Rabobank Investor presentation H1 2018 results - 17 September 2018

Page created by Louise Santos
 
CONTINUE READING
Rabobank Investor presentation H1 2018 results - 17 September 2018
Rabobank
Investor presentation H1 2018 results

17 September 2018
Rabobank Investor presentation H1 2018 results - 17 September 2018
Disclaimer

This presentation (the “Presentation”) is prepared by Coöperatieve Rabobank U.A. (“Rabobank”) incorporated under the laws of the Netherlands. The liability of its members is excluded. Rabobank is among others regulated by De
Nederlandsche Bank N.V. and by the Netherlands Authority for the Financial Markets, as well as the European Central Bank. This Presentation is solely for information purposes and on the basis of the acceptance of this disclaimer. Neither
the Presentation nor any of its contents, in whole or in part, directly or indirectly, may be used for any other purpose without the prior written consent of Rabobank. This Presentation is only directed at Eligible Counterparties and
Professional Clients, as defined in the Markets in Financial Instruments Directive 2014/65/EU (“MiFID”) (the “Recipient”). It is not directed at Retail Clients (as defined in MiFID).
The content of this Presentation reflects prevailing market conditions and Rabobank’s judgment as on 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. The information contained in this Presentation is published
for the assistance of the Recipient, but is not to be relied upon as authoritative or taken in substitution for the exercise of judgment by any Recipient nor will any information in this Presentation (including, but not limited to, Statistical
Information (as defined below) and forward- looking statements) be subject to updating. Rabobank 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, Rabobank 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 Recipient
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 in securities issued by a client, or may act as advisers, brokers or bankers to a client or any of its affiliates.
This Presentation contains certain tables and other statistical analyses (the "Statistical Information"). Numerous assumptions have been used in preparing the Statistical Information, which may or may not be reflected in this Presentation or
may or may not be suitable for the circumstances of any particular Recipient. As such, no assurance can be given as to the Statistical Information's accuracy, appropriateness or completeness in any particular context, or as to whether the
Statistical Information and/or the assumptions upon which they are based reflect present market conditions or future market performance. The Statistical Information should not be construed as either projections or predictions.
This Presentation may include "forward-looking statements". Such statements contain the words "anticipate", "believe", “could”, “intend", "estimate", "expect", "will", "may", "project", "plan“, the negative of such terms and words of similar
meaning. All statements included in this Presentation other than statements of historical facts, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors
that could cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are
based on numerous assumptions regarding present and future business strategies and the relevant future business environment. The information and opinions contained in this Presentation are wholly indicative, for discussion purposes
only and are subject to change without notice at any time. No rights may be derived from any potential offers, transactions, commercial ideas 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 as an offer of securities 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, Croeselaan 18, 3521 CB Utrecht, The Netherlands, www.rabobank.com/ir, Chamber of Commerce number 30046259.
Investing
Rabobank and the other parts of Rabobank Group that are designated as investment firms are registered as such with the Netherlands Authority for the Financial Markets. The aforementioned investment firms are licensed by the
Netherlands Authority for the Financial Markets under the Financial Supervision Act. If you invest funds that you have borrowed, you run the risk of incurring a debt as well as losing the invested amounts.
This Presentation does not constitute an offering document. The information herein is neither an advertisement nor does it comprise a prospectus for the purpose of EU Directive 2003/71/EC (as amended from time to time). The information
herein has not been reviewed or approved by any rating agency, government entity, regulatory body or listing authority and does not constitute listing particulars in compliance with the regulations or rules of any stock exchange.
Nothing in this Presentation should be construed as legal, tax, accounting, regulatory or investment advice and the Recipient is advised to consult its own independent professional advisers in relation to investment in one of the products
mentioned. The information contained herein does not purport to be complete and 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 Rabobank or on www.rabobank.com/ir.
The value of your investment can fluctuate. Past performance offers no guarantee for future results.

Investor Relations                                                                                                                                                                                                                      2
Rabobank Investor presentation H1 2018 results - 17 September 2018
Valuable progress on all our strategic objectives

 Update on strategy                                                        Economic environment
 •   Continuing positive trend in customer satisfaction                    •   Ongoing positive economic momentum in the Netherlands
 •   Ready for next step in successful transformation of domestic retail   •   Prolonged strong fundamentals in Dutch housing market
     banking                                                               •   Solid global economic expansion amidst ongoing (geo)political
 •   Balance sheet optimization on track                                       uncertainties
 •   Further progress in the execution of strategic portfolio management   •   Persistent low interest rate environment despite gradual winding
 •   Acceleration of our investments in digitization                           down of extraordinary monetary policy

