Financial developments
Net profit target achieved; continued financial soundness
Financial targets realised
- Net profit up 14%
- Tier I ratio at 10.7
- Return on equity 10.1%
Balance sheet
- Private sector lending up 10% to EUR 356 billion
- Amounts due to customers up 6% to EUR 250 billion
- Savings up 13% to EUR 101 billion
- Equity up 7% to EUR 31.4 billion
Net profit EUR 2.7 billion
- Income up 14% to EUR 11.5 billion
- Operating expenses up 12% to EUR 7.7 billion
- Efficiency ratio improved by 1.5 percentage points to 67.0%
- Value adjustments at 22 basis points, in line with five-year average
- Risk Adjusted Return On Capital 13.0%
Rabobank Group's net profit rose by 14% to EUR 2,662 million in 2007, with a strong contribution from domestic retail banking. The turbulence in the financial markets caused a decline in Rabobank International's net profit. Rabobank Group exceeded its financial targets for 2007: net profit growth was 14%, the Tier I ratio was 10.7 and return on equity was 10.1%. Rabobank Group achieved a Risk Adjusted Return On Capital of 13.0%.
Growth of the mortgages portfolio in the Netherlands was an important factor in the increase in lending, with private sector lending increasing by 10% to EUR 356 billion. The large number of new savings clients at the local Rabobanks contributed to the 13% growth in savings to EUR 101 billion.
Despite downward pressures on the interest margin and a slight income decrease for Rabobank International, total income was 14% higher, at EUR 11.5 billion, the increase being due to business growth. Organic growth and acquisitions caused a 12% increase in operating expenses, to EUR 7.7 billion. Gross profit rose by 20% to EUR 3.8 billion and the efficiency ratio showed a 1.5 percentage point improvement, to 67.0%. The item Value adjustments increased by 65% to EUR 742 million, corresponding to 22 basis points of average lending and in line with the five-year average of 23 basis points.