Rabobank Group Investor Presentation FY2011

Transcription

1 Rabobank Group Investor Presentation FY2011

2 Disclaimer This presentation is prepared by Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. incorporated in the Netherlands, trading as Rabobank Nederland ( RN ). The liability of its members is limited. RN is regulated by De Nederlandsche Bank N.V. and by the Netherlands Authority for the Financial Markets. Neither this presentation nor any of its contents may be used for any other purpose without the prior written consent of RN. This presentation is only directed at Eligible Counterparties and Professional Clients, as defined in the Markets in Financial Instruments Directive 2004/39/EC ( MiFID ). It is not directed at Retail Clients (as defined in MiFID). The content of this presentation reflects prevailing market conditions and RN s judgment as of the date of this presentation, all of which may be subject to change. The information and opinions contained in this presentation have been compiled or arrived at from sources believed to be reliable, but no representation or warranty, express or implied is made as to their accuracy, completeness or correctness. RN has further relied upon and assumed, without independent verification, the accuracy and completeness of all information made available to it. To the extent permitted by law, RN excludes any liability howsoever arising from the contents of this presentation or for the consequences of any actions taken in reliance on this presentation or the content herein. Each client is advised to seek independent professional advice as to the suitability of any products and to their tax, accounting, legal or regulatory implications. Members of the Rabobank Group trade on their own account and may from time to time hold or act as market makers in securities issued by a client, or may act as advisors, brokers or bankers to a client or any of its affiliates. The information and opinions contained in this presentation are wholly indicative, for discussion purposes only and is subject to change without notice at any time. No rights may be derived from any potential offers, transactions, commercial ideas et cetera contained in this presentation. This presentation does not constitute an offer, commitment or invitation and does not constitute investment advice and is not intended for the use by persons an offer of securities to whom would be subject to the Netherlands Financial Supervision Act. This presentation shall not form the basis of or be relied upon in connection with any contract or commitment whatsoever. Rabobank Nederland, Croeselaan 18, 3521 CB Utrecht, The Netherlands, Chamber of Commerce number Investing Rabobank Nederland and the other parts of Rabobank Group that are designated as investment institutions are registered as such with the Netherlands Authority for the Financial Markets. The aforementioned investment institutions are licensed by the Netherlands Authority for the Financial Markets under the Financial Supervision Act. If you invest funds you have borrowed, you run the risk of incurring a debt as well as losing the invested funds. Your decision to invest in one of the products mentioned should solely be based on the applicable prospectus or information memorandum including the risk factors, costs, terms and conditions and underlying values. The applicable prospectus or information memorandum is available with RN or on The value of your investment can fluctuate. Past performance offers no guarantee for future results. 2 Investor Relations

3 Introduction Welcome to the world of Rabobank Cooperative, Dutch, in the world s top 30, All-finance leader in the Netherlands, largest savings and mortgage bank, dominant in Dutch agriculture, global focus on food & agribusiness There is a lot to tell about Rabobank. Investor Relations provides information to institutional investors and financial analysts on Rabobank Group. In doing so we aim to assist them in making informed decisions regarding the bank s credit standing. The team s approach is to develop and maintain close and active relationships through regular communication and dialogue with investors in the form of individual meetings, group presentations, deal and non-deal specific roadshows and results updates. Investors can also subscribe to the Investor Relations Newsletter. More information can be found on the Investor Relations web pages on For individual questions or inquiries please contact the Investor Relations department on IR@rabobank.com. Frederik Hoek Head Investor Relations Rabobank Group All photos in this presentation taken by Rabobank employees 3 Investor Relations

4 Content Results FY Structure & strategy 12 Asset quality 16 Solvency & liquidity 23 Preview Funding 27 4 Investor Relations

5 Results FY2011 Rabobank at a glance Cooperative bank established in 1898 All-finance leader in domestic market Global food & agribusiness bank Moody s Standard & Poor s Fitch DBRS Aaa AA AA AAA Dec Dec Total assets ( bn) Group equity ( bn) Tier 1-ratio 17.0% 15.7% Core Tier 1-ratio 12.7% 12.6% Equity Capital Ratio 14.7% 14.2% Net profit ( mn) Net profit growth -5% +26% Return on equity 7.6% 8.6% Efficiency ratio 65.2% 64.5% 5 Investor Relations

6 Results FY2011 Substantial net profit Net profit -5% to 2,627mn Income +5% Operating expenses +6% Bad debt costs 37bps Lending +3% to 448bn Customer deposits +10% to 330bn 6 Investor Relations

