus EUR 190
(2016: 310) million in 2017, positively influencing net profit,
which amounted to EUR 2,674 (2016: 2,024) million in 2017.
Results
in millions of euros
31-12-2017
31-12-2016
Change
Net interest income
8,843
8,835
0%
Net fee and commission income
1,915
1,826
5%
Other income
1,243
2,144
-42%
Income
12,001
12,805
-6%
Staff costs
4,472
4,680
-4%
Other administrative expenses
3,176
3,476
-9%
Depreciation
406
438
-7%
Operating expenses
8,054
8,594
-6%
Gross result
3,947
4,211
-6%
Impairment losses on goodwill and
investments in associates
0
700
-100%
Loan impairment charges
(190)
310
-161%
Regulatory levies
505
483
5%
Operating profit before tax
3,632
2,718
34%
Taxation
958
694
38%
Net profit
2,674
2,024
32%
Loan impairment charges (in basis points)
(5)
7
-171%
Ratios
Cost/income ratio exclusive regulatory levies
67.1%
67.1%
Cost/income ratio including regulatory levies
71.3%
70.9%
Return on tier 1 capital
7.2%
5.8%
ROIC
6.9%
5.2%
Balance sheet (in EUR billion)
31-12-2017
31-12-2016
Total assets
603.0
662.6
-9%
Private sector loan portfolio
411.0
424.6
-3%
Underlying performance further improved
Our underlying performance improved in 2017 as illustrated by
the development of the underlying operating profit before tax,
which increased by EUR 486 million to EUR 4,465 million. In
calculating this underlying profit, we made corrections for fair
value items, restructuring costs, the provision for the interest
rate derivatives framework for both comparable years, for the
impairment on our stake in Achmea taken in 2016, forthe
provision taken by RNA in 2017 and forthe book profit on the sale
of Athlon in December 2016 and the ensuing deconsolidation
of this subsidiary. In 2017, the underlying cost/income ratio,
including regulatory levies, stood at 65.3% (2016:64.8%).
Development of underlying operating profit before tax
Amounts in millions of euros
Income
Adjustments on income
Underlying income
Operating expenses
Adjustments on
expenses
Fair value items
Regular income Athlon
Book profit on sale Athlon
Restructuring
Derivatives framework
Provision RNA
Regular expenses A thlon
Underlying expenses
Regulatory levies
Loan impairment charges
Impairment losses on
investments in associates
Impairment Achmea
Deposits from customers
340.7
347.7
Operating profit before tax
Total adjustments
Underlying profit before tax
2017
12,001
313
0
0
12,314
8,054
159
51
310
0
7,534
505
(190)
0
3,632
833
4,465
2016
12,805
(106)
(271)
(251)
12,177
8,594
515
514
0
160
7,405
483
310
(700)
2,718
1,261
3,979
Number of internal employees (in FTEs)
Number of external employees (in FTEs)
Total number of employees (in FTEs)
37,170
40,029
-7%
6,640
5,538
20%
43,810
45,567
-4%
Rabobank retained EUR 1,509 (2016: 749) million of its net profit
to bolster capital in 2017.Tax amounted to EUR 958 (2016: 694)
million, an effective tax rate of 26% (2016: 26%).
Rabobank Annual Report 2017 - Management report
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