Rabobank Media presentation H1 2018 results 16 August 2018 - - PowerPoint PPT Presentation

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Rabobank Media presentation H1 2018 results 16 August 2018 - - PowerPoint PPT Presentation

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Rabobank Media presentation H1 2018 results 16 August 2018 Strategy overview Focus on 10 top priorities for 2018-2020 Growing a better world together Banking for the Netherlands Banking for Food Excellent customer Meaningful Empowered

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Rabobank

Media presentation H1 2018 results 16 August 2018

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Growing a better world together

Banking for the Netherlands Banking for Food

10 Strategic Top Priorities

  • 100% Digital

convenience in everything

  • Top customer advice

nearby

  • Growth with innovation
  • Top performance
  • Optimal balance sheet
  • Exceptionally good

execution

  • Concrete socially

responsible contribution

  • Involved members and

communities

  • Inspired employees
  • One-Rabobank culture

Excellent customer focus Rock-solid bank Empowered employees Meaningful cooperative

Strategy overview

Focus on 10 top priorities for 2018-2020

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SLIDE 3

Highlights H1 2018 (I)

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 Growth deposit base & loan book

  • Growth loan book by € 7.6bn
  • Deposit base increased by € 3.4bn

Excellent customer focus Meaningful cooperative

 Most customer-friendly bank

  • 1st place by consumers as the most customer-friendly

bank in the Netherlands (Customer First Awards)

  • Sustained increase in domestic Net Promotor Scores

 Strong progress in innovation

  • Rabobank innovation SurePay (IBAN name check) rolled
  • ut to many Dutch banks and insurance companies
  • 1st Dutch bank to facilitate 3rd party payment initiation
  • Customers can check account balance or set a spending

alert using their voice via Google Assistant

 Client-focused operating model

  • New client focused operating model for local Rabobanks

in the Netherlands as the foundation for a more effective and efficient banking operation

 Industry leading in sustainability

  • Sustainalytics score: 86 + awarded ‘ESG Industry Leader’
  • Oekom Prime: awarded ‘Industry Leader’ in 2017
  • RobecoSam: score 89 (11th worldwide)

 First to launch ‘ESG Leader’ program

  • Rabobank was first to launch ESG Leader CP/CD program
  • Driven by Rabobank's 'ESG Industry Leader' status

Rabobank issues short term funding labelled as ESG investment

 3rd Kickstart program launched (Food)

  • Launched Kickstart Waste to drive food waste reduction,

from stimulating innovations to financial support for farmers to improve replanting, logistics and storage

 Driving energy efficient housing

  • Proprietary sustainability scan helps mortgage clients

identify sustainability improvements in their homes

  • Introduced Green Depot, a 2-year interest-free depot to

finance sustainable home improvements

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Highlights H1 2018 (II)

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 Strong net profit

  • H1 net profit of € 1.7bn (+12%) supported by favorable

economic environment

Rock-solid bank Empowered employees

 Comfortable capital position

  • Well positioned to absorb future

Basel IV and MREL requirements (30.96%)

  • Expected Non-Preferred Senior issuance in H2 2018

 Continued strategic focus

  • Non-core domestic CRE portfolio divested with FGH Bank

portfolio sale

  • Repositioned BPD with focus on Dutch and German

market by divesting BPD France (expected closing: Q4)

 Improved efficiency

  • Cost/Income ratio improved to 64.6% with further cost

reduction remaining a point of attention

 #1 Employer in the Netherlands

  • Rabobank awarded #1 favorite employer to work for by

talents (university & higher vocational education)

 Diversity strong and improving

  • Women well-represented in senior management

positions (33% overall, 40% in Managing Board)

  • Strong cultural diversity in our young talent pool (30%)

 235 New start-up ideas generated

  • Employees from 13 countries generated 235 ideas for

start-ups through our innovation incubator program

  • Involved in 68 start-up communities and organizer of F&A

innovation events such as FoodBytes! and Terra

 High employee mobility

  • 63% of the employees we had to let go found a job within

six months, which is above average for the banking sector in the Netherlands

+12%

(€ 1.7bn)

CET1 Total Capital

15.8% 26.1%

64.6%

(-3.0%-point)

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Ongoing successful transformation in the Netherlands…

Ready for the next phase

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Phase 3 | Optimize service model Phase 2 | Regionalize mid- & back office Phase 1 | Implement new governance

January 2016

  • Efficiency improvement through process

standardization and regionalization of customer call center and operational service centers

  • Incorporated digitalization as an integral part
  • f the strategy and change agenda
  • Significantly reduced cost and FTE, while

increasing Net Promotor Scores (NPS)

  • Next step towards a more effective and

efficient organization as per 1/1/2019

  • Further optimization of omnichannel client

service model

  • 250 Market teams ensure customer intimacy

through face-to-face contact, operating out

  • f 90 banks supported by 14 regional teams
  • Anticipating changing client demands and

regulatory requirements

  • Merger of 106 local Rabobanks with central

entity to one legal entity with one banking license and one balance sheet

  • More flexible, simple and adaptive structure

supporting cooperative values 2016 -2018 June 2018 14 regions

  • f 6-7

Rabobanks

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…resulting in higher client appreciation and efficiency

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37 60 33 56 21 52 Dec 15 Dec 16 Dec 17 Jun 18 NPS private banking customers NPS retail customers NPS business customers

Net Promotor Score (domestic market) FTE development Rabobank Group

* Including 1,255 FTEs due to the Athlon sale in 2016 ** This is the balance of -775 FTEs at DRB (of which ~400 FTEs transferred to the central

  • rganization), and +669 FTEs at the other business segments
  • 106**

Dec 17 45,567 Ambition 43,623 38,500 Jun 18

  • 8,390*

52,013 Dec 15 Dec 16 43,729

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Valuable progress on our financial targets

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Jun 2017 Dec 2017 Jun 2018 Ambition 2020 Capital

Fully loaded CET1 ratio 14.7% 15.5% 15.8% >14% Total capital ratio 25.5% 26.2% 26.1% >25%

Profitability

ROIC 7.8% 6.9% 8.8% >8% C/I ratio 67.6% 71.3% 64.6% 53-54% Underlying C/I ratio 63.9% 65.3% 62.9%

Funding

Wholesale funding € 171bn € 160bn € 164bn < €150bn

Financial targets and results

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Positive net profit development

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In € mn H1 2017 H2 2017 H1 2018 Net interest income 4,454 4,389 4,274 Net fee & commission income 988 927 981 Other results 496 747 774 Total income 5,938 6,063 6,029 Operating expenses 3,755 4,299 3,611 Regulatory levies 258 247 284 Impairment charges

  • 67
  • 123
  • 37

Operating profit before tax 1,992 1,640 2,171 Tax 476 482 473 Net profit 1,516 1,158 1,698

Profit & Loss account Net profit (in € mn)

1,522 997 692 1,027 1,158 1,516 1,698 2015 2,214 2016 2,024 2018 2017 2,674

H2 H1

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Continued strong underlying performance

9 Exceptional items included in operating profit before tax Underlying profit before tax (in € mn)

In € mn H1 2017 H2 2017 H1 2018 Fair Value items

  • 186
  • 127
  • 133

Restructuring costs

  • 98
  • 61
  • 22

Provision RNA

  • 310

Derivatives framework

  • 51

Total effect

  • 284
  • 549
  • 155

1,992 1,640 2,171 549 155 284 H1 2017 2,189 2,276 +2% Operating profit before tax Exceptional items H1 2018 2,326 H2 2017

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Total income slightly up despite challenging interest rate environment

10 Total income (in € mn)

4,389 4,274 927 981 874 4,454 988 907 682 5,938 H1 2017

  • 186

6,190 6,162 6,029 6,124 6,063 Net fee and commission income Net interest income Other results FV items H1 2018

  • 133

H2 2017

  • 127
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Net interest income impacted by prolonged low interest rate environment

11 Net interest income (in € mn) and Net interest margin (in % of average balance sheet total)

NIM (12m-rolling average) 1.41% 1.39% 1.33% 1.29% 1.33% 1.33% 1.32% 4,657 4,375 4,368 4,454 4,389 4,274 4,482 H1 2018 H2 2017 H1 2017 H2 2016 H1 2016 H2 2015 H1 2015

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Multi-year transformation program is paying off

12 Operating expenses (in € mn)

H1 2017 H2 2017 H1 2018 C/I ratio 67.6% 75.0% 64.6% Underlying C/I ratio 63.9% 66.6% 62.9% 2,206 2,266 2,127 1,451 1,611 1,462 310 61 51 H1 2017 3,755 4,299 3,589 H1 2018 Staff costs Other Opex H2 2017 3,657 3,877 Restructuring costs 22 3,611 98 Derivatives framework Provision RNA

Development cost/income ratio incl. regulatory levies

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Asset quality continues to benefit from economic tail wind

13 Impairment charges (in € mn and in bps of average lending)

  • 2 bps
  • 3 bps
  • 6 bps
  • 43
  • 73

105

  • 103

41 65

  • 42
  • 156
  • 27

35

  • 3

H2 2017

  • 10

H1 2018 Domestic Retail Other Real Estate Leasing WRR H1 2017

  • 2
  • 14
  • € 37mn
  • € 67mn
  • € 123mn
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Loan portfolio increased after a few years of slight contraction

14 Composition of private sector loan portfolio (in € bn)

193 193 23 22 22 27 27 27 42 42 43 62 61 65 37 36 37 27 27 29 192 Domestic Retail F&A Domestic Retail other SMEs WRR Wholesale (excl. CRE) WRR Rural & Retail Leasing Jun 18 416 Jan 18 408 Dec 17 Domestic CRE Domestic Retail mortgages +2% 411

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Deposits from customers and private sector lending (in € bn)

Loan-to-deposit ratio slightly improved

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1.21 LtD ratio 229 229 235 28 28 25 84 86 87 411 408 416 343 WRR and Other RaboDirect 347 DRB 341 Dec 17 Jan 18 Jun 18 1.20 Deposits from customers Lending

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13.5% 14.0% 15.8% 15.8% 2.9% 3.6% 3.0% 3.0% 6.8% 7.4% 7.4% 7.3% 2015 2016 2017 H1 2018 Tier 2 AT1 CET1

Capital position provides strong basis for regulatory developments

16 CET1 development (Fully loaded) Total capital (Transitional)

25.0% 26.2% 26.1% 23.2% 12.0% 13.5% 15.5% 15.8% +0.6%

  • 0.3%

2015 2016 2017 Profit minus distributions Other H1 2018

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Rabobank

Media presentation H1 2018 results 16 August 2018