Rabobank Group Investor Presentation FY2012
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, www.rabobank.com/ir, Chamber of Commerce number 30046259. 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 www.rabobank.com/ir. The value of your investment can fluctuate. Past performance offers no guarantee for future results. 2 Investor Relations
Welcome to the world of Rabobank Cooperative, Dutch, in the world s top 30 banks, All-finance leader in the Netherlands, largest savings and mortgage bank, dominant in Dutch agriculture, global focus on food & agribusiness and one of the world s best rated privately owned large banks. There is a lot to tell about Rabobank. This Investor Presentation will give you details about assets and capital structure, liquidity and profits. You will learn about the bank s position in the Netherlands and internationally, in wholesale and retail, in mortgages, real estate, food & agribusiness and other sectors with details on loans, impairments and bad debt costs. About the funding strategy and a wide range of short-term and long-term funding programmes. More information can be found on the Investor Relations web pages on www.rabobank.com/ir For individual questions or inquiries please contact the Investor Relations department on IR@rabobank.com. Welcome to the world of Rabobank! Bert Bruggink CFO Executive Board Rabobank Group 3 Investor Relations
Content Rabobank: Dutch, cooperative, solid, profitable 5 Results FY2012 11 Loan portfolio 25 Capital, liabilities and funding 45 Dutch economy & Preview FY2013 64 Tables 1 Key figures 6 2 Financial results Rabobank Group 12 3, 4 Financial results Domestic retail banking + Wholesale & Int retail 14 5 Capital & risk-weighted assets 16 6 Liquidity 20 7 Balance sheet 22 8, 9 Group loan portfolio + Domestic loan portfolio 26 10 International loan portfolio 28 11 Impairments, allowances and bad debt costs 30 12 Dutch residential mortgages 32 13 Actual Loan-to-Value Dutch residential mortgages 34 14 Domestic retail portfolio food & agribusiness 38 15 Domestic retail non-f&a portfolio 40 16 Domestic commercial real estate 42 17 Rabobank Group Commercial Real Estate 43 18 Capital & liabilities 46 19 Capital 48 20, 21, 22 Hybrid capital issues & Tier 2 50 23, 24 Highlights 2012, 2013 54 25 EUR benchmark curve 56 26 Other currencies 58 27, 28 Short Term Funding sources & programmes 62 29 Dutch economy: key figures 64 4 Investor Relations
Rabobank: Dutch, cooperative, solid, profitable Key figures 6 Members and local banks basis of Rabobank 7 Unique cross-guarantee 8 Strategy: Rabobank Group in 2016 9 5 Investor Relations
Table 1 Key figures Dec 2012 Dec 2011 Total assets (EUR mn) 752,410 731,665 Private sector loan portfolio (EUR mn) 458,091 448,337 Due to customers 334,271 329,892 Group equity 44,627 45,001 Net profit (EUR mn) 2,112 2,627 Branches 826 872 Members (x1000) 1,918 1,862 Foreign places of business 759 761 Number of employees (in FTEs) 59,600 59,670 Market shares in the Netherlands Mortgages 31% 32% Savings 39% 39% SMEs 43% 42% Agriculture & horticulture 85% 83% Ratings May 2013 Standard & Poor s Moody s AA-/stable/A-1+ Aa2/neg/P-1 Fitch AA/neg/F1+ DBRS AAA/stable/R-1 (high) 6 Investor Relations
Rabobank: Dutch, cooperative, solid, profitable Members and local cooperatives basis of Rabobank 1.9 million members of local Rabobank cooperatives Non-financial membership: no entry fee, no dividend Members buy 4 products on average, compared to 2.5 by non-member clients Limited say on business strategy of local Rabobank via Members Council Exclusive right to buy Member Certificates Organisation structure 10 million clients 1.9 million members 136 local cooperative Rabobanks ownership and cross-guarantee Rabobank Nederland specialised subsidiaries 7 Investor Relations
Rabobank: Dutch, cooperative, solid, profitable Unique Cross-Guarantee Local banks liable for each other s 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 Cross-Guarantee system De Lage Landen Rabobank Nederland Schretlen & Co Rabo Mortgage Banks Local Rabobanks 8 Investor Relations