7 Results FY2011 Capital ratios at comfortable levels Tier 1 ratio Dec 2011: 17.0% Core Tier 1-ratio Dec 2011: 12.7% Equity Capital Ratio Dec 2011: 14.7% Rabobank fulfills Basel III capital requirements Rabobank comfortably passed both the stress test and the capital test of the European Banking Authority (EBA) 18% 16% Capital ratios 14% 12% 10% 8% 6% Tier 1-ratio Core Tier 1-ratio Equity Capital Ratio 4% 2% 0% June 09 Dec. 09 June 10 Dec. 10 June 11 Dec Investor Relations

8 Results FY2011 Limited exposures to Greece, Ireland, Italy, Portugal and Spain Total net exposure in sovereigns of GIIPS countries is limited at 349mn as of 31 December 2011 Very limited exposure in state-guaranteed bonds: 121mn in total Exposure in bonds of financial institutions mainly covered bonds. Value adjustments total 374mn Rabobank Group exposures Dec 2011 Sovereigns Stateguaranteed bonds Bonds issued by financial institutions Cumulative value adjustments Greece Ireland Italy Portugal Spain , Total , Investor Relations

9 Results FY2011 Domestic retail basis of substantial Group profit Group net profit -5% to 2,627mn Domestic retail +1% to 1,853mn Wholesale & international retail +1% to 781mn Asset management -63% 62mn Leasing +51% to 304mn Real estate -71% to 31mn Net profit by business line Domestic retail Wholesale & international retail Asset management Leasing Real estate Investor Relations

10 Results FY2011 Group lending & bad debt costs Group Lending +3% to 448bn Bad debt costs + 372mn to 1,606mn = 37bps Domestic retail Lending + 3% to 296bn Bad debt costs + 290mn to 648mn = 22bps Rabobank International Lending +8% to 107bn Bad debt costs + 89mn to 686mn = 73bps Bad debt costs ,606mn = 37 bps Long term average 24 bps Dutch mortgages 2.9 bps Loan portfolio Dec bn Wholesale & intern. retail, leasing and asset man. 29% Dutch mortgages 45% Other Dutch retail 71 bps Wholesale & international retail, leasing and asset management 61 bps other Dutch retail 26% 10 Investor Relations

11 Results FY2011 Domestic retail: good performance Net profit +1% to 1,853mn Income +7% Operating expenses +4% Bad debt costs 22bps Lending +3% to 296bn Customer deposits +4% to 200bn Efficiency ratio improves from 59% to 57% Domestic retail banking Income 6,941 6,509 +7% Operating expenses Operating profit Value adjustments 3,986 3,833 +4% 2,954 2, % % Taxation % Net profit 1,853 1,843 +1% 11 Investor Relations

12 Structure and strategy Market leadership in All-finance in domestic market is and remains first priority Long-standing strategy Basel III will only have limited effect on strategic focus of Rabobank Increased focus on core activities: All-finance in the Netherlands Food & agribusiness outside home market Strong and stable domestic market shares Savings 39% Mortgages 32% Agriculture & horticulture 83% Small and medium-sized enterprises 42% Subsidiaries complement local Rabobanks in All-finance leadership leasing asset management real estate financing & development mortgage brokerage 12 Investor Relations

13 Structure and strategy Members and local cooperatives basis of Rabobank 1.9 million members of local Rabobank cooperatives Non-financial membership: no entry fee, no dividend Limited say on business strategy of local Rabobank via Members Council Exclusive right to buy Member Certificates Members buy 4 products on average, compared to 2.5 by non-member clients 10 million clients 1.9 million members 139 local cooperative Rabobanks 872 domestic branches ownership and cross-guarantee Rabobank Nederland division: Rabobank International specialised subsidiaries asset management, real estate, leasing, mortgages, private banking 13 Investor Relations

14 Structure and strategy Unique Cross-Guarantee Local banks liable for each others obligations (1 st level) Ensures intra-group credit support (2 nd level) Rabobank Group is treated as a consolidated entity for the regulatory supervision of solvency, liquidity and other controls De Lage Landen Rabobank Nederland Schretlen & Co Rabo Mortgage Banks Local Rabobanks 14 Investor Relations

15 Structure and strategy Global spread of activities 47 countries 751 foreign branches of which appr. 600 retail branches Loan portfolio international wholesale & retail +7% to 93bn Focus on food & agribusiness (51bn): 55% of total Rural & retail (36bn) is 38% of total International leasing + 16% to 21bn of which 36% food & agribusiness 15 Investor Relations

