Janine Vos

287 Pages·2017·4.83 MB·English

2017
Annual report
Rabobank Annual Report 2017 - 1
Introduction Chairman’s foreword; About this report 2
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Management report
6
Overview of the strategy, developments and financial results
and corporate social responsibility and sustainability of
Rabobank Group.
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Appendices
96
Materiality matrix, Non-financial KPIs, Sustainability
facts & figures, dialogue with organisations and clients,
EU-directive, Global Reporting Initiative and financial
performance.
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Corporate governance
141
Retrospective on 2017 by the Supervisory Board. Explanation
of the new governance structure of Rabobank.
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Consolidated financial statements
162
The balance sheet and the profit and loss statement
for the entire Rabobank Group, with notes.
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Company financial statements
242
The balance sheet and the profit and loss
statement of Rabobank, with notes.
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Glossary of terms 282
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Chairman’s foreword
Strong performance but some way to go
We are committed to being a meaningful cooperative bank, making a substantial contribution
towards achieving welfare and prosperity in the Netherlands and to resolving the global food issue.
We are shaping our mission of ‘Growing a better world together’ with passion and this is bearing
fruit. In 2017 we accelerated our efforts to reach the goals set in our Strategic Framework 2016-
2020. We further reinforced our position in Food & Agriculture in the Netherlands and around the
world. The future Rabobank is taking shape with more satisfied customers, innovations, a stronger
balance sheet and improved financial results.
Our cooperative structure helps us identify and act upon the of the independent Rabobank Foundation1, we are helping 5
issues which matter to our 7.3 million retail and corporate million poor small farmers in the developing world to achieve
customers in the Netherlands. Last year, for instance, we took self-reliance. We have launched and driven forward numerous
specific measures to help starters and seniors in the housing digital innovations (including our first block chain application
market. Our recent efforts relating to livestock production in 2017) and our operational indicators on reliability and
rights (such as phosphate legislation) underscore our strong availability have improved sharply. We have introduced many
commitment to our clients and partners in the Dutch Food & innovations in our client service offerings, and have improved
Agri sector. Local Rabobanks allocated an amount of EUR 45 the Rabobank digital experience across many domains. The
(2016: 40) million from their net profit for future investments in Rabo banking App is now highly rated and offers the widest
local community initiatives in the Netherlands. number of services provided on the platform. The vast majority
of our segments and businesses have delivered higher
As a leading global Food & Agri bank, that lends around EUR 98 performance this year compared to last. What’s more, we have
billion to corporate and rural clients in the Food & Agri sector, done this with a more diverse leadership team: 26% of our
we are uniquely positioned to help our clients to produce senior management positions are now occupied by women
more and better quality food in a more sustainable way, while (up from 25%), while 40% of the Managing Board and 33% of
using fewer resources. In October we launched the Kickstart the Supervisory Board are female. We are deeply committed to
Food programme. In collaboration with the UN Environment diversity of all forms and will continue to champion this cause
Programme, we are creating a USD 1 billion facility to help in 2018.
accelerate the transition to a sustainable food supply. Our
Sustainably Stronger Together mission and our commitment Our employees make the difference. They are the people
to the UN Sustainable Development Goals guide us in bringing about the bank’s transition and we very much
helping clients around the world make their businesses more appreciate their efforts. Human Resources’ attention for talent is
sustainable. now represented at the highest management level, with Janine
Vos being appointed as CHRO. The results of recent surveys
The capital targets we set for 2020 were reached this year, show an inspiring rise in employee motivation, thanks in part to
which we consider prudent given upcoming new regulations our new mission Growing a better world together. Our mission
and we posted a net profit over the year of EUR 2,674 million.
Our ratings are stable, as are our market shares and margins,
despite external volatile realities. Our Net Promotor Score 1 The Rabobank Foundation is an independent foundation, founded
and other metrics have shownn even higher levels of client about 40 years ago by local Rabobanks. Up to this day the local
appreciation nearly all our businesses throughout 2017. We banks donate a percentage of their profits to the foundation.
have applied greater focus in our Food & Agri portfolios and, The foundation’s financial statements are not consolidated within
through the work of Rabo Development and with the help Rabobank’s consolidated financial statements.