Rabobank: Dutch, cooperative, solid, profitable Consistent and focused strategy: Rabobank Group in 2016 Selective growth of loan portfolio Increased focus on core activities and on contribution of subsidiaries to Group strategic ambitions Economic developments and increased regulatory pressure lead to higher capital and liquidity buffers Financial targets: Cost reduction of EUR 1 bn in 2016 Basel 3 Core tier-1 ratio of 14% in 2016 Strengthening of earnings capacity Reduction and diversification of capital market funding Growth of amount due to customers has high priority Rabobank Group strategy Predominantly Dutch bank Strong cooperative identity All-finance-leadership position in the Netherlands Global position as the number 1 food & agribusiness bank in a selected number of countries Creditworthiness at the highest level High level of corporate social responsibility 9 Investor Relations
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Results FY2012 Substantial net profit 12 Capital ratios at comfortable levels 16 High liquidity buffer 20 Negligible asset encumbrance 22 11 Investor Relations
Table 2 Financial results Rabobank Group EUR million 2012 2011 Total income 13,452 12,706 +6% Total operating expenses 8,831 8,252 +7% Gross profit 4,621 4,454 +4% Bad debt costs 2,350 1,606 +46% Bank tax 196 0 Operating profit before taxation Net profit continued activities Net profit discontinued activities 2,075 2,848-27% 1,915 2,493-23% 197 134 +47% Net profit 2,112 2,627-20% Return on equity 5.6% 7.6% -2.0%-pnt Efficiency ratio 65.7% 64.9% +0.8%-pnt Bad debt costs in basis points 52 bps 37 bps +15bps 12 Investor Relations
Results FY2012 Substantial net profit Net profit substantial but lower due to increase in bad debt costs, decrease in interest margins and rise in operating expenses Net profit EUR 2,112 mn (-20%) Bad debt costs EUR 2,350 mn (+46%) Operating expenses EUR 8,831 mn (+7%) Bank tax EUR 196 mn 2012 net profit EUR 2,112 mn 13 Investor Relations
Table 3 Financial results Domestic retail banking EUR million 2012 2011 Total income 7,289 6,941 +5% Total operating expenses 4,360 3,986 +9% Gross profit 2,929 2,955-1% Bad debt costs 1,329 648 +105% Bank tax 91 0 Operating profit before taxation 1,509 2,307-35% Net profit 1,304 1,853-30% Efficiency ratio 59.8% 57.4% +2.4%-pnt Bad debt costs in basis points 44 bps 22 bps +22 bps Table 4 Financial results Wholesale & international retail EUR million 2012 2011 Total income 4,005 3,750 +7% Total operating expenses 2,416 2,072 +17% Gross profit 1,589 1,678-5% Bad debt costs 621 686-9% Bank tax 60 0 Operating profit before taxation 908 992-8% Net profit 704 781-10% Efficiency ratio 60.3% 55.3% +5.0%-pnt Bad debt costs in basis points 59 bps 73 bps -14 bps 14 Investor Relations
Results FY2012 Substantial net profit in all business lines except Real estate group Group net profit -20% to EUR 2,112 mn Domestic retail -30% to EUR 1,304 mn Wholesale & international retail -10% to EUR 704 mn Leasing +21% to EUR 367 mn Real estate group decrease of EUR 144 mn to loss of EUR 108 mn Robeco +43% to EUR 197 mn Net profit by business line In EUR mn 15 Investor Relations
Table 5 Capital & risk-weighted assets EUR million Dec 2012 Dec 2011 Capital Equity 44,627 45,001-0.8% Qualifying capital 42,375 39,088 +8.4% Tier 1 capital 38,412 37,964 +1.2% Core Tier 1 capital 29,307 28,324 +3.5% Equity capital 34,185 32,981 +3.7% Risk-weighted assets RWA Rabobank Group 222,847 223,613-0.3% RWA Credit risk 197,396 200,082-1% RWA Market risk 5,222 5,759-9% RWA Operational risk 20,229 17,772 +14% Capital ratios Core Tier1-ratio 13.2% 12.7% +0.5%-pnt Tier 1-ratio 17.2% 17.0% +0.2%-pnt Qualifying capital ratio (BIS-ratio) 19.0% 17.5% +1.5%-pnt Rabobank Equity Capital ratio 15.3% 14.7% +0.8%-pnt 16 Investor Relations
Results FY2012 Capital ratios at comfortable levels Risk-Weighted Assets EUR 222,847 (-0.3%) Core Tier 1 ratio: 13.2% Tier 1-ratio: 17.2% Qualifying capital ratio (BIS)-ratio: 19.0% Rabobank Equity Capital Ratio: 15.3% Regulatory Capital Capital ratios ratios 17 Investor Relations
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Results FY2012 Strong buffer for senior unsecured bondholders Rabobank has built a strong buffer which would protect senior unsecured bondholders in the unlikely event of bail-in of senior debt Buffer capital EUR 48.8 bn (+9%) Equity Capital EUR 34.2 bn (+4%) Rabobank capital buffer* * EUR mn * Buffer capital excl. Minority interests 19 Investor Relations
