About this
Report
Chairman's
Foreword
Corporate
Management Report Appendices Governance
Consolidated Financial Company Financial
Statements Statements
efficiently and flexibly enough to (re)allocate of capital
between different portfolios, products and geographies;
We achieve a solid performance, with a limited earnings
volatility, based on a well-diversified asset portfolio of
products, sectors and geographies. We price our risk well,
allocate sufficient capital to growth themes and we migrate
to more effective (digital) services. Our operational efficiency
is competitive, we do the right things well and are conscious
of the risks we take;
We protect the identity and reputation of Rabobank and
safeguard the trust customers and investors have in
Rabobank. We live up to our community commitments, we do
what we say, and we avoid clients, business and risks that
could reasonably be assumed to damage our reputation and
unique identity;
Risk Appetite Statement
Risk Type Risk Appetite Sta tement
Credit Risk
Liquidity Risk
Market Risk
Interest Rate Risk in the Banking Book
Operational Risk (incl. Compliance)
Credit Risk Management
Rabobank continues the current prudent credit policy and a
balanced growth ofthe credit portfolio that suits the strategy and
the reputation of Rabobank. This implies that (i) the credit
portfolio maintains an overall acceptable risk profile, (ii) the credit
portfolio has limited growth and (iii) capital and funding are used
selectively. Rabobank maintains a profitable credit portfolio with
an acceptable risk profile in order to limit the impact of
impairment charges on financial assets on the profitability and
reputation ofthe bank.
The size of our credit (loan) portfolios is relatively stable and
supported by positive local and global economies the quality is
much improved, evidenced by low provisioning in the last three
years and a slightly reduction to nonperforming loans (NPL).
Credit portfolio quality improved despite a simultaneous
tightening of standards in ourcredit risk management process to
better reflect portfolio quality. Prudent credit acceptance policy
The risks encountered in the business result in an impact to one
or all of these areas with as the main financial indicators:
Common Equity Tier 1-ratio
Total Return on Invested Capital
Score RepTrak Indicator
The risk appetite is embedded across Rabobank Group within
principles, policies, indicators, limits and controls.The
combination of a breach management process and appropriate
governance ensures an adequate and timely response. The risk
appetite is reviewed and updated at least once a year, depending
on internal or external events with material impact.
Examples ofKRI's to support our Risk Appetite
Statement
is typified by careful assessment of clients and their ability to
repay the loan we granted them. As a result, the risk profile ofthe
loan portfolio is acceptable even in less-than-favorable economic
circumstances. Rabobank forms long-term relationships that
benefit both the clients and the bank alike. To further support the
pace of portfolio improvements specific sector/country strategies
have been designed to further reduce the NPL's. Rabobank
continuously monitors its clients' position as a result of
(upcoming) events (draughts, Brexit) or of sector issues (dairy) and
reconsiders the strategy accordingly.
An important principle in the acceptance policy for business loans
is having thorough knowledge of ourclients. We understand our
clients' sector, business, management, goals, financials,
opportunities and challenges and this helps us to manage
potential risk in the best possible way. In addition, Rabobank
closely monitors developments in the business sectors in which
its clients operate so that it can properly assess their financial
Maintain a credit profitable portfolio with a controllable risk profile in order to Average probability of default inflow
limit the impact of bad debt costs on the profitability and reputation and as a Loan impairment charges
means to serve our customers well. Concentration limits
We accept a certain level of liquidity risk, as this is identified as a source of Liquidity Coverage Ratio
earnings and value creation, but we want to meet expected and unexpected Net Stable Funding Ratio (NSFR)
cash flows and collateral needs at any time without materially affecting the Loans To Stable Funding (LTSF)
bank's daily operations or financial stability. In the baseline Rabobank's internal
liquidity risk appetite is more conservative than legislative constraints.
Maintain modest exposure to market movements in the trading environment.
Accept an appropriate level of interest rate risk, in order to be able to fulfill the
above mentioned transformation role in our retail banking business, and to be
able to make the optimum decision regarding the investment of our capital, as
part of our business strategy. While these activities can be an important profit
source, losses due to changes in interest rates should never threaten the bank's
financial stability.
Total operational risk losses may not exceed approximately 1-1,5% ofthe
budgeted annual gross income.
Event Risk
Value at Risk
Earnings at Risk
Modified Duration of Equity
Number of process execution failures
IT security
*Customer Due Diligence
Annual Report 2018 - Management Report
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