Wholesale, Rural and Retail Highlights Financial Results Notes to the Financial Results About this Report Chairman's Foreword Corporate Management Report Appendices Governance Consolidated Financial Company Financial Statements Statements The performance of Wholesale, Rural Retail improved in 2018, as illustrated by the development of net profit, which increased to EUR 710 million. This is an increase of EUR 123 million compared to 2017. Impairment charges on financial assets increased to EUR 300 million, but are still below the long term average. Compared to January 1, 2018, the loan portfolio of the WRR segment increased by 9%, to EUR 109.0 billion. Results in millions of euros 12-31-2018 12-31-2017 Change Net interest income 2,388 2,367 1% Net fee and commission income 461 432 7% Other results 486 655 -26% Total income 3,335 3,454 -3% Staff costs 938 939 0% Other administrative expenses 845 1,194 -29% Depreciation 40 56 -29% Total operating expenses 1,823 2,189 -17% Gross result 1,512 1,265 20% Impairment charges on financial assets 300 95 216% Regulatory levies 169 171 -1% Operating profit before tax 1,043 999 4% Income tax 333 412 -19% Net profit 710 587 21% Impairment charges on financial assets (in basis points) 29 9 Ratios Cost/income ratio including regulatory levies 59.7% 68.3% Underlying cost/income ratio including regulatory levies 59.5% 59.4% Balance Sheet (in billions of euros) External assets 140.2 131.9 6% Private sector loan portfolio 109.0 101.5 7% Number of internal employees (in FTEs) 7,211 6,966 4% Number of external employees (in FTEs) 473 357 32% Total number of employees (in FTEs) 7,684 7,323 5% Development of Underlying Operating Profit Before Tax in millions of euros 12-31-2018 12-31-2017 Income 3,335 3,454 Operating expenses 1,823 2,189 Adjustments to expenses Restructuring 7 (2) Impairment RNA 0 310 Underlying expenses 1,816 1,881 Impairment charges on financial assets 300 95 Regulatory levies 169 171 Operating profit before tax 1,043 999 Total adjustments 7 308 Underlying profit before tax 1,050 1,307 Income Down by 3% WRR's total income decreased to EUR 3,335 (2017: 3,454) million in 2018. Adjusted for FX effects income increased by 1%. At WRR, underlying commercial interest margins were stable and net interest income improved to EUR 2,388 (2017: 2,367) million. Excluding FX effects net interest income increased by 7% due to growth of the loan portfolio. Australia, North America and the Netherlands had the strongest growth in net interest income (in local currencies). Net fee and commission income showed a 7% increase to EUR 461 (2017:432) million as our Mergers and Acquisitions division performed stronger than in 2017. Other results decreased by EUR 169 million to EUR 486 (2017: 655) million as our Markets division could not match the strong performance from 2017 because results were negatively impacted by market volatility in the final quarter of 2018. Other results were positively influenced by a stronger performance of our Corporate Investments division. Operating Expenses Decreased by 17% Operating expenses at WRR went down to EUR 1,823 (2017: 2,189) million. Excluding FX effects, operating expenses decreased by 14%. In 2018, staffing levels at WRR increased by 361 FTEs mainly because of (temporary) staff hired for several Annual Report 2018 - Appendices 90

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Annual Reports Rabobank | 2018 | | pagina 92