Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Income decreased by 6%
Net interest income resilient
Net interest income totaled EUR 8,843 (2016: 8,835) million.
As in 2016, repricing of the loan book had a positive effect on
the net interest margin. Extra mortgage repayments at the
local Rabobanks moderately lowered the outstanding lending
volumes. An increased volume of early interest rate revisions
in our mortgage books has a downward effect on net interest
income going forward. At the same time, higher lending
volumes augmented net interest in 2017 for both WRR and DLL.
The low interest rate environment still negatively impacted
the income from treasury activities related to maintaining the
liquidity buffers.The average net interest margin, calculated by
dividing net interest income by the average balance sheet total
in the year, increased from 1.30% in 2016 to 1.39% in 2017.This
was the result of stable net interest income combined with a
lower balance sheet total. The balance sheet decreased due to
the lower value of the derivatives as a result of changes in fx
and interest rates, along with a somewhat lower lending book
and lower liquid assets.
Net fee and commission income stable
In 2017, net fee and commission income increased to EUR 1,915
(2016:1,826) million in 2017. At the local Rabobanks, net fee and
commission income on payment accounts increased. At WRR, net
fee and commission income decreased. In 2017, WRR Markets
division's net fee and commission income reflected somewhat
lower activity levels after a relatively high number of significant
transactions in 2016. Net fee and commission income at DLL
remained stable (corrected for the deconsolidation of Athlon).
Net fee and commission income in the real estate segment
increased due to higher performance fees at Bouwfonds IM.
Other results down 42%
The decrease in other results to EUR 1,243 (2016: 2,144) million
can be partly attributed to the de-consolidation of Athlon.
Income from Athlon's operational lease contracts added to
other results during 2016 as did the book profit on the sale of
Athlon.The negative result on hedge accounting and structured
notes affected other results significantly. On balance, the gross
result on structured notes and hedge accounting decreased from
a profit of EUR 106 million in 2016 to a loss of EUR 313 million in
2017. WRR's markets division's trading results improved due to
better market conditions than in 2016, which partly levelled out
the decrease. The increase in the number of houses sold at the
real estate segment had an upward effect on other results.
Furthermore, other results got a boost from higher (regular)
results on our investment in Achmea (EUR 43 million), The sale
of our share in Van Lanschot (EUR 44 million) and the sale of our
share in Orix (EUR 42 million). Despite this divestment, Orix/
Robeco will remain an important financial partner of Rabobank.
Operating expenses decreased 6%
Staff costs down 4%
In 2017, the total number of employees (including external hires)
at Rabobank decreased by 1,757 FTEs to 43,810 (2016:45,567)
FTEs mainly because of the large restructuring programme
currently underway in the Netherlands.The largest reduction
in staff in 2017 was at the local Rabobanks. Overall staff costs
decreased to EUR 4,472 (2016:4,680) million.The decrease
in staff costs was moderated by the release of a provision
connected to the sobering of fringe benefits in 2016. The costs
associated with the 2% pension accrual guarantee given to
the pension fund covering the 2014-2020 period increased to
EUR 160 (2016: 30) million in 2017.The maximum guaranteed
amount was almost reached in 2017.
Other administrative expenses decreased by 9%
The other administrative expenses were negatively impacted
by the provision taken by RNA (EUR 310 million). Nonetheless,
total other administrative expenses decreased to EUR 3,176
(2016: 3,476) million in 2017.Total other administrative expenses
were relatively high in 2016 as a result of the provision for
adopting the SME interest rate derivative framework (EUR 514
million), which was significantly higherthan the addition of
EUR 50 million to the provision in 2017. Higher restructuring
costs in 2016 (EUR 515 million versus EUR 159 million in 2017)
also helped reducing other administrative expenses. Overall,
this decrease was somewhat tempered by the release of a
provision for legal claims at WRR in 2016.
Depreciation down 7%
As a result of the closing down of offices in the Netherlands
as part of the execution of Performance Now, depreciation
decreased to EUR 406 (2016:438) million.
Loan impairment charges at minus 5 basis points
At minus EUR 190 million, loan impairment charges actually
contributed to operating profit, which is atypical. In 2016
an amount of EUR 310 million was charged to the income
statement, which was already a year with very low loan
impairment charges. We saw improvements in nearly all
business segments.This is mainly due to the ongoing
favourable economic conditions in our domestic market,
leading to limited additions and high releases of existing loan
loss allowances, particularly in the domestic retail banking
business and in real estate. Relative to the average private
sector loan portfolio, loan impairment charges amounted to
minus 5 (2016: +7) basis points, which is exceptionally low and
substantially below the long-term average (period 2007-2016)
of 36 basis points.
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