Rabobank Annual Report 2017 2
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
confirms the course we are taking and guides our actions as Taking a stand on issues that matter is also key to the personal
a cooperative bank. The increase in employee motivation is and professional development of our employees. In 2017,
appropriate to the current phase of our overall transformation. we redesigned the leadership profiles; they now emphasise
We have confidence in the measures we are taking to address leadership through connection in the community in addition
employee motivation and are grateful for their continued to personal and team leadership. We seek to empower our
dedication to Rabobank in these turbulent times. employees and leaders by asking them: What do you need
to achieve personal growth as well as growth in and for your
In all, we are proud that we are on track to achieving the goals team? How are you helping to grow a better world together?
set in the Strategic Framework 2016-2020. Yet our ambitions This applies to the whole bank, to our customers and their
go beyond the results to date. We must pick up even more communities.
speed, particularly in our digital transition and innovation
efforts, to continue offering our customers the best possible In the Strategic Framework 2016-2020, Rabobank adopted a
service. We laid a solid foundation for this in 2017. And like in clear strategy for improvement with Performance Now. This
any organisation in transition some things go according to plan programme has had major consequences for our staffing levels,
while others are more challenging, and sometimes even present reducing them by approximately 7,000 jobs so far with another
dilemma’s. 5,300 set to go between 2018 and 2020. Job loss is an issue
across the financial sector, but our mobility centres are proving
Keeping up with the implementation of new regulation needs effective in helping many of those who we had to let go. The
attention. Rabobank runs a complex portfolio of IT change initial figures show that almost half of this group found a job
programmes. It requires extra management attention, time or started their own business within six months of being made
and costs to implement new policies and procedures in redundant.In 2018 the focus will shift to starting support earlier,
the changing organisation. We also implemented a global in the active mobility phase. Research shows that the earlier
programme on customer due diligence, encompassing employees start working on developing a new perspective, the
governance, education, conduct and tools. We monitor a large more likely they are to succeed in finding a new challenge.
portfolio of customer relationships and transactions worldwide
and address new adverse external signals throughout the entire Many of our employees are migrating from local Rabobanks to
organisation. That also means that we sometimes need to end centralised regionalised service centres. This move will benefit
customer relationships or decline transactions. We assigned a our client service because it will boost our speed and efficiency
task to a committee to review the target operating model of the and reduce back office costs. Our cost reduction efforts are
local Rabobanks in order to increase customer focus, increase mostly on target, with increased efficiency in many parts of
the contribution to the regional economy, improve operational Rabobank, in line with our strategic plan. However additional
management and reduce costs. The outcome is planned for 2018. efforts in IT and follow-up work on for example SME derivatives
and other one-offs led to an increase in overall costs for the
In June we announced the formation of a new management year. We need to continue focusing intensively on cost control
structure. In the new Managing Board, all key customer to achieve structural efficiency gains to further reduce our cost-
segments are represented at the executive level. Group-wide to-income ratio, leveraging the benefits of further digitalisation
attention for digitalisation and talent at the highest executive and building scale in back-office activities.
management level gives us a closer fit with the change agenda
of the cooperative Rabobank. Each of my fellow members The past few years have been particularly challenging for our
of the Managing Board will introduce themselves and their employees. In the Organisational Health Index taken at the start
business later in this report. Suffice to say here that I am proud of 2017, they expressed a need for a clearer sense of direction
to chair such a driven and diverse team and to be leading and purpose. We have addressed this in our new mission,
the bank forward together. I would also like to express our Growing a better world together, which is a clear statement
deep appreciation and thanks to Rien Nagel and Ralf Dekker of that purpose. On behalf of the Managing Board, I sincerely
who stepped down in September. They brought distinctive thank our employees for their intensive efforts in 2017 and look
leadership to Rabobank during their long careers at the bank. forward to the growth we can achieve together in 2018.
We wish them all the best for the future.
Rabobank Annual Report 2017 3
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Looking ahead
In 2017 Rabobank laid a solid foundation for the next step in its
transition. The environment is changing fast and we will boost
our digitalisation and innovation efforts so we can continue
to offer optimum service to our clients. Our employees play
a key role in this process. The legislative changes in Europe,
such as PSD2 and GDPR, will alter client interactions in all
industries. Open banking could make us just one of many
ecosystem choices. While the regulatory requirements of the
reform of Basel III have finally been made clear, they do not
favour north-western European banks like ourselves, with a
prudent risk profile like Rabobank. We will of course comply
with these new requirements on time, but we would prefer a
more level playing field. The favourable economic climate in
many parts of the world helped many customers thrive in 2017
and this will continue in 2018. When our customers do well,
we do well. Yet we also face considerable uncertainties. The
interest rate landscape in 2018 is likely to remain challenging
for our customers and our balance sheet. And the geopolitical
environment is both tense and unpredictable. The one constant
in the world - not just the financial sector - is change and
disruption.
While we can be pleased with our progress in 2017, we are not
there yet. I believe that our new positioning and clear direction
as a meaningful cooperative will serve as a source of inspiration
for our employees and our customers. It represents the basis for
the choices we make in the future. As the natural world teaches
us, adaptivity is key in a changing, and sometimes hostile,
Wiebe Draijer, Chairman
environment. In the future we will focus even more keenly on
adaptivity: the key not only to survival, but also to thriving. of the Managing Board
Wiebe Draijer, Chairman of the Managing Board
Rabobank Annual Report 2017 4
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
About this report
Rabobank is driven to create value for our clients and other stakeholders. Key inputs fuel our
strategy and business model, allowing us to fulfil our mission and vision, and maximise both our
output and our impact on members, customers, the society and our employees. Therefore the
2017 Annual Report takes an integrated approach, highlighting Rabobank’s contribution to our
various stakeholders by providing both financial and non-financial information. This report and
Financial Statements have been prepared in accordance with the appropriate reporting standards
and guidelines and it relates to the reporting period 1 January 2017 to 31 December 2017. They
were published on 15 March 2018 on Rabobank’s corporate website. See appendix 1 for more
information.
Integrated reporting Materiality
Our integrated reporting approach rests on two pillars: our The materiality analysis provides insight into the choices we
value creation model and materiality matrix. The value creation made in the reporting year. This is illustrated in a materiality
model is about how we create economic, social and ecological matrix, which shows the topics that require attention as
value through our capital resources, business model and they have substantial impact on both our stakeholders and
strategic priorities. This model enables a transparent view of on Rabobank. Information on the process of determining
our ability to create value over the short, medium and long materiality and the boundaries of the topics is provided in
term. It begins with three key inputs: human and social capital, Appendix 1. Rabobank’s mission is Growing a better world
intellectual capital and financial resources. These inputs lead to together. Through our strategic focus areas – Banking for the
our business model, including Rabobank’s mission, vision and Netherlands and Banking for Food - we offer value-added
strategy. Finally, the output and impact section of the model products and services to our customers in the Netherlands
is structured along the 18 material topics from the materiality and in Food & Agri in the world. We are committed to making
matrix. a difference as a leading, cooperative, client-driven bank, in
the Netherlands and around the world and to being a rock-
solid bank with strong financial capital and liquidity buffers for
financial solidity and high credit ratings made possible by our
empowered employees.
Rabobank Annual Report 2017 5
Management
report
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Contents
Key figures 8
Rabobank at a glance 10
Our impact on our customers 20
Our impact on society 45
Empowered Employees 54
Our performance 63
Our financial performance 72
Risk Management and Compliance 79
Outlook on 2018 90
Members of the Managing and Supervisory Board 91
Management board responsibility statement 95
Rabobank Annual Report 2017 - Management report 7
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Key figures
Key figures
Amounts in millions of euros 2017 2016 2015 2014 2013
Financial position and solvency
Equity 39,610 40,524 41,197 38,788 38,534
Common equity tier 1 capital 31,263 29,618 28,754 28,714 28,551
Tier 1 capital 37,204 37,079 35,052 33,874 35,092
Total capital 51,923 52,873 49,455 45,139 41,650
Risk-weighted assets 198,269 211,226 213,092 211,870 210,829
Profit and loss account
Income 12,001 12,805 13,014 12,889 13,072
Operating expenses 8,054 8,594 8,145 8,055 9,760
Regulatory levies 505 483 344 488 197
Impairment losses on goodwill and investments in associates 0 700 623 32 42
