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

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 Rock-solid focus cooperative employees bank 10 Strategic Top Priorities 100% Digital Concrete socially Top performance Inspired employees • • • • convenience in everything responsible contribution Optimal balance sheet One-Rabobank culture • • Top customer advice Involved members and Exceptionally good • • • nearby communities execution Growth with innovation • 2

Highlights H1 2018 (I) Excellent customer focus Meaningful cooperative   Industry leading in sustainability Growth deposit base & loan book Growth loan book by € 7.6bn Sustainalytics score: 86 + awarded ‘ESG Industry Leader’ • • Oekom Prime: awarded ‘Industry Leader’ in 2017 Deposit base increased by € 3.4bn • • RobecoSam: score 89 (11 th worldwide) •   First to launch ‘ESG Leader’ program Most customer-friendly bank 1 st place by consumers as the most customer-friendly Rabobank was first to launch ESG Leader CP/CD program • • bank in the Netherlands (Customer First Awards) Driven by Rabobank's 'ESG Industry Leader' status • Sustained increase in domestic Net Promotor Scores Rabobank issues short term funding labelled as ESG • investment 3 rd Kickstart program launched (Food)   Strong progress in innovation Launched Kickstart Waste to drive food waste reduction, Rabobank innovation SurePay (IBAN name check) rolled • • from stimulating innovations to financial support for out to many Dutch banks and insurance companies farmers to improve replanting, logistics and storage 1 st Dutch bank to facilitate 3 rd party payment initiation • Customers can check account balance or set a spending • alert using their voice via Google Assistant  Driving energy efficient housing  Client-focused operating model Proprietary sustainability scan helps mortgage clients • New client focused operating model for local Rabobanks identify sustainability improvements in their homes • in the Netherlands as the foundation for a more effective Introduced Green Depot, a 2-year interest-free depot to • and efficient banking operation finance sustainable home improvements 3

Highlights H1 2018 (II) Rock-solid bank Empowered employees  Strong net profit  #1 Employer in the Netherlands +12% H1 net profit of € 1.7bn (+12%) supported by favorable Rabobank awarded #1 favorite employer to work for by • • economic environment talents (university & higher vocational education) (€ 1.7bn)   Comfortable capital position Diversity strong and improving 15.8% CET1 Well positioned to absorb future Women well-represented in senior management • • Basel IV and MREL requirements (30.96%) positions (33% overall, 40% in Managing Board) Total 26.1% Capital Expected Non-Preferred Senior issuance in H2 2018 Strong cultural diversity in our young talent pool (30%) • •   Continued strategic focus 235 New start-up ideas generated Employees from 13 countries generated 235 ideas for Non-core domestic CRE portfolio divested with FGH Bank • • portfolio sale start-ups through our innovation incubator program Involved in 68 start-up communities and organizer of F&A Repositioned BPD with focus on Dutch and German • • market by divesting BPD France (expected closing: Q4) innovation events such as FoodBytes! and Terra   Improved efficiency High employee mobility 64.6% Cost/Income ratio improved to 64.6% with further cost 63% of the employees we had to let go found a job within • • reduction remaining a point of attention six months, which is above average for the banking sector (-3.0%-point) in the Netherlands 4

Ongoing successful transformation in the Netherlands… Ready for the next phase Phase 1 | Implement new governance Phase 2 | Regionalize mid- & back office Phase 3 | Optimize service model January 2016 2016 -2018 June 2018 14 regions of 6-7 Rabobanks Anticipating changing client demands and Efficiency improvement through process Next step towards a more effective and • • • regulatory requirements standardization and regionalization of efficient organization as per 1/1/2019 customer call center and operational service Merger of 106 local Rabobanks with central Further optimization of omnichannel client • • centers entity to one legal entity with one banking service model license and one balance sheet Incorporated digitalization as an integral part 250 Market teams ensure customer intimacy • • of the strategy and change agenda More flexible, simple and adaptive structure through face-to-face contact, operating out • supporting cooperative values Significantly reduced cost and FTE, while of 90 banks supported by 14 regional teams • increasing Net Promotor Scores (NPS) 5

