Financial Results of Rabobank
-
Notes to the Financial Results of Rabobank
About this
Report
Chairman's
Foreword
Corporate
Management Report Appendices Governance
Consolidated Financial Company Financial
Statements Statements
Results
in millions of euros
12-31-2018
12-31-2017
Change
Net interest income
8,559
8,843
-3%
Net fee and commission income
1,931
1,915
1%
Other results
1,530
1,243
23%
Total income
12,020
12,001
0%
Staff costs
4,278
4,472
-4%
Other administrative expenses
2,780
3,176
-12%
Depreciation
388
406
-4%
Total operating expenses
7,446
8,054
-8%
Gross result
4,574
3,947
16%
Impairment charges on financial assets
190
(190)
Regulatory levies
478
505
-5%
Operating profit before tax
3,906
3,632
8%
Income tax
902
958
-6%
Net profit
3,004
2,674
12%
Impairment charges on financial assets (in
basis points)
5
(5)
Ratios
Cost/income ratio including regulatory
levies
65.9%
71.3%
Underlying cost/income ratio including
regulatory levies
63.9%
65.3%
ROIC
7.4%
6.9%
Balance Sheet (in billions of euros)
Total assets
590.4
603.0
-2%
Private sector loan portfolio
416.0
411.0
1%
Deposits from customers
342.4
340.7
0%
Number of internal employees (in FTEs)
35,850
37,089
-3%
Number of external employees(in FTEs)
6,011
6,640
-9%
Total number of employees(in FTEs)
41,861
43,729
-4%
Net Profit Increased to EUR 3,004 Million
Higher income and lower operating expenses had a positive
impact on net profit compared to 2017. As the average staffing
level fell further in 2018, subsequently lower staff costs
contributed to this. Net profit was also boosted by lower
restructuring costs and an improved result on fair value items this
year. Impairment charges on financial assets remained at a low
level, but was no match for 2017's extremely positive outcome.
In 2018 we took a charge of EUR 190 million compared to a net
release of EUR 190 million in 2017. The development of this line-
item tempered the increase in net profit, which amounted to
EUR 3,004 (2017: 2,674) million.
Underlying Performance Decreased by 6%
Our underlying operating profit before tax decreased by
EUR 272 million to EUR4,193 million. In calculating this underlying
profit for 2018, we made adjustments for fair value items,
restructuring costs and the additional provision taken for the
interest rate derivatives framework. In 2017 we made an
additional correction for the provision taken by RNA. In 2018, the
underlying cost/income ratio, including regulatory levies,
improved to 63.9% (2017: 65.3%).
Development of Underlying Operating Profit Before Tax
in millions of euros
12-31-2018
12-31-2017
Income
12,020
12,001
Adjustments to income
Fair value items
115
313
Underlying income
12,135
12,314
Operating expenses
7,446
8,054
Adjustments to expenses
Restructuring
120
159
Derivatives framework
52
51
Provision RNA
0
310
Underlying expenses
7,274
7,534
Impairment charges on
financial assets
190
(190)
Regulatory levies
478
505
Operating profit before tax
3,906
3,632
Total adjustments
287
833
Underlying profit before
tax
4,193
4,465
Rabobank retained EUR 1,894 (2017:1,509) million of its net profit
to bolster capital in 2018. Tax amounted to EUR 902 (2017:
958) million, implying an effective tax rate of 23% (2017:26%). The
decrease in effective tax rate was mainly caused by the lower U.S.
corporate income tax rate, which was partly offset by the negative
effect of the lower Dutch tax rate. As of 2020, the Dutch tax rate
will decrease, which resulted in a tax loss in 2018.
Income Remained Stable
Net Interest Income Down 3%
Net interest income totaled EUR 8,559 (2017: 8,843) million. This
3% decrease was the result of the continued low interest rate
environment; specifically, it affects margins on savings and
current accounts and the expenses incurred by Treasury for
managing ample liquidity buffers. New business margins on
mortgages and SME lending had a positive effect on net interest
income. The average net interest margin, calculated by dividing
net interest income by the average balance sheet total over the
last 12 months, increased from 1.39% in 2017 to 1.41% in 2018.
This improvement came about because the decline in the
average balance sheet total outpaced the decrease of net interest
income.
Annual Report 2018 - Management Report
53