Loan impairment charges (190) 310 1,033 2,633 2,643
Taxation 958 694 655 (161) 88
Net profit from continued activities 2,674 2,024 2,214 1,842 342
Net profit from discontinued activities 0 0 0 0 1,665
Net profit 2,674 2,024 2,214 1,842 2,007
Ratios
Common equity tier 1 ratio 15.8% 14.0% 13.5% 13.6% 13.5%
Fully loaded common equity tier 1 ratio 15.5% 13.5% 12.0% 11.8% 11.1%
Tier 1 ratio 18.8% 17.6% 16.4% 16.0% 16.6%
Total capital ratio 26.2% 25.0% 23.2% 21.3% 19.8%
Equity capital ratio 17.3% 15.0% 14.7% 14.4% 16.1%
Leverage ratio 6.0% 5.5% 5.1% 4.9% 4.8%
Loan-to-deposit ratio 1.20 1.22 1.25 1.32 1.35
Return on tier 1 capital 7.2% 5.8% 6.5% 5.2% 5.2%
ROIC 6.9% 5.2% 6.0% - -
Cost/income ratio excluding regulatory levies 67.1% 67.1% 62.6% 62.5% 74.7%
Cost/income ratio including regulatory levies 71.3% 70.9% 65.2% 66.3% 76.2%
Net profit growth 32.1% -8.6% 20.2% -8.2% -2.5%
Return on assets 0.44% 0.31% 0.33% 0.28% 0.27%
Ratings
Standard & Poor’s A+ A+ A+ A+ AA-
Moody’s Investors Service Aa2 Aa2 Aa2 Aa2 Aa2
Fitch Ratings AA- AA- AA- AA- AA-
DBRS AA AA AA AA (high) AAA
Sustainability ratings
RobecoSAM (DJSI) – ranking 11 7 5 12 -
Sustainalytics – ranking 7 2 11 40 -
Volume of services
Total assets 602,991 662,593 678,827 691,278 669,095
Private sector loan portfolio 410,964 424,551 433,927 429,731 434,691
Deposits from customers 340,682 347,712 345,884 336,409 326,222
Wholesale funding 160,407 188,862 203,218 216,529 219,057
Supporting local communities
Rabobank Foundation (in the Netherlands and abroad) 20 16.9 16.3 19.5 16.4
Cooperative dividend (local Rabobanks) 38.9 36.8 38.1 36.8 44.5
Donations Rabobank 6.6 6.5 6.9 8.0 8.0
Climate Footprint before full compensation
CO emissions own operations (x 1,000 tonnes CO) 174 181 182 198 208
2 2
CO emissions per FTE (tonnes CO) 4.0 3.8 3.5 3.6 3.5
2 2
Rabobank Annual Report 2017 - Management report 8
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Key figures
2017 2016 2015 2014 2013
Private customers
Net Promotor Score (NPS Recommendation) 53 36 33 17 12
Customer Effort Score (CES Day-to-day banking) 66 67 64 68 66
Customer Advocacy Score (CAS Recommendation) 80% 79% 76% 61% 59%
Satisfaction with day-to-day banking 8.4 8.2 7.9 7.8 7.7
Private Banking customers
Net Promotor Score (NPS Recommendation) 50 41 37 29 20
Customer Effort Score (CES Day-to-day banking) 65 68 64 68 66
Customer Advocacy Score (CAS Recommendation) 82% 84% 81% 70% 64%
Satisfaction with day-to-day banking 8.4 8.1 7.8 7.8 7.7
Corporate customers
Net Promotor Score (NPS Recommendation) 43 30 21 10 1
Customer Effort Score (CES Day-to-day banking) 49 51 43 52 43
Customer Advocacy Score (CAS Recommendation) 69% 71% 62% 53% 48%
Satisfaction with day-to-day banking 8.0 8.4 7.3 7.1 6.9
Nearby
Local Rabobanks 102 103 106 113 129
Offices 446 475 506 547 656
ATMs 1,967 2,141 2,206 2,305 2,524
Members (x 1,000) 1,916 1,927 1,945 1,959 1,947
Availability of internet payments & savings1 99.9% 99.7% 99.8% 98.9% -
Availability of mobile banking1 99.9% 99.7% 99.8% 99.0% -
Foreign places of business 389 382 403 440 769
Market shares (in the Netherlands)
Mortgages 22% 21% 20% 22% 26%
Savings 34% 34% 35% 36% 38%
Trade, Industry and Services (TIS) 39% 41% 42% 39% 44%
Food & Agri 86% 84% 84% 85% 85%
Sustainable products and services (in millions of euros)
Total sustainable financing 18,610 18,791 19,240 19,510 18,926
Total sustainable assets under management and assets held in custody 4,030 3,835 2,843 2,101 1,739
Total sustainable funding 3,501 2,985 2,122 2,365 2,870
Total financial transactions supervised by Rabobank 6,236 5,750 6,313 2,383 883
Personnel data
Number of employees (internal in FTEs) 37,170 40,029 45,658 48,254 56,870
Number of employees (external in FTEs) 6,640 5,538 6,355 5,658 6,034
Number of employees (total in FTEs) 43,810 45,567 52,013 53,912 62,904
Staff costs (in millions of euros) 4,472 4,680 4,787 5,086 5,322
Absenteeism 4.0% 3.6% 3.7% 3.7% 3.5%
Females employed 50.9% 51.7% 51.8% 53.3% 53.5%
Females in senior positions (≥ scales 8) 27.4% 25.8% 28.6% 28.5% 27.6%
Training expenses (in millions of euros) 68 78 79 77 91
Training expenses in EUR per FTE 1,837 1,945 1,734 1,604 1,603
1 Average availability measured over 12 months
Rabobank Annual Report 2017 - Management report 9