Rabobank annual results 2012

Decline in profits due to economic adversity

Piet Moerland, Chairman of the Executive Board: "For Rabobank, 2012 was a difficult year without any economic recovery. The Dutch economy contracted more in 2012 than foreseen at the beginning of the year. The year was characterised by a drop in consumer spending, rising unemployment, falling house prices and a lack of business investments. The debt crisis caused uncertainty in the financial markets. The drop in earnings was relatively strong in the domestic retail banking division in particular due to higher value adjustments, lower interest income and mounting operating expenses. In addition, Rabo Real Estate Group delivered a significantly worse performance and the bank tax weighed down profit by EUR 196 million. Total net profit for 2012 saw a 20% drop on 2011, landing at EUR 2,112 million. Our solvency and liquidity positions remained robust: the core tier 1 ratio rose to 13.2% and the tier 1 ratio to 17.2%.

  1. Retained earnings added to equity caused the solvency position, measured as the core tier 1 ratio, to increase by 0.5 percentage point to 13.2%, well in excess of the Basel III requirements and above those of recent EBA stress tests.
  2. We seek to grow the solvency ratio to 14%. This requires growth in reserves to outpace growth in lending.
  3. Lending to private individuals was up 2% to reach EUR 458 billion. Growth in lending was caused primarily by the consolidation of Friesland Bank and to a lesser extent by growth in the lending portfolios of Rabobank International, De Lage Landen and Obvion.
  4. Rabobank Group achieved a net profit of EUR 2.1 billion in 2012, down 20% on 2011. The decline in profits is mainly caused by a EUR 744 million increase in value adjustments, rising to EUR 2.4 billion.
  5. Our liquidity position remained robust at EUR 157 billion.
  6. Amounts due to customers were up 1% to EUR 334 billion, with the consolidation of Friesland Bank again contributing to the increase. Savings deposits by private individuals were up 7% to EUR 150 billion.  

Domestic earnings

Net profit from domestic retail banking fell by 30% to EUR 1,304 million. Businesses active in construction and real estate, retail, glasshouse horticulture and sea and coastal shipping were hit particularly hard. This was reflected in value adjustments, which were up EUR 681 million to reach EUR 1,329 million (i.e. 44 basis points, which is higher than the long-term average of 13 basis points). The loan portfolio saw a 4% growth to EUR 306.5 billion thanks primarily to the consolidation of Friesland Bank. Amounts due to customers were up 7% to EUR 213.9 billion. Operating expenses were up at the local Rabobanks due to the costs associated with the implementation and enforcement of stricter rules and regulations. As a result, the efficiency ratio of domestic retail banking worsened from 57.4% to 59.8%. A purchase agreement with Japanese service provider Orix for the sale of Robeco was signed in February 2013.


Despite the challenging economic climate, Rabobank International had a relatively good year, posting a profit of EUR 704 million, a 10% drop on 2011. Lower interest spreads and higher operating expenses put pressure on earnings, but they were offset, in part, by gains from the sale of shares in Indian-based Yes Bank. Our online savings banks experienced strong growth outside the Netherlands in the year under review. After having launched RaboDirect in Germany, we now have online savings banks in six countries. We made a successful bid for the remaining shares in Polish Bank BGZ.

LIBOR Investigations

Government authorities in various jurisdictions are investigating a number of banks, including Rabobank, in connection with the LIBOR and EURIBOR setting process. Rabobank is cooperating with these investigations. Rabobank has also been named a defendant in civil litigations pending in the United States involving LIBOR. Rabobank intends to defend itself in these actions.

The facts and circumstances that appear from the ongoing investigations are being shared with the various regulatory agencies, and competition and criminal authorities on a rolling basis. At this point in time, it is still unsure when these investigations will be concluded. Based on the facts currently known and the publicly announced outcome of other panel banks’ investigations, it is likely that an assessment of the facts and circumstances will lead to a settlement. The amount of such a settlement cannot be estimated reliably at this time.

Rabobank will not give any further comments.

Outlook for 2013

In 2013 it will be difficult to match the performance we delivered in 2012 (excluding the impact of the sale of Robeco). 2013 will be another difficult year with very little economic growth. The outlook for the housing market is better in the long run, but it will take at least until 2014 before we will see true recovery. Therefore, lending is expected to show limited growth in 2013. Cost reduction will continue to be a priority for Rabobank. Thereby we have to deal with the resolution levy, the continually high pressure on the organisation to comply with rules and regulations, and large groups of customers experiencing financial difficulties.

Rabobank in 2016

We also foresee great challenges looking beyond next year. The strategy for the period 2013-2016 is designed to guarantee that we continue to be the robust and strong bank that we are now: nearby, visible and committed on the outside, and smart and efficient on the inside. Our environment is changing dramatically. Customers have an increasing need for simple and transparent financial services, and round-the-clock access to their bank. Private individuals, private banking clients and businesses demand multi-channel, virtual and bespoke services. The trend of rising costs needs to be stopped for us to be able to maintain our robust position. That is why Rabobank is working on streamlining processes, simplifying the product range and increasing the self-serve offering via online and mobile services. This will initially come with large investments in systems and processes, after which the new strategy should lead to major cost cuts, substantial job losses and a considerable reduction in the number of branches in domestic retail banking. We expect to cut 3,000 jobs at the local Rabobanks in 2013 and 2014, with further effects in subsequent years. We also need to scale down our excellent pay-and-benefits package. Although Rabobank will look different in 2016, we will still be the same cooperative, robust and sustainable bank that we have always been for our customers”.

Key Figures


In millions of euros 31-12-12 31-12-11
Total assets 752,410 731,665 3
Private sector loan portfolio 458,091 448,337 2
Amounts due to customers 334,271 329,892 1
Equity 44,627 45,001 -1
Tier 1 capital 38,412 37,964 1
Core tier 1 capital 29,307 28,324 3
Assets managed and held in custody for clients 221,200 262,300 -16
Number of employees (in FTEs) 59,628 59,670 -
Total capital ratio 19.0% 17.5% 1.5
Core tier 1 ratio 13.2% 12.7% 0.5
2012 2011 %
Income 13,452 12,706
Operating expenses 8,831 8,252
Value adjustments 2,350 1,606 46
Taxation 160 355 -55
Bank tax expense 197 -
Net profit 2,112 2,627 -20
Return on equity 5.6% 7.6% -2.0 
Efficiency ratio 65.6% 64.9% 0.7