…resulting in higher client appreciation and efficiency Net Promotor Score (domestic market) FTE development Rabobank Group -8,390* NPS private banking customers 52,013 60 NPS retail customers 56 NPS business customers 52 -106** 45,567 43,729 43,623 37 33 38,500 21 Dec 15 Dec 16 Dec 17 Jun 18 Ambition Dec 15 Dec 16 Dec 17 Jun 18 * 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 organization), and +669 FTEs at the other business segments 6

Valuable progress on our financial targets Financial targets and results Jun 2017 Dec 2017 Jun 2018 Ambition 2020 Fully loaded CET1 ratio 14.7% 15.5% 15.8% >14% Capital Total capital ratio 25.5% 26.2% 26.1% >25% ROIC 7.8% 6.9% 8.8% >8% Profitability 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 7

Positive net profit development Profit & Loss account Net profit (in € mn) In € mn H1 2017 H2 2017 H1 2018 2,674 H2 Net interest income 4,454 4,389 4,274 H1 2,214 Net fee & commission income 988 927 981 2,024 1,158 Other results 496 747 774 692 Total income 5,938 6,063 6,029 1,027 Operating expenses 3,755 4,299 3,611 Regulatory levies 258 247 284 Impairment charges -67 -123 -37 1,698 1,522 1,516 Operating profit before tax 1,992 1,640 2,171 997 Tax 476 482 473 Net profit 1,516 1,158 1,698 2015 2016 2017 2018 8

Continued strong underlying performance Exceptional items included in operating profit before tax Underlying profit before tax (in € mn) In € mn H1 2017 H2 2017 H1 2018 +2% Fair Value items -186 -127 -133 2,326 2,276 2,189 155 Exceptional items Restructuring costs -98 -61 -22 284 549 Provision RNA 0 -310 0 Derivatives framework 0 -51 0 Total effect -284 -549 -155 2,171 Operating profit before tax 1,992 1,640 H1 2017 H2 2017 H1 2018 9

Total income slightly up despite challenging interest rate environment Total income (in € mn) 6,063 6,029 5,938 Other results 682 874 907 Net fee and 988 927 commission income 981 6,162 6,124 6,190 Net interest income 4,454 4,389 4,274 -127 -133 -186 FV items H1 2017 H2 2017 H1 2018 10

Net interest income impacted by prolonged low interest rate environment Net interest income (in € mn) and Net interest margin (in % of average balance sheet total) 1.41% 1.39% 1.33% 1.33% 1.33% 1.32% 1.29% NIM (12m-rolling average) 4,657 4,482 4,454 4,375 4,368 4,389 4,274 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 11

Multi-year transformation program is paying off Operating expenses (in € mn) Development cost/income ratio incl. regulatory levies 4,299 Derivatives framework 51 H1 2017 H2 2017 H1 2018 Provision RNA 310 3,755 61 C/I ratio 67.6% 75.0% 64.6% 3,611 Restructuring 98 22 costs Underlying C/I ratio 63.9% 66.6% 62.9% 1,611 Other Opex 1,451 1,462 3,877 3,657 3,589 2,266 Staff costs 2,206 2,127 H1 2017 H2 2017 H1 2018 12

Asset quality continues to benefit from economic tail wind Impairment charges (in € mn and in bps of average lending) -3 bps -6 bps -2 bps -€ 67mn -€ 123mn -€ 37mn Leasing 41 105 WRR 65 35 -2 0 -14 Other -42 -43 -73 Real Estate -3 -27 -10 -156 Domestic Retail -103 H1 2017 H2 2017 H1 2018 13

Loan portfolio increased after a few years of slight contraction Composition of private sector loan portfolio (in € bn) +2% 416 411 408 29 Leasing 27 27 37 WRR Rural & Retail 37 36 62 65 WRR Wholesale (excl. CRE) 61 42 42 43 Domestic Retail other SMEs 27 Domestic Retail F&A 27 27 23 22 22 Domestic CRE 193 193 192 Domestic Retail mortgages Dec 17 Jan 18 Jun 18 14

Loan-to-deposit ratio slightly improved Deposits from customers and private sector lending (in € bn) 1.21 1.20 LtD ratio 416 411 408 347 343 341 87 WRR and Other 86 84 25 RaboDirect 28 28 235 DRB 229 229 Dec 17 Jan 18 Jun 18 Lending Deposits from customers 15