About this
Report
Chairman's
Foreword
Corporate
Management Report Appendices Governance
Consolidated Financial Company Financial
Statements Statements
income was pressured due to lower margins on savings and
current accounts as a result of the low interest rate environment.
The increased volume of payment accounts had a positive impact
on net interest income. All in all, the total net interest income of
EUR 5,575 million still matched the level of 2017
(EUR 5,581 million). Higher commissions on payment accounts
helped to lift the net fee and commission income to EUR 1,434
(2017:1,398) million. Other results came to EUR 92 (2017:
74) million at December 31,2018.The increase in other results can
be partly explained by the premium on the sale of a share of
Rabobank's mortgage portfolio to the French investor La Banque
Postale in September.
Operating Expenses Down by 5%
Total operating expenses of DRB decreased to EUR 4,267 (2017:
4,487 million. Staff costs fell to EUR 1,158 (2017:1,430) million as
a consequence of the digitalization and centralization of services
reduced the size of the workforce. The number of internal and
external employees in the segment decreased to 12,069 (2017:
13,635) FTEs on December 31, 2018, partly due to employees
moving from local Rabobanks to the central organization in order
to create economies of scale. The decrease in staff costs was
further caused by lower costs associated with the pension accrual
guarantee given to the pension fund which amounted to EUR 9
(2017:116) million. Other administrative expenses landed at
EUR 3,025 (2017:2,959) million and were negatively impacted by
higher restructuring costs, which amounted to EUR 69 (2017:
52) million and by costs related to the accelerated depreciation
of authentication devices for internet banking. The project
expenses for the execution of the interest rate derivatives
framework were somewhat lower than in 2017. The additional
provision taken for the interest rate derivatives framework was in
line with 2017 and amounted to EUR 52 (2017: 51) million. The
revaluation decrease of property for own use was somewhat
higher than in 2017 due to lower occupancy rates, amounting to
EUR 61 (2017:49) million. As a result of our restructuring
activities, several offices were closed and consequently,
depreciation fell to EUR 84 (2017: 98) million.
Impairment Charges on Financial Assets Remained
Negative
The impairment charges on financial assets increased in 2018, but
are still at an exceptionally low rate as a result of the favorable
economic climate. Impairment charges on financial assets
amounted to minus EUR 150 (2017: minus 259) million in 2018,
which translates to minus 5 (2017: minus 9) basis points of the
average private sector loan portfolio - far below the long-term
average of 21 basis points. Releases were mainly in the sea and
coastal shipping sector, while additions were observable in
industry sectors. The net additions on mortgages amounted to
minus 2 basis points. This illustrates the strong Dutch residential
real estate market, where large numbers of houses are being sold
and prices increase enormously.
Loan Portfolio Decreased by 1%
The persisting low interest rate on savings continued to
encourage clients to make supplementary repayments on their
loans. In 2018, clients' extra mortgage repayments - all those on
top of the mandatory repayments - at local Rabobanks and
Obvion totaled approximately EUR 19.2 (2017:19.8) billion. Ofthis
amount EUR 3.5 (2017: 3.6) billion was due to partial repayments.
Full mortgage repayments, which are mainly caused by
borrowers moving house, slightly decreased to EUR 15.7 (2017:
16.2) billion. This is a reflection of the Dutch housing market,
which witnessed a decline in the number of houses sold in 2018.
DRB's total loan portfolio (including business lending) decreased
to EUR 276.1 (2017:280.0) billion. On January 1, 2018, as a result
reclassifications due to the full implementation of IFRS 9, lending
decreased by EUR 0.1 billion to EUR 279.9 billion. These figures
include Obvion's loan portfolio, valued at EUR 28.5 (2017:
28.5) billion. Lending to the SME business segment amounted to
EUR 83.8 (2017: 84.7) billion.
Loan Portfolio by Sector
in billions of euros 12-31-2018 12-31-2017
Volume of loans to private individuals 192.3 195.4
Volume of loans to trade, industry services 57.7 57.7
Volume of loans to Food Agri 26.1 27.0
Private sector loan portfolio 276.1 280.0
Mortgage Loan Portfolio
Following record house sales in 2017, 2018 saw transaction
activity decline by almost 10%. Prices kept rising, however,
resulting in 9% more expensive residential properties in the
Netherlands compared to the year before. This is the strongest
growth since 2001Rabobank's share of the Dutch mortgage
market decreased to 19.9% (2017: 22.0%) of new mortgage
production in 2018'. The local Rabobanks' market share dropped
to 16.7% (2017:18.0%) and Obvion's decreased to 3.2% (2017:
4.0%). The quality of Rabobank's residential mortgage loan
portfolio remained high because of positive developments in the
Dutch economy and the strong domestic housing market. The
total volume of Rabobank's residential mortgage loan portfolio
declined in the reporting yearto EUR 190.0 (2017:193.1) billion,
partly due to a whole loan sale transaction to La Banque Postale.
In 2018, financing backed by the National Mortgage Guarantee
1 Source: Dutch Land Registry Office (Kadaster); following data issues at CBS the September mortgage shares are the most recent ones available.
Annual Report 2018 - Appendices
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