16 Asset quality Diversified portfolio with focus on the Netherlands Predominantly Dutch bank 75% of total lending is domestic 61% of domestic banking is in residential mortgages Domestic food & agribusiness retail market share is 83% but F&A loans only 9% of the domestic portfolio Group lending Dec bn Domestic banking Dec bn Intern. Wholesale 13% Intern. Leasing 4% Intern. Rural & Retail 8% Large corporates 4% SMEs 19% Real estate 6% Leasing 1% Domestic banking 75% Food & agri retail 9% Mortgages 61% 16 Investor Relations

17 Asset quality International lending wholesale and rural & retail Australia & New Zealand 20% Asia 6% Europe excl.neth 30% Americas 44% International lending wholesale & retail Dec bn (21% of total) in bn Wholesale Rural & retail TOTAL Europe excl. the Netherlands Americas Australia / New Zealand Asia TOTAL Investor Relations

18 Asset quality Dutch housing market remains stable Demand exceeds supply structurally Increasing no. of households Limited land available for housing Shortage of housing stock Interest paid is tax-deductible Governmental guarantees Number of houses sold in % Average house price -2% Owner occupation 54%, lower than EU average 65% No speculation due to 6% transaction costs Tax deductible for first house only 250 House prices 200 Index: 2002 = 100 Australia Sweden 150 Spain UK Netherlands 100 USA Ireland Source: Reuters-EcoWin 18 Investor Relations

19 Asset quality Rabobank mortgage portfolio has long-term fixed interest period 93% of mortgage portfolio has (predominantly long-term) fixed interest rate Only 7% of mortgage portfolio has variable interest rate Break-down of Rabobank Dutch mortgage portfolio by remaining fixed interest rate period Dec Investor Relations

20 Asset quality Market leader in low risk Dutch residential mortgages Low loan losses 2011: 2.9 bps/p.a. Long term average 3 bps/p.a. Loan-to-value ratio: 67% on average Dutch mortgages 45% of total Group lending Market share 32% 16% of mortgage portfolio government guaranteed (NHG) 33% of new mortgages in 2011 under governmental guarantee scheme (NHG) Number of delinquencies and foreclosures remains very low Bank has first charge at default Full recourse for the bank 20 Investor Relations

21 Asset quality F&A portfolio well spread over sectors Portfolio +9% to 88bn Well diversified 20% of Group portfolio Domestic market share 83% Sugar 2% Miscellaneous crops 2% Other 10% Animal protein 18% Grains & oilseeds 19% Beverages 4% Dairy 18% Fruit & veg 11% Food retail & foodservice 6% Flowers 4% Farm inputs 6% 21 Investor Relations

22 Asset quality Non-F&A portfolio well spread over sectors Portfolio stable at 148bn Well diversified 33% of Group portfolio Other services 19% Trade 12% Activities related to real estate 6% Arts, entertainment & recreation 1% Construction 5% Finance & insurance (excl.banks) 14% Health care & social assistance 4% Utilities 1% Transportation & warehousing 5% Retail (excl. food & beverages) 3% Professional scientific and technical services 3% Manufacturing 5% Information & communication 1% Lessors of real estate 21% 22 Investor Relations

23 Solvency & liquidity Well-balanced balance sheet Total assets + 12% to 732bn Strong growth in cash + 57bn Customer deposits plus long term funding is more than loans Short term assets (22%) larger than short term liabilities (14%) Balance sheet Dec 2011 versus Dec 2010 Dec 2011 Dec 2010 Dec 2011 Dec 2010 Loans 64% 70% Capital 6% 6% Due to customers Long-term funding 45% 46% 23% 24% 68% 70% Cash 10% 2% Short-term funding 10% 11% Banks 3% 5% Banks 4% 4% Securities 9% 12% 22% 19% 14% 15% Derivatives 8% 7% Derivatives 9% 7% Others 6% 4% Others 3% 2% 100% 100% 100% 100% 732bn 653bn 732bn 653bn 23 Investor Relations

24 Solvency & liquidity High quality capital base Amount due to customers up 10% because of increase in saving deposits Capital increase by 10%, due to retained earnings and the issue of USD 4bn of new style hybrid capital Retained earnings and Member Certificates together form core capital Capital & liabilities 732bn Capital 45bn CD 7% CP 3% Other liabilities 3% Capital 6% new style hybrid 7% old style hybrid 13% Derivatives 9% Long term funding 23% Banks 4% Member Certificates 15% Due to customers 45% Retained earnings & minority interests 65% 24 Investor Relations

