Solid and stable interim result
27-8-2010 | Economic news
Rabobank Group has announced a net profit of nearly EUR 1.7 billion for the first six months of 2010, up 26% on the same time last year. “This performance proves the resilience of our cooperative business model in turbulent times,” said Chairman of the Executive Board Piet Moerland. “We owe this solid half-year result to the trust of our clients, our stable market share and our robust capital position.”
Taking the long-term view
Presenting the interim figures to the press, Piet Moerland stressed that the long-term view is key to both Rabobank’s relationship with its clients and its strategy. “Despite the tentative recovery in the Netherlands, sectors like construction, inland transport and horticulture are still in difficulty. Our staff are supporting and guiding our clients as long as is justifiable, consolidating the mutual trust and relationships we’ve built over many years.”
Acquisitions in China and U.S.
Also with an eye to the long-term, this year Rabobank took a stake in ABC Bank, the biggest bank in China, and acquired three banks in California. “Given our strategic focus on food and agriculture, China is a very important market,” said Piet Moerland. “Our interest in ABC Bank provides opportunities for Trade Finance, but also for our Leasing and Asset Management subsidiaries De Lage Landen and Robeco. And just this week we’ve taken over two small community banks in the agricultural ‘salad bowl’ of California, complementing our acquisition of Napa Community bank in the spring. Step-by-step we’ll turn them into true rural and retail banks, based on our Dutch model.”
Strong across the board
Chief Financial Officer Bert Bruggink is pleased that the solid interim results have been achieved across the board. “We’ve improved our margins, retained market share and kept costs under control.” The last time Rabobank Group reported such strong results was half-way through 2008, so pre-crisis. “The fact that our bad debt costs have fallen by 50 percent is a clear sign that our clients are benefiting from the recovery.”
Consolidating liquidity and capital position
Rabobank’s Tier 1 ratio rose to 14.9 percent, up 1.1 percentage point on the same time last year, and equity rose by 6 percent to over EUR 40 billion. Bert Bruggink: “Although the recent European stress tests confirmed our low risk profile and our large buffers, we intend to further consolidate our capital and liquidity position in anticipation of Basel III.”
Four engines of global economy
Piet Moerland compared the world economy to a jet aircraft powered by four engines which are out of synch. “China’s engine is running at top speed, but in danger of overheating. The U.S. engine is firing on half cylinders and running out of fuel. Japan’s engine is ticking over slowly but running on the wrong fuel. And the fourth engine of Europe is running at two different speeds altogether.”
The global economy needs to find a new and steadier equilibrium, according to the Rabobank Chairman. “Governments need to reduce their levels of debt and correct the fundamental imbalances in the world economy. Only if we accept lower levels of growth, will the recovery be sustainable for the long term. We will get there in the end, but it’s a long haul and there may still be turbulence ahead.”
