Income up 4%
In the year under review, total income was 4% higher, at EUR 5,795 (5,551) million, mainly due to growth in interest income. Despite fierce competition in the mortgages market and lower income from penalty interest, interest income was 4% higher, at EUR 4,391 (4,226) million. The increases in both lending and savings offset the effects of lower mortgage margins and lower penalty interest. Commission income from payment transactions and other financial services were major factors in the 10% rise in commission income to EUR 1,379 (1,259) million. Commission income from insurance activities was 1% lower, at EUR 376 (379) million.
Operating expenses down 1%
Total operating expenses were 1% lower in 2007, at EUR 3,835 (3,877) million. The staffing level in the domestic retail banking business declined by 71 FTEs to 29,304 (29,375) FTEs. In line with this decrease staff costs were 2% lower, at EUR 2,072 (2,118) million. Other administrative expenses were 1% higher, at EUR 1,618 (1,607) million, partly as a result of higher training costs and higher marketing expenses.
Value adjustments at 6 basis points
Because the favourable economic climate in the Netherlands continued, the increase in the item Value adjustments was virtually in line with the growth in lending. The item Value adjustments rose by 4% to EUR 145 (139) million in the year under review. This corresponds to 6 (7) basis points of average lending and is far lower than the five-year average of 12 basis points. Depreciation charges were 5% lower, at EUR 145 (152) million, mainly due to lower real estate and equipment depreciation. {
Net profit up 24%, RAROC 15.1%
Gross profit increased by 17% in 2007, as a result of higher income in combination with lower operating expenses. The increase in gross profit especially caused net profit to grow by 24% to EUR 1,349 (1,091) million. In 2007, domestic retail banking achieved a Risk Adjusted Return On Capital (RAROC) of 15.1%. At year-end, economic capital required amounted to EUR 8.9 billion.