A Healthy Foundation for the Cooperative Bank of the Future

Strong net profit and more happy customers

  • EUR 3,004M (+12%) net profit.
  • Low impairment charges because of the positive economy (5 basis points of the average loan portfolio).
  • Upward trend in customer satisfaction for third consecutive year.
  • Lending to international Food & Agri customers increased by 5%. Private sector lending increased by EUR 7.9B to EUR 416.0B.
  • Cost/income ratio improved from 71.3% to 65.9% because of lower operating expenses and despite higher investments in digitalization and risk management.
  • Strong buffers: fully loaded common equity tier 1 ratio from 15.5% to 16.0%.
  • Sustainalytics has placed Rabobank at the top of the global sustainability rankings for major banks.

In 2018 Rabobank posted a net profit of EUR 3,004 million. This is an increase of 12% compared to 2017. These strong results have reinforced the bank’s financial position. Impairment charges remained at historically low levels thanks to the continuing favorable economy but were higher than in 2017. Total revenues remained stable despite the low interest rate environment. In line with the strategic growth targets, lending to international customers in the Food & Agri sector increased, while the deposits from customers remained stable. Rabobank actively contributes to the sustainability of its customers. For the third consecutive year, Rabobank’s customers were more satisfied with the bank’s services. Lower operating expenses improved the cost/income ratio from 71.3% to 65.9%. Cost reduction will remain necessary for the coming years, despite the need to invest in digitalization and risk management. Adjusted for the impact of reorganization costs and fair value items, the underlying operating profit before taxes showed a decrease of 6% on 2017 when an exceptional release of credit provisions caused an upward shift in operating profit. Rabobank's capital base is holding strong: the fully loaded common equity tier 1 ratio increased again and now stands at 16.0%. The return on invested capital improved to 7.4% (2017: 6.9%) but has yet to reach the 8.0% target set by Rabobank.

Chairman of the Managing Board Wiebe Draijer:

“2018 was a good year. We have a healthy foundation for the cooperative bank of the future. We’ll need it too, to weather all the challenging transitions affecting society. The global food problem, the challenges of the Paris climate agreement and the agricultural and energy transition in the Netherlands also require a healthy and committed, cooperative bank.”

“Our mission, “Growing a better world together,” gives us direction and guidance. Our employees are inspired and motivated. Thanks to their efforts, we are largely on schedule in achieving most of our targets. We can be of greater significance for (international) society now that our financial results have improved, our capital position has been strengthened and the balance sheet has been further optimized. The fact that Sustainalytics has placed Rabobank at the top of its global sustainability rankings for major banks signifies huge recognition for our efforts in this area and speaks volumes about how we’re putting into practice the ambitions set out in our Sustainability strategy.”

International Loan Portfolio F&A Grew

“The private sector loan portfolio rose by EUR 7.9 billion to EUR 416.0 billion in 2018. In line with our growth objectives more clients obtained a loan from Rabobank, particularly in the Wholesale, Rural & Retail (WRR) sector and at our leasing subsidiary DLL. The way our F&A focus impacts international business is becoming increasingly clear. The WRR loan portfolio rose by 9% to EUR 109.0 billion. In line with our Banking for Food strategy, 61% of this portfolio was lent out to the Food & Agri sector. Partly due to extra mortgage repayments, we saw Rabobank's total mortgage portfolio decrease in 2018 to EUR 190.0 billion. The deposits from customers remained stable at EUR 342.4 billion.”

Cost/income Ratio Fell to 65.9%

“Operating expenses declined by 8%, which improved the cost/income ratio including regulatory levies by 5.4 percentage points, bringing it to 65.9% (2017: 71.3%). Still, a further cost reduction is necessary to achieve the intended efficiency targets. In 2018 the number of employees (FTEs) decreased by 1,868 (4%). At local banks, many jobs have changed or have disappeared, because of regional clustering of roles and tasks.”

Capital Position Improved

“Rabobank's strong capital position improved even further in 2018. Rabobank’s goal is to achieve a common equity tier 1 (CET1) ratio of at least 14% in 2020. The fully loaded CET1 ratio rose from 15.5% to 16%. Thus, the capital targets for 2020 have already been largely achieved. Rabobank will continue further strengthening its buffers to prepare for compliance with the capital requirements of Basel IV by 2027.”

Customer Satisfaction Increased for Third Year in a Row

“Customer satisfaction also rose in 2018, but the sector has not yet managed to restore consistent public confidence. Together, we still have a lot to improve. As a cooperative bank, we can only change that by distinguishing ourselves to the public in a positive way as a strong, customer-oriented organization that fulfills its social responsibility. Rabobank invests continually in risk management, compliance and client integrity.”

“To provide clarity in 2018 on the compensation relating to the reassessment of interest rate derivative contracts, Rabobank sent a letter to all the customers who are eligible for this. At December 31, 2018 almost 6,300 customers had received an offer letter and over 2,500 had received a proposal for a full advance. The project costs were higher than anticipated. We deeply regret that it takes so long to complete the compensation process.”

Rabobank’s Transition on Schedule

“The past year proved that the new senior management structure is working effectively. We further optimized the service model of the Dutch banking business, combining digital and personal services with a comprehensive network of offices and services. We are seeing one Rabobank Culture emerging at a rapid pace. Employee satisfaction increased, despite the far-reaching transition that large parts of the bank are experiencing. The number of women in senior positions is high and is set to rise further. Of both the Managing Board members and the Supervisory Board, 40% are women and women represent 31% of the management level reporting to the Managing Board.”

Acceleration in Innovation

“In 2018 we also achieved an acceleration in the field of innovation. More than 70% of our customers in the Netherlands now bank online. Our Moonshot campaign has already led to 6 new ventures, including Tellow, an app that helps freelancers with their accounting and tax returns. In 2018 we collaborated with innovative start-ups and scale-ups, such as Komgo and We.trade, both blockchain platforms which make it easier for our customers to do international business. Open Banking and PSD2 will quickly change the financial institution landscape. New competitors from the technology sector, among others, will lead to tighter competition and more possible choices for customers.”

Contributing to the Agricultural Sector’s Sustainable Transition

“Rabobank wants to encourage the transition of the agricultural sector and to make sustainable food production possible. As a leading international Food & Agri bank, we want to contribute to the solution for the global food problem.By 2050, there has to be enough healthy food to feed around 10 billion people worldwide. We can count about half of the world's top 300 food and agricultural businesses among our customers. Through the work of Rabobank Foundation and Rabo Partnerships we contribute to the financial self-reliance of almost five million small farmers worldwide.”

Drought Loan Helps Bridge Tough Times

“Prolonged dry weather in 2018 impacted the agriculture sector in the Netherlands, especially arable farming, the dairy sector and horticulture. Rabobank helps its customers dealing with the consequences by offering a “drought loan,” among other things. Farmers in California and Australia were also able to count on Rabobank at difficult times due to persistent drought.”


“We can look back with satisfaction on the progress we made in 2018, but we are also aware that we are not there yet. In the coming years we will give even more attention to the future of cooperative banking, where we take social responsibility in line with our mission. We do that in a world with many challenges, a low interest rate environment, digitalization, technological advances, trade wars, more stringent regulation and climate change.”

“For the coming years Rabobank forecasts moderate economic growth and a low interest rate environment in the Netherlands and international markets, against a backdrop of risks associated with tensions on the world stage. Rabobank is seeking further growth, in Food & Agri internationally, and in the Netherlands as an all-finance service provider. We remain close to our customers as a cooperative bank and will continue to invest in both digitalization and our national branch network. This enables us to stimulate innovation among our customers and to help them make either their home or business operations more sustainable. The type of social contribution we want to make in all countries in which we operate is becoming clearer every year. Growing a better world together.”

Published: 14 February 2019, 07:30 CET

Elements of this press release are considered by Rabobank as inside information relating directly or indirectly to Rabobank within the meaning of article 7 of the Market Abuse Regulation (EU Regulation 596/2014) that is made public in accordance with article 17 Market Abuse Regulation.

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