Table 6 Liquidity EUR million Dec 2012 Dec 2011 Liquidity buffer Liquidity buffer 157,290 158,472-0.7% - Cash (mainly ECB) 67,062 69,522-3.5% - Government debt 47,057 43,003 + 9.4% - Other central bank eligible assets 43,172 45,947-6.0% Funding Due to customers 334,271 329,892 + 1.3% - Private individuals 163,844 152,139 + 7.7% * domestic 136,425 127,068 + 7.4% * international of which IDB: 27,419 24,466 25,071 16,795 + 9,4% + 45.7% - Corporates/SMEs 170,428 177,753-4.1% * domestic 75,909 72,078 + 5.3% * international 94,519 105,675-10.6% Long -term debt 191,358 170,290 +12.0% Short-term debt 61,476 70,306-13.3% 20 Investor Relations
Results FY2012 High liquidity buffer, dependence on institutional markets reduced Liquidity buffer of EUR 157 bn comfortably covers short-term debt issued LCR at 145% NSFR at 102% Liquidity buffer and short term debt Dec 2012 Liquidity buffer EUR bn Strong liquidity reduces dependence on institutional markets 21 Investor Relations
Table 7 Balance sheet EUR million Dec 2012 Dec 2011 Assets Loans 485,299 468,085 +4% Cash 68,103 70,430-3% Banks 35,386 25,221 +40% Securities 62,723 67,166-7% Derivatives 65,423 58,973 +11% Other 35,476 41,790-15% Total assets 752,410 731,665 +3% Encumbered assets - in % of funded assets 4.6% 4.3% 0.3%-pnt Capital & Liabilities Equity 44,627 45,001-1% Due to customers 334,271 329,892 +1% Long-term debt 191,359 170,814 +12% Short-term debt 61,476 70,929-13% Banks 27,059 26,259 +3% Derivatives 73,237 63,224 +16% Other 20,381 25,546-20% Total capital & liabilities 752,410 731,665 +3% 22 Investor Relations
Results FY2012 Negligible asset encumbrance Total assets +3% to EUR 752 bn Negligible asset encumbrance only 4.6% of funded assets is secured funding Loan-to-deposit ratio 1.39 Due to customers plus long term funding is more than loans Short-term assets (22%) much larger than short-term debt (12%) Balance sheet Dec 2012 in EUR billion % of total % of total Loans 485 65% Capital 45 6% Due to customers Long-term issued debt Cash 68 9% Short-term issued debt 334 44% 191 25% 525 69% 62 8% Banks 35 5% Banks 27 4% Securities 63 8% Short-term assets 166 22% Short-term liabilities 89 12% Derivatives 65 9% Derivatives 73 10% Other 36 4% Other 20 3% Total 752 100% Total 752 100% 23 Investor Relations
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Loan portfolio Diversified portfolio with focus on the Netherlands 26 Global spread of activities 28 Bad debt costs 30 Dutch residential mortgages & housing market 32 Food & agribusiness portfolio 38 Non-F&A portfolio 40 Commercial real estate 42 25 Investor Relations
Table 8 Group loan portfolio EUR million Dec 2012 Dec 2011 Group private sector loans Private individuals 220,029 212,269 +4% Food & agribusiness 92,436 88,191 +5% Non-food & agribusiness 145,626 147,878-2% Total 458,091 448,390 +2% Table 9 Domestic loan portfolio EUR million Dec 2012 Dec 2011 Domestic private sector loans Residential mortgages 212,340 203,893 +4% Food & agribusiness 29,624 29,103 +2% SMEs, excl F&A 63,928 62,758 +2% Large corporates 14,751 13,501 +9% Real estate group 18,711 18,528 +1% Leasing 4,563 4,593-1% Total 343,917 332,376 +3% 26 Investor Relations
Loan portfolio Diversified portfolio with focus on the Netherlands Group lending EUR 458bn (+2%) Domestic lending EUR 344 bn (+3%) Domestic lending 75% of total Domestic residential mortgages 62% of total domestic lending Domestic commercial real estate EUR 26.3 bn of which EUR 15.5 bn FGH Bank and EUR 10.8 bn local banks Group lending EUR 458 bn Domestic lending EUR 344 bn 27 Investor Relations
Table 10 International loan portfolio EUR million Dec 2012 Dec 2011 International private sector loans Wholesale & Retail 92,721 93,131-0.5% - Large corporates 54,083 57,330-6% - Rural & retail 38,638 35,801 +8% Leasing 20,325 18,988 +7% Total 113,046 112,119 +1% International wholesale & retail (excl. leasing) Dec 2012 EUR 93 bn (20% of total) in EUR bn Wholesale Rural & retail TOTAL Europe excl. the Netherlands 14.9 9.6 24.5 Americas 29.8 13.1 43.0 Australia / New Zealand 3.6 15.9 19.5 Asia 5.6-5.6 Africa 0.2-0.2 TOTAL 54.1 38.6 92.7 28 Investor Relations
Loan portfolio Global spread of activities 43 countries 759 foreign places of business of which ca. 600 retail offices Loan portfolio international wholesale & retail EUR 93 bn (-0.5%) Focus on food & agribusiness (EUR 51 bn): 55% of total Rural & retail (EUR 39 bn) is 42% of total International leasing portfolio EUR 23 bn of which EUR 20 bn private sector loans 29 Investor Relations
Table 11 Impairments, allowances and bad debt costs Dec 2012 Dec 2011 Impaired loans in EUR million Domestic retail 5,317 4,559 +17% % of loans 1.7% 1.5% +0.2%-pnt Wholesale & international retail 3,456 3,493-1% % of loans 3.2% 3.3% -0.1%-pnt Leasing 905 832 +9% % of loans 3.6% 3.5% +-0.1%-pnt Real estate group 1,525 1,066 +43% % of loans 7.9% 5.5% +2.4%-pnt Total Rabobank Group 11,203 9,958 +13% % of loans 2.4% 2.2% +0.2%-pnt Allowance in % of impaired loans Domestic retail 38% 34% +4%-pnt Wholesale & international retail 28% 29% -1%-pnt Leasing 54% 57% -3%-pnt Real estate group 25% 19% +6%-pnt Total Rabobank Group 34% 32% +2%-pnt Bad debt costs in basis points of average loans 2012 2011 Domestic retail 44 bps 22 bps +22bps Wholesale & international retail 59 bps 73 bps -14 bps Leasing 53 bps 58 bps -5 bps Real estate group 124 bps 69 bps +55 bps Total Rabobank Group 52 bps 37 bps +15 bps 30 Investor Relations
Loan portfolio Bad debt costs Bad debt costs by business segment: total EUR 2,350 mn EUR million 31 Investor Relations
Table 12 Dutch residential mortgages EUR million Dec 2012 Dec 2011 Loans 212,340 203,893 +4% - of which >90 days overdue 1,215 928 31% Allowance 176 142 +24% 2012 2011 Bad debt costs 113 59 +92% in bps 5.6 bps 3.0 bps +2.6 bps Remaining fixed interest rate period of mortgages Breakdown of domestic mortgages portfolio 32 Investor Relations
Loan portfolio Dutch residential mortgages Low loan losses 5.6 bps Loan-to-value ratio: 81% on average NHG: 19% of mortgage portfolio, 49% of new mortgages in 2012 93% of portfolio has (predominantly long-term) fixed interest rate Number of delinquencies and foreclosures remains very low Bank has first charge at default Bank has full recourse to the borrower Mortgages, delinquencies and foreclosures (Local banks 2012, in number of mortgages) 100% 0.43% 0.18% 0.03% 1,100,000 4,730 1,991 300 Number of mortgage clients > 90 days overdue Recovery procedure Foreclosures 33 Investor Relations
Table 13 Actual Loan-to-Value Dutch residential mortgages in % of total exposure Loan-to-Value guaranteed other total 0%-50% 1.6% 10.7% 12.3% 50%-60% 0.6% 5.7% 6.3% 60%-70% 1.1% 7.7% 8.8% 70%-80% 1.7% 10.3% 12.0% 80%-90% 2.3% 11.3% 13.6% 90%-100% 3.2% 12.7% 15.9% 100%-105% 1.7% 6.2% 7.9% 105%-110% 2.1% 4.2% 6.2% 110%-115% 1.9% 3.8% 5.7% >115% 3.0% 8.1% 11.1% 19.1% 80.9% 100% Average Loan-to-Value in Dec 2012: 81% 34 Investor Relations
Loan portfolio Credit risks in mortgages are limited Loan-to-Value figures are only part of the story of the mortgage portfolio 90% of clients with LTV>100% have a better than standard cost-to-income ratio and of the remaining 10% who have a higher than standard cost-toincome ratio, the default ratio is very limited LTV figures do not take into account free savings accounts and other assets to cover mortgage expenses when needed in case of temporary financial setbacks The NHG guarantee fund covers a large number of all mortgages To cover premature death risk, the majority of clients have a life insurance, pledged to the bank Under a stress scenario, with two annual house price decreases of 10% plus two annual unemployment increases of 2%-point, the maximum credit loss after two years is expected to be less than 1% of Rabobank s equity Stress scenario Rabobank mortgage portfolio Stress assumptions: house prices -10% per annum unemployment +2%-point per annum Bad debt costs EUR mn Bad debt costs in bps Bad debt costs in % of Equity 2012 annual report 2013 stress scenario 2014 stress scenario 113mn 5.6 bps 0.25% 250mn 11 bps 0.6% 400mn 19 bps 0.9% 35 Investor Relations
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Loan portfolio Dutch housing market Demand exceeds supply structurally Increasing number of households Limited land available for housing Limited new production Shortage of housing stock Interest paid is tax-deductible Government guarantees (NHG) Affordability improved due to lower prices and lower interest rates Number of houses sold in 2012-2.9% compared to 2011 Average house price -5.9% in 2012 Owner occupation 60%, lower than EU average 69% House prices 37 Investor Relations
Table 14 Domestic retail portfolio food & agribusiness (F&A) EUR million Dec 2012 Dec 2011 Loan portfolio Domestic retail 29,624 29,103 +2% Other 62,812 58,088 +8% Total group 92,436 88,191 +5% Impairments domestic retail Impaired 1,026 1,146-10% Allowance 376 383-2% % of impaired 21% 33% -12%-pnt Bad debt costs domestic retail 2012 2011 Bad debt costs 194 136 +43% - in bps 65 bps 47 bps +18 bps 38 Investor Relations
Loan portfolio F&A portfolio Portfolio EUR 92bn (+5%) Well diversified 20% of group portfolio Domestic market share 85% Breakdown F&A portfolio Group total EUR 92 bn 39 Investor Relations
Table 15 Domestic retail non-f&a portfolio EUR million Dec 2012 Dec 2011 Loan portfolio Domestic retail 63,928 62,758 +2% Other 81,698 85,120-4% Total group 145,626 147,878-2% Impairments domestic retail Impaired non-f&a loans 4,110 3,217 +28% Allowance 1,411 1,019 +39% % of impaired 21% 32% -11%-pnt Bad debt costs domestic retail 2012 2011 Bad debt costs 1,014 453 +124% - in bps 157 bps 73 bps 84 bps 40 Investor Relations
Loan portfolio Non-F&A portfolio Group portfolio EUR 146 bn (-2%) Well diversified 32% of Group portfolio Breakdown non-f&a portfolio Group total EUR 146 bn 41 Investor Relations
Table 16 Domestic commercial real estate EUR million Dec 2012 Dec 2011 Loan portfolio 26,304 27,167-3% - Local banks 10,781 11,293-5% - Real estate group 15,523 15,355 +1% Impaired loans 2,441 1,379 +77% - Local banks 917 478 +92% - Real estate group 1,525 1,066 +43% Impaired loans in % of total 9% 5% +4%-pnt - Local banks 9% 4% +5%-pnt - Real estate group 10% 7% +3%-pnt Allowance 754 311 +142% - Local banks 400 150 +167% - Real estate group 354 205 +74% Coverage ratio = Allowance in % of impaired 31% 23% +8%-pnt - Local banks 44% 31% +13%-pnt - Real estate group 23% 19% +4%-pnt Bad debt costs 337 179 +88% - Local banks 104 50 +109% - Real estate group 232 128 +81% Bad debt costs in basis points 121 bps 68 bps +53 bps - Local banks 87 bps 45 bps +42 bps - Real estate group 146 bps 84 bps +62 bps Cumulative bad debt costs 2010-2012 591 - Local banks 184 - Real estate group 407 42 Investor Relations
Loan portfolio Commercial real estate: increased impairments in the Netherlands Strict underwriting criteria have resulted in relatively healthy portfolio Conservative valuation policy results in realistic asset value Domestic commercial real estate EUR 26.3 bn (-3%) Activities related to commercial real estate: project development EUR 3 bn Loan-to-Value ca. 80% on average of domestic portfolio Break-down of domestic portfolio commercial real estate: ca. 20% residential 25% offices 25% retail outlets 25% industrial 5% other Table 17 Rabobank Group commercial real estate Dec 2012 Loans (EUR bn) Bad debt costs (EUR mn) Domestic Dec 2012 2012 Cumulative 2010-2012 26.3 337 591 International 3.2 203 728 Total 29.5 540 1,319 43 Investor Relations
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Capital, liabilities & funding Capital & liabilities 46 High quality capital base 48 Rabobank has good access to funding 54 The public market: EURO benchmark issuing 56 The public market: other currencies 58 Private placements 61 Short-term debt 62 Dutch economy & Preview 2013 64 45 Investor Relations
Table 18 Capital & liabilities EUR million Dec 2012 Dec 2011 Capital 44,627 45,001-1% Due to customers 334,271 329,892 +1% Long-term issued debt 191,359 170,814 +12% Short-term issued debt 61,476 70,929-13% Banks 27,059 26,259 +3% Derivatives 73,237 63,224 +16% Other 20,382 25,546-20% Total capital & liabilities 752,410 731,665 +3% 46 Investor Relations
Capital, liabilities & funding Capital & liabilities Customer deposits up 1% because of increase in saving deposits Capital stable at EUR 45bn Long-term debt +12% Short-term debt -13% Treasury Rabobank covers: Capital Long term debt Short term debt Capital & liabilities EUR 752 bn 47 Investor Relations
