Rabobank Group recorded net profit of EUR 1,080 million in the first six months of 2014. The result was reduced by EUR 214 million by the resolution levy, a non-recurring levy by the Dutch government for the banking sector in connection with the nationalisation of SNS Reaal.
Following a weak first quarter, the economic recovery continued in the second quarter of 2014 and the economy in the Netherlands grew cautiously, mainly due to exports and corporate investments. The recovery of the housing market is continuing fairly vigorously and consumer confidence is likewise showing an encouraging recovery. Value adjustments at the group level remained high in the first half of 2014, at EUR 1,188 million, or 54 basis points of average lending; the long-term average is 32 basis points. Deferred tax assets relating to losses incurred in the past at ACC Loan Management contributed to a low tax burden, benefiting net profit. Higher early repayments on residential mortgages contributed to a limited decrease of the loan portfolio by EUR 1.5 billion to EUR 433.2 billion. Amounts due to customers decreased by 1% to EUR 323.0 billion. Rabobank Group’s equity at 30 June was EUR 39.9 billion. An amount of EUR 1.1 billion of profit was added to equity. In addition, distributions of EUR 0.6 billion on instruments were charged to equity. Solvency remained strong with a common equity tier 1 ratio of 12.6% and a capital ratio of 19.7%.
The potential impact of the Asset Quality Review is uncertain, as the European Central Bank and the Dutch Central Bank DNB do not provide any interim updates on outcomes. We are expecting a cautiously continuing economic recovery in the second half of the year. Private consumption is picking up slightly more vigorously than expected and the movements in the housing market are positive. The consequences of the trade conflict with Russia that has recently flared up represent an uncertain factor, however. The Russian sanctions can have an adverse impact on a number of our business customers and may therefore also adversely affect Rabobank’s result to a limited extent. We are assuming that the current trade conflict will not continue to escalate and that the climate of trust will not be further eroded. Should this happen nonetheless, a weaker development of the economy in 2014 and 2015 cannot be excluded.