25 Solvency & liquidity Member Certificates: Core Tier 1 capital Member Certificates cost effective Core Tier 1 capital 6.6bn outstanding Continuously trading over par since issuance Standard & Poor s qualifies the Member Certificates as Adjusted Common Equity (ACE) bn Member Certificates amount outstanding 25 Investor Relations

26 Preview 2012 Rabobank s strong capital position, robust balance sheet and good 2011 results give comfort for the 2012 results Preview 2012 Low economic growth Low increase in lending and amounts due to customers Rabobank s capital base remains strong Rabobank s liquidity position remains strong Despite the turmoil in the financial markets and the uncertainties in Europe we are quite positive about the overall future performance of the bank 26 Investor Relations

27 Funding 27 Investor Relations

28 Funding Public market issues in Benchmarks In a challenging market environment Rabobank remains a frequent issuer in the institutional markets and continues to provide investors with new assets across markets Raised over 42bn in senior debt plus USD 4bn in new style hybrid capital EUR Benchmarks 2012 Highlights 2012 EUR 1.75bn EUR 2.75bn 10-year Fixed Rate 2-year 3m Euribor +70 bps USD 3.0bn USD 2.5bn 10-year Fixed Rate 3a2 Format 5-year Fixed Rate 3a2 Format EUR Benchmarks 2011 Highlights 2011 EUR 1.5bn EUR 1.5bn EUR 3.5bn EUR 2.0bn 7-year Fixed Rate 3-year 3m Euribor +35 bps 5-year Fixed Rate 10-year Fixed Rate USD 1.5bn USD 1.25bn USD 1.5bn USD 300mn 30y Fixed Rate 3a2 Format 3y Fixed Rate 3a2 Format 10y Fixed Rate 3a2 Format 3.5y Fixed Rate Eurobond increase EUR 500mn 15-year Fixed Rate tap of 2010 issue GBP 400mn GBP 625mn GBP 400mn 30y Fixed Rate 1y Floating Rate 10y Fixed Rate CHF 500mn CHF 200mn CHF 200mn 2y Floating Rate 7y Fixed Rate 2y Fixed Rate AUD 2.5bn AUD 625mn AUD 500mn 4y, 5y, 7y Kangaroo 2y,3y,4y Eurobond 2y, 3y Uridashi JPY 74.3bn JPY 77.2bn JPY 89.5bn 3y, 5y, 10y Samurai 3y, 5y, 10y Samurai 3y, 5y Samurai 28 Investor Relations

29 Funding Diversified funding portfolio with a healthy duration Portfolio has an average maturity of 5 years The average maturity of issuance done in recent years exceeds 5 years With a strong focus on a healthy duration of the funding portfolio more than 40bn matures in 2017 or later Maturity profile portfolio (March 1, 2012) Currency breakdown (in volume) EUR Equivalent (bn) AUD 8% Other 15% EUR 47% 10 USD 14% GBP 16% 29 Investor Relations

30 Funding The public market Euro benchmark issuance Rabobank is committed to a liquid EUR benchmark curve in senior unsecured format Rabobank has never issued in Covered Bond format, nor in Government Guaranteed format Rabobank has a curve outstanding of 19 different issues with a minimum size of over 1bn each and maturities up until of these issues have an issue size of 2bn or larger In 2011, Rabobank issued an EUR 3.5bn 5 year benchmark This 5 year issue was the largest senior unsecured issue from a financial issuer in 2011 In 2012, Rabobank issued an EUR 1.75bn 10 year benchmark This 10 year issue was the largest senior unsecured issue from a financial issuer in 2012 year to date These issues proved that Rabobank is still one of the few financial institutions with an in-depth market access in the senior unsecured markets 30 Investor Relations

31 Funding Public market issues in Niche currencies Rabobank has continued to benefit from its unrivalled relationship with retail investors over many years, issuing in more than 20 different currencies. Given the global turmoil in financial markets a significant amount of new issuance is done in safe haven currencies like NOK, CAD, AUD and CHF Highlights ARS 60mn CAD 130mn 3y Fixed Rate Eurobond 3y Fixed Rate Eurobond NZD 525mn NZD 450mn 4, 5, 7y Kauri Bond 3, 4y Fixed Rate Eurobond HKD 200mn 2y Fixed, FRN Eurobond RUB 3bn 3, 5y Fixed Rate Eurobond MXN 1.15bn 1, 3, 4y Fixed Rate Eurobond SEK 2.9bn 2, 3y Fixed Rate Eurobond NOK 4.6bn 2, 3, 4, 5y Fixed Rate Eurobond TRY 1.3bn 2, 3, 4, 5y Fixed Rate Eurobond ZAR 1bn 3, 4, 5y Fixed Rate Eurobond 31 Investor Relations