Capital, liabilities & funding High quality capital base Table 19 Capital EUR million Dec 2012 Dec 2011 Capital 44,627 45,001 - Retained earnings & minority interests 29,267 29,100 - Member certificates 6,672 6,614 - New style hybrid 3,030 3,030 - Old style hybrid 5,660 6,181 Capital EUR 44.6 bn 48 Investor Relations
Funding Member Certificates: Core Tier 1 capital Member Certificates cost effective Tier 1 capital 6.7bn outstanding Monthly tradable on internal market Core Tier 1 capital Rating agencies have testified that MCs are as close to equity as can be issued by a cooperative bank Member Certificates (amount outstanding) mn 8000 7000 6000 5000 4000 3000 2000 1000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 49 Investor Relations
Table 20 New Style Hybrid capital issues Capital Securities USD 2bn Jan 2011 July 2016 Coupon 8.375%, trigger ECR<8%, loss absorbing Capital Securities USD 2bn Nov 2011 May 2017 Coupon 8.4%, trigger ECR<8%, loss absorbing Table 21 Trust Preferred Securities II USD 733mn Trust Preferred Securities III USD 755mn Trust Preferred Securities IV GPB 350mn Old Style Hybrid capital issues Issue date First redeemable Features Nov 2003 Dec 2013 Non-cumulative; 5.26% fixed until call; Step up Oct 2004 Oct 2016 Non-cumulative;5.254% fixed until call. Step up. Oct 2004 Dec 2019 Non-cumulative; 5.556% fixed until call; Step up Trust Preferred Securities V AUD 250mn Oct 2004 Dec 2014 Non-cumulative; applicable BBSW + 0.67% until call; Step up Trust Preferred Securities VI AUD 250mn Oct 2004 Dec 2014 Non-cumulative; 6.415% fixed until call; Step up Capital Securities NZD 900mn Oct 2007 Oct 2017 Non-cumulative, Non Step; applicable 1 yr swap rate + 0.76% until call Capital Securities USD 130mn June 2008 June 2013 Non-cumulative, Non Step; 7.00% fixed for life Capital Securities GBP 250mn June 2008 June 2038 Capital Securities CHF 350mn June 2008 June 2018 Capital Securities ILS 323mn July 2008 July 2018 Non-cumulative, Non Step; Fixed to floating; 6.91% to call Non Cumulative, Non Step, Fixed to Floating; 5.5% until call Non-cumulative; Fixed to Floating 5.50% fixed until call; Step up Capital Securities USD225mn Sept 2008 March 2014 Non-cumulative; 7.375% fixed for life Capital Securities NZD 280mn May 2009 June 2019 Capital Securities USD 2.9bn June 2009 June 2019 Capital Securities CHF 750mn July 2009 Nov 2014 Non-cumulative, Non Step; Applicable 5yr swap rate + 3.75% until call Non-cumulative, fixed to floating; 11% till call; Step Up Non-cumulative, Fixed to Floating; 6.875% fixed until call; Step Up Table 22 Tier 2 issues Issue date 1 st call/maturity Features EUR 1bn,, 3.875% July 2013 July 2023 10-y Bullet EUR 1bn, 5.875% May 2009 May 2019 10-y Bullet EUR 1bn, 3.750% Nov. 2010 Nov. 2020 10-y Bullet GBP 500mn, 5.250% Sept. 2012 Sept. 2027 15-y Bullet EUR 1bn, 4.125% Sept. 2012 Sept. 2022 10-y Bullet USD 1.5bn, 3.950% Nov 2012 Nov. 2022 10-y Bullet 50 Investor Relations
Funding Hybrid capital & Tier 2 issues New style hybrid capital total outstanding of USD 4bn Tier 1 Perp. NC 5.5 years Trigger: Equity Capital Ratio (ECR) <8% Current ECR: 15.3% (Dec 2012) In the unlikely event that ECR falls below 8%, the new style Hybrid Tier 1 will absorb losses pro-rata with Equity Capital and other loss absorbing instruments Old style hybrid capital total outstanding of EUR 5.7 bn (EUR equivalent) in several currencies and formats Tier 2 total outstanding of EUR 6.4 bn (EUR equivalent) in several currencies and maturities Increasing buffer for senior unsecured bondholders 51 Investor Relations
Funding Senior contingent notes March 2010: issued EUR 1.25 bn benchmark 10 year fixed rate senior note Annual coupon 6.875% Trigger: Equity Capital Ratio (ECR) <7% ECR Dec 2012: 15.3% In the unlikely event that ECR falls below 7%, write-down to 25% of par and immediate repayment of this redemption price, thus strengthening Rabobank s capital Why Rabobank issued this note Hedging tail risk reflects Rabobank s prudence Further enhancing Rabobank s creditworthiness Anticipating future regulatory requirements 52 Investor Relations
Funding Stress analysis Equity Capital Ratio Retained Earnings + Member Certificates 27,513 + 6,672 ECR Dec 2012 = --------------------------------------------- = -------------------- = 15.3% Risk Weighted Assets 222,847 Stress analysis ECR Change in Equity Capital RWA change 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% RWA change -30% 28,5% 26,3% 24,1% 21,9% 19,7% 17,5% 15,3% 13,1% 11,0% 8,8% -30% -20% 24,9% 23,0% 21,1% 19,2% 17,3% 15,3% 13,4% 11,5% 9,6% 7,7% -20% -10% 22,2% 20,5% 18,7% 17,0% 15,3% 13,6% 11,9% 10,2% 8,5% 6,8% -10% 0% 19,9% 18,4% 16,9% 15,3% 13,8% 12,3% 10,7% 9,2% 7,7% 6,1% 0% 10% 18,1% 16,7% 15,3% 13,9% 12,6% 11,2% 9,8% 8,4% 7,0% 5,6% 10% 20% 16,6% 15,3% 14,1% 12,8% 11,5% 10,2% 8,9% 7,7% 6,4% 5,1% 20% 30% 15,3% 14,2% 13,0% 11,8% 10,6% 9,4% 8,3% 7,1% 5,9% 4,7% 30% 40% 14,2% 13,1% 12,1% 11,0% 9,9% 8,8% 7,7% 6,6% 5,5% 4,4% 40% 50% 13,3% 12,3% 11,2% 10,2% 9,2% 8,2% 7,2% 6,1% 5,1% 4,1% 50% 60% 12,5% 11,5% 10,5% 9,6% 8,6% 7,7% 6,7% 5,8% 4,8% 3,8% 60% 70% 11,7% 10,8% 9,9% 9,0% 8,1% 7,2% 6,3% 5,4% 4,5% 3,6% 70% 80% 11,1% 10,2% 9,4% 8,5% 7,7% 6,8% 6,0% 5,1% 4,3% 3,4% 80% 90% 10,5% 9,7% 8,9% 8,1% 7,3% 6,5% 5,7% 4,8% 4,0% 3,2% 90% 100% 10,0% 9,2% 8,4% 7,7% 6,9% 6,1% 5,4% 4,6% 3,8% 3,1% 100% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% Change in Equity Capital Trigger of ECR< 8% is hit if * losses made > 16bn or * RWA Increase > 204bn Trigger of ECR< 7% is hit if * losses made > 18bn or * RWA increase > 265bn 53 Investor Relations
Table 23 Highlights 2013 EUR 1.5 bn 10-year Fixed Rate EUR 2 bn 2-year FRN 3m Euribor +20bps EUR 1.7 bn 1-year FRN 3m Euribor +10bps USD 1 bn 3-year FRN USD 1.5 bn 5-year Fixed GBP 1.1 bn 1-year FRN 3m GBP Libor +14bps GBP 600 mn 1-year FRN 3m GBP Libor +15bps AUD 650 mn Domestic deal 4-year AUD 350 mn 4 & 5-year Fixed Rate MXN 3.3 bn 3, 4 & 5-year Fixed Rate NOK 500 mn 5-year Fixed Rate NZD 100 mn 5-year Fixed Rate RUB 1.6 bn 4 & 5-year Fixed Rate SEK 1 bn 1 & 3-year Fixed Rate TRY 250 mn 3 & 4-year Fixed Rate ZAR 1.4 bn 3, 4 & 6-year Fixed Rate Table 24 Highlights 2012 EUR 1.75 bn 10-year Fixed Rate EUR 2.75 bn 2-year 3m FRN EUR 1 bn 10-year LT2 USD 2.5 bn 5-year Fixed Rate USD 3.0 bn 10-year Fixed Rate GBP 500 mn 15-year LT2 GBP 600 mn 10-year Fixed Rate CHF 325 mn 7-year Fixed Rate NOK 2.75 bn 10-year Fixed Rate JPY JPY 120.0 bn 161.8 bn 3 & 5-year Samurai 3,5 & 10-year Samurai CNY 650 mn 3-year Fixed Rate 54 Investor Relations
Funding In-depth access to funding In the most challenging market environment Rabobank continues to have an in-depth access to international capital markets Rabobank borrowed in 2009, 2010 and 2011 more than EUR 40 bn annually and in 2012 EUR 28bn in senior unsecured format All Rabobank issues have been well received with our investors and provide secondary performance Rabobank has never issued in Covered Bond format, nor in Government Guaranteed format The average maturity of issuance done in recent years exceeds 5 years with more than EUR 55 bn maturing in 2017 or later Maturity profile portfolio Currency breakdown In EUR bn (equivalent) (February 2013) (in volume) 55 Investor Relations
Table 25 EUR benchmark curve Year of issue Maturity Coupon Issue size (EUR) Reoffer 2003 25-Apr-13 4.25 1 bn 7 2009 22-Jan-14 4.375 5 bn 150 2004 22-Apr-14 4.25 1 bn 7 2010 16-Feb-15 3.0 3 bn 50 2006 18-Jan-16 3.375 1.85 bn 6 2011 20-Apr-16 3.875 3.5 bn 75 2009 5-May-16 4.375 2.2 bn 130 2007 16-Jan-17 4.25 3 bn 5 2010 21-Apr-17 3.375 2 bn 60 2008 15-Jan-18 4.75 3.425 bn 19 2011 17-Oct-18 3.5 1.5 bn 125 2010 14-Jan-20 4.125 3.5 bn 65 2011 12-Jan-21 4.125 2 bn 100 2006 7-Jun-21 4.375 1.25 bn 7 2012 11-Jan-22 4.0 1.75 bn 175 2007 6-Jun-22 4.75 2.55 bn 6 2010 14-Jul-25 4.125 2.65 bn 95 56 Investor Relations
Funding The public market: Euro benchmark issuance Rabobank is committed to a liquid EUR benchmark curve in senior unsecured format On average Rabobank issued 2 new EUR benchmarks per year Rabobank EUR benchmarks have been proven the most liquid issues outstanding in times of stress The curve consist of 17 maturities with a minimum size of EUR 1 bn each and maturities up until 2025 11 of these issues have an issue size of EUR 2 bn or larger In 2009 Rabobank issued the largest ever EUR benchmark done by a financial institution: an EUR 5 bn, 5 year Rabobank EUR Senior Spread Performance Basis points over midswaps 57 Investor Relations
Table 26 Other currencies (in local currency) Currency Outstanding Format AUD 15.1 bn Eurobond + Kangaroo CAD 6.1 bn Eurobond + Maple CHF 5.4 bn Eurobond CNY 1 bn Dimsum bond GBP 11.9 bn Eurobond JPY 1,098.2 bn Samurai MXN 10.5 bn Eurobond NOK 24.3 bn Eurobond NZD 3.8 bn Eurobond + Kauri RUB 12.7 bn Eurobond SEK 7.1 bn Eurobond SGD 214 mn Eurobond TRY 4.1 bn Eurobond USD 31.2 bn Eurobond + 144a + 3a2 ZAR 9.4 bn Eurobond 58 Investor Relations
Funding The public market: other currencies Rabobank is an active player in institutionalized markets like USD, GBP, CHF, AUD and JPY With Funding officers based in New York, Utrecht, Sydney and Tokyo we operate close to the markets All currency exposure is swapped back to EUR Rabobank is a well established issuer in retail markets by being active in these markets over many years Issuance is done in over 20 different currencies giving investors opportunities to diversify currency risk in their portfolio s Recently most issuance is done in so called safe haven currencies like NOK, CAD and AUD 59 Investor Relations
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Funding Private placements More than EUR 8.5 bn raised in 2012 in Private Placements Of which EUR 2 bn are Structured MTNs. All exposures are swapped back to floating Euro rates Over 200 transactions completed with a broad group of dealers consisting of more than 25 different counterparties Rabobank can issue in possible structures: Plain Vanilla FRN Plain Vanilla Fixed Interest Rate Linked Commodity Linked Equity Linked Inflation Linked FX Linked 61 Investor Relations
Table 27 Short term funding In EUR mn 2012 2011 CD 40,400 52,533-23% CP / ABCP 21,076 18,396 +15% Total short term debt 61,476 70,929-13% Table 28 Short term funding programmes Rabobank Nederland (FCD) Rabobank Nederland (ECP & ECD) Rabobank Nederland, Australia Branch (NZDCD) Rabobank Nederland, Australia Branch (AUDCD) Rabobank Nederland, Australia Branch (ECP) Rabobank Nederland, Hong Kong Branch (CD) Rabobank Nederland, London Branch (SCD) Rabobank Nederland, Singapore Branch (CP & CD) Rabobank Nederland, Tokyo Branch (CP) Rabo India Finance Pvt. Ltd. (CD) Rabobank Nederland, New York Branch (YCD) Rabobank USA Financial Corporation (CP) Multi currency Multi currency NZD AUD Multi currency Multi currency Multi currency Multi currency JPY INR USD USD ABCP Nieuw Amsterdam Receivables Corporation (US ABCP) Nieuw Amsterdam Receivables Corporation (E ABCP) USD Multi currency 62 Investor Relations
Funding Short term debt Total Short term debt (CP, CD, ABCP) outstanding at Dec. 2012: EUR 61.5 bn (equivalent) Rabobank is a flexible and frequent issuer. To ensure response to investor requirements, levels are posted on a daily basis in: Australia, Asia, Europe and the Americas Multiple currencies A variety of maturities across the curve Flexible ticket size Various distribution channels provide investor coverage on a global basis Over the past years Rabobank has seen a good inflow of client related funding due to its high creditworthiness Priorities: tenor extension and funding diversification Maturity profile In EUR bn (March 2013) 63 Investor Relations
Dutch economy Table 29 key figures / fundamentals 2012 Outlook 2013 Annual GDP growth -0.9% -0.75% GDP per capita -1.2 % -1.0 % Unemployment 5.3 % 6.5 % Inflation 2.8 % 2.25 % Population 16.7 mn 16.8 mn Government debt as % of GDP 70.8% 74.0% Budget deficit as % of GDP -4.1% -3.5% % % 160 140 120 100 80 60 40 20 0 Pension funds assets as % of GDP, 2011 160 140 120 100 80 60 40 20 0 64 Investor Relations
Preview 2013 Flat economic growth Limited increase in lending and amounts due to customers Rabobank s capital base remains strong Rabobank s liquidity position remains strong Rabobank s strong capital position, robust balance sheet and substantial profit in 2012 give comfort for the years to come For 2013 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 65 Investor Relations
More information Rabobank Tel.: +31 30 712 2401 Investor Relations E-mail: IR@rabobank.com P.O. Box 17100, UCR 315 Internet: www.rabobank.com/ir 3500 HG Utrecht Bloomberg: RABO NA The Netherlands For economic research reports visit: www.rabobank.com/ir-research 05-2013 http://m.keyfiguresrabobank.com