The first months of 2023 continued to be characterized by high inflation figures against the backdrop of geopolitical tension, economic uncertainty and turbulent market conditions. In an effort to cool down the economy central banks pursued a series of interest rate hikes. Rabobank’s financial results strongly benefited from these rising interest rates and, combined with modest credit losses resulted in a net result of EUR 2,528 million in the first half of 2023.

Financial Performance

The fastest cycle of interest rate hikes in decades helped bolster the performance of banks around the world. Although this is a return to normal after an exceptionally long period with negative interest rates, the impact of geopolitical tension and enduring high inflation on economic growth is visible globally. Under these circumstances, Rabobank achieved a strong result, with a net profit of EUR 2,528 million compared to EUR 1,276 million in the first half of 2022. The level of loan impairment charges remained modest and amounted to EUR 339 (H1 2022: 42) million or 16 basis points of the average loan portfolio, reflecting the sound quality of Rabobank’s loan portfolio.

Total income increased by 36% driven by strong net interest income development, benefitting from higher margins on deposits, which more than compensated the margin pressure on the asset side, mainly on new mortgages and lending to business clients. Expenses were higher than in the first half of last year, as a result of an increase in staff costs related to FEC activities, investments in IT infrastructure, new business initiatives and collective labor agreement increases. Despite continued efficiency measures, it is expected that inflation will continue to put pressure on the overall cost level in the coming years.

As a result of the current macroeconomic environment the global demand for loans is decreasing. Nonetheless, the size of Rabobank’s private sector lending remained about the same with an increase of EUR 1.0 billion to EUR 433.1 billion. The worldwide Food & Agri portfolio increased by 1% to EUR 114.7 billion. The bank regained its position as market leader in the Dutch residential mortgage market with a 19.4% market share of new production. The mortgage loan portfolio slightly increased by EUR 0.6 billion to EUR 193.6 billion, despite the cooling down of the housing market. Rabobank’s deposit and funding mix is stable and well diversified. In the first six months of 2023, deposits from retail and wholesale clients stabilized at EUR 395.4 (2022: 396.5) billion as an increased level of retail savings was compensated by lower balances from SMEs.

Rabobank’s capital and liquidity position remains rock-solid. Driven by the strong financial results the CET1 ratio further increased to 16.7% (2022: 16.0%). The cost/income ratio improved to 51.3% (H1 2022: 66.8%) and Return on Equity amounted to 10.7% (H1 2022: 5.7%).

125 years a cooperative

Chair of the managing board of Rabobank Stefaan Decraene: “I’m proud to have been given the opportunity to lead this beautiful and rock-solid bank. We have been helping our clients achieve their goals for 125 years. Today we work with over 2 million of our members and more than 9 million customers to have a positive impact on the world around us. We see that society is changing and is facing more and more complex challenges. This requires that we as a bank change with the times, without forsaking our cooperative roots. For us as a cooperative the way forward is clear: we need to unite networks, knowledge and resources to overcome obstacles together.

Our solid business performance helps us to make a difference. It enables our clients to have a positive impact while allowing us to contribute meaningfully to society. It helps us develop new, cooperative products and initiatives which support our clients to accelerate the energy transition and the food system transition while our products serve our clients to improve their financial health and meet their goals.

In January of this year we underlined our commitment to aid SME and mid-cap companies to become more sustainable. By reinforcing our collaboration with the European Investment Bank Group we were able to make over EUR 1 billion available in new loans with favorable conditions.

The visible impact of climate change and ongoing geopolitical tensions underline the importance of accelerating the energy transition from fossil to more sustainable sources. In the first half of 2023, more than 35% of our new mortgage customers financed future investments to make their homes more sustainable. Globally, we financed 20 renewable energy projects for a total amount of EUR 1 billion.

Farmers in the Netherlands continue to face uncertainty after the premature end to the negotiations for a national agriculture agreement: “het landbouwakkoord”. To help the sector make the shift to more sustainable business practices, Rabobank is making EUR 3 billion available in loans. With these loans entrepreneurs who have a solid business case will be able to finance adjustments in their operations against favorable conditions and/or with extended grace periods. Additionally, Rabobank will make extra advisers available to support farmers in becoming more sustainable.

”Stefaan Decraene: “I want to thank all our clients and members for their trust in Rabobank. I am grateful to all our employees for their hard work and commitment. I look forward to continue our efforts to make our great bank into one of the best banks.

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