Rabobank achieved profit of EUR 2.1bn in 2012
Piet Moerland, Chairman of the Executive Board said 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%.
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. We seek to grow the solvency ratio to 14%. This requires growth in reserves to outpace growth in lending. 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. 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. Our liquidity position remained robust at EUR 157 billion. 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. 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 maritime shipping and inland navigation 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).