32 Funding Private placements and structured MTNs More than 11bn raised in 2011 in Private Placements More than 3bn raised in 2011 in Structured MTNs More than 250 transactions completed Broad group of dealers consisting of more than 25 different counterparties Rabobank issues in all possible structures Plain Vanilla FRN Interest Rate Linked Equity Linked Plain Vanilla Fixed Commodity Linked Inflation Linked FX Linked 32 Investor Relations

33 Funding New style hybrid capital Continue to differentiate from our peers with our strong capitalisation Strengthen capital base ahead of upcoming Basel III implementation Trigger: Equity Capital Ratio (ECR) = (retained earnings + member certificates) risk weighted assets Current ECR: 14.7% (Dec 2011) 2011 Capital Trades January 2011: USD 2bn Coupon November 2011: USD 2bn Coupon Tier 1 Perp. NC 5.5 year 8.375% Tier 1 Perp. NC 5.5 year 8.4% CRD2 compliant capital Trigger ECR < 8% In the event that ECR falls below 8%, the new Hybrid Tier 1 will absorb losses pro-rata with Equity Capital and other loss absorbing instruments 33 Investor Relations

34 Funding Stress analysis Equity Capital Ratio Trigger of ECR< 8% is hit if * losses made > 15bn or * RWA Increases > 187bn Trigger of ECR< 7% is hit if * losses made > 17bn or * RWA increase > 246bn Retained Earnings + Member Certificates 26, ,614 Dec 2011 ECR = = = 14.7% Risk Weighted Assets 223,613 Stress analysis: change in ECR if Equity Capital and/or RWA change Change in Equity Capital RWA change 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% RWA change -30% 27.3% 25.2% 23.1% 21.0% 18.9% 16.8% 14.7% 12.6% 10.5% 8.4% -30% -20% 23.9% 22.1% 20.2% 18.4% 16.5% 14.7% 12.9% 11.0% 9.2% 7.4% -20% -10% 21.2% 19.6% 18.0% 16.3% 14.7% 13.1% 11.4% 9.8% 8.2% 6.5% -10% 0% 19.1% 17.6% 16.2% 14.7% 13.2% 11.8% 10.3% 8.8% 7.4% 5.9% 0% 10% 17.4% 16.0% 14.7% 13.4% 12.0% 10.7% 9.4% 8.0% 6.7% 5.3% 10% 20% 15.9% 14.7% 13.5% 12.3% 11.0% 9.8% 8.6% 7.4% 6.1% 4.9% 20% 30% 14.7% 13.6% 12.4% 11.3% 10.2% 9.0% 7.9% 6.8% 5.7% 4.5% 30% 40% 13.7% 12.6% 11.6% 10.5% 9.5% 8.4% 7.4% 6.3% 5.3% 4.2% 40% 50% 12.7% 11.8% 10.8% 9.8% 8.8% 7.8% 6.9% 5.9% 4.9% 3.9% 50% 60% 11.9% 11.0% 10.1% 9.2% 8.3% 7.4% 6.4% 5.5% 4.6% 3.7% 60% 70% 11.2% 10.4% 9.5% 8.7% 7.8% 6.9% 6.1% 5.2% 4.3% 3.5% 70% 80% 10.6% 9.8% 9.0% 8.2% 7.4% 6.5% 5.7% 4.9% 4.1% 3.3% 80% 90% 10.1% 9.3% 8.5% 7.7% 7.0% 6.2% 5.4% 4.6% 3.9% 3.1% 90% 100% 9.6% 8.8% 8.1% 7.4% 6.6% 5.9% 5.1% 4.4% 3.7% 2.9% 100% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% Change in Equity Capital 34 Investor Relations

35 Funding Long Term Funding going forward Based on redemptions and balance sheet developments funding requirements for 2012 are around 20-25bn. Raised over 14bn in 2012 year to date Rabobank will be opportunistic in its funding depending on market developments A continued strategic approach to benchmark funding, especially in institutional markets in EUR, USD, AUD and JPY 35 Investor Relations

36 More information Rabobank Tel.: Investor Relations Fax: P.O. Box 17100, UCR HG Utrecht Internet: The Netherlands Bloomberg: RABO NA For economic research reports visit: