Outlook on 2019 About this Report Chairman's Foreword Corporate Management Report Appendices Governance Consolidated Financial Company Financial Statements Statements Strategic priorities for 2019 The Managing Board has set 10 strategic priorities for 2019 and beyond. Growth and top line development are high on the list of priorities, along with digitalization and virtualization of the entire bank, coupled with wide-scale innovation, operational excellence and efficiency. Our positioning and the clear direction we have taken will serve as a guiding principle for our employees and our clients and form the basis of the choices we make in the future. Rediscovering local community banking with specific propositions for the future and the more active involvement of clients, members and stakeholders are part and parcel of this process. As one Rabobank, we take responsibility for the performance of the group as a whole. Making the bank an agile learning organization will to achieving the adaptivity we need to take us forward. Continued performance improvements and the implementation of complex IT improvement processes will equip us to provide the services our customers demand. Further execution of restructuring measures will reduce the workforce more, lowering operating expenses in 2019. Impairment charges on financial assets are expected to increase but remain below the long-term average. Fligher capital requirements are lowering returns on equity in the banking sector. Long-term measures are being taken to manage operating costs and improve net profit, but efficiency and effectiveness must undergo further improvement to reach our performance targets in 2019. Financial outlook The global economic growth is decreasing slightly. There are still some significant risks which require caution in 2019. The trade war between the United States and China could negatively impact the growth of the global economy. Brexit and difficulties around the government budget in Italy are growing downside risks. In the Eurozone, growth is gradually easing further. RaboResearch expects the global economy to grow between 3% and 4% in 2019. Dutch economic growth is expected to decline to around 2% in 2019. Labor scarcity is starting to hinder production, especially housing investments. In 2019, the household consumption will continue to be an important driver for the Dutch economy. Lower income tax will help households, but this will be offset to some extent by the VAT increase. Wages are growing slowly, which, combined with higher inflation, is limiting the increase in consumer purchasing power. Furthermore, the international uncertainties are undermining confidence and business investments. As in 2018, Rabobank will have to remain prepared in 2019 for what is expected to remain a low interest rate environment. Improving our income is challenging in such conditions, when investing liabilities (such as current account balances) and equity with zero or very low interest rates is less profitable. Annual Report 2018 - Management Report 66

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Annual Reports Rabobank | 2018 | | pagina 68