 Improvement of financial results                                          Strong capital ratios and optimized funding position
 •   Net profit +12% to € 1.7bn                                            •   Capital targets already met and well positioned to absorb future
 •   Growth in loan portfolio (+ € 7.6bn) and deposit base (+€ 3.4bn)          requirements
 •   Net interest income impacted by low interest rate environment         •   Rabobank intends to meet its limited MREL needs with Own Funds
 •   Ongoing impairment releases                                               and Non-Preferred Senior (NPS)
 •   Continued strong underlying performance                               •   Rabobank is ready to start issuing in NPS format
                                                                           •   Majority of long term funding budget raised in H1 2018

Investor Relations                                                                                                                                3
Rabobank Investor presentation H1 2018 results - 17 September 2018
Rabobank at a glance

Mission | Growing a better world together                                                 Credit ratings
              The Netherlands                                                             Rabobank is one of the few banks with NPS rated in the ‘A-AA’ range
             101 local Rabobanks                                                          Jun 2018                      PS         NPS           T2         AT1         Issuer/outlook
                             420      1.9mn            20%                   33%
                                                                                                                        A+           A-        BBB+           -           A+/Positive
                          offices    members
                                                     Mortgages         Private savings
                                                                                                                        Aa3         A3         Baa1        Baa3           Aa3/Stable
                             6.5      0.8mn          € 192bn             € 120bn
                      million private corporate      € 59bn
                       customers customers                                                                             AA-          AA-          A         BBB-           AA-/Stable
                                                     Private sector lending to TIS
                                                     € 27bn
   Domestic Retail Banking                           Private sector lending to F&A                                      AA            -           -           -           AA/Stable

                International                                                             PS: Preferred Senior; NPS: Non-Preferred Senior; T2: Tier 2; AT1: Additional Tier 1
                  38 countries
                                                     € 63bn                               ESG ratings
                                                     Private sector lending to F&A*

                                                     € 41bn
                                                     Private sector lending to TIS*                                                                                86 out of 100 points
                                                                                                                                                                  Industry ESG Leader
                                                     € 29bn
                                                     Private sector lending by Leasing*
      WRR & DLL loan portfolio per region in € bn
                                                                                                                                                                  89 out of 100 points
* Including WRR and DLL lending in the Netherlands
Investor Relations                                                                                                                                                               4
Rabobank Investor presentation H1 2018 results - 17 September 2018
Topics

 Update on strategy
 H1 2018 results
 Appendix:
 •    Dutch economy, housing market and credit ratings
 •    Financial results
 •    Loan portfolio
 •    Capital, funding & liquidity
 •    Current & future developments
Investor Relations                                       5
Rabobank Investor presentation H1 2018 results - 17 September 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                       Rock-solid                       Empowered
                focus                       cooperative                        bank                           employees

                                                    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

Investor Relations                                                                                                                6
Rabobank Investor presentation H1 2018 results - 17 September 2018
Highlights H1 2018 (I)

Excellent customer focus                                                                Meaningful cooperative

                      Growth deposit base & loan book                                                    Industry leading in sustainability
                        •   Growth loan book by € 7.6bn                                                     •    Sustainalytics score: 86 + awarded ‘ESG Industry Leader’
                        •   Deposit base increased by € 3.4bn                                               •    Oekom Prime: awarded ‘Industry Leader’ in 2017
                                                                                                            •    RobecoSam: score 89 (11th worldwide)

                      Most customer-friendly bank                                                        First to launch ‘ESG Leader’ program
                        •   1st 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

                      Strong progress in innovation                                                      3rd Kickstart program launched (Food)
                        •   Rabobank innovation SurePay (IBAN name check) rolled                            •    Launched Kickstart Waste to drive food waste reduction,
                            out to many Dutch banks and insurance companies                                      from stimulating innovations to financial support for
                        •   1st Dutch bank to facilitate 3rd party payment initiation                            farmers to improve replanting, logistics and storage
                        •   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

Investor Relations                                                                                                                                                7
Rabobank Investor presentation H1 2018 results - 17 September 2018
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
                            economic environment
                                                                                                       •   Rabobank awarded #1 favorite employer to work for by
                                                                                                           talents (university & higher vocational education)
        (€ 1.7bn)

                      Comfortable capital position                                                  Diversity strong and improving
 CET1       15.8%       •   Well positioned to absorb future                                           •   Women well-represented in senior management
 Total                      Basel IV and MREL requirements (30.96%)                                        positions (33% overall, 40% in Managing Board)
 Capital   26.1%        •   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
                        •   Non-core domestic CRE portfolio divested with FGH Bank                     •   Employees from 13 countries generated 235 ideas for
                            portfolio sale                                                                 start-ups through our innovation incubator program
                        •   Repositioned BPD with focus on Dutch and German                            •   Involved in 68 start-up communities and organizer of F&A
                            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
                            reduction remaining a point of attention
                                                                                                       •   63% of the employees we had to let go found a job within
                                                                                                           six months, which is above average for the banking sector
   (-3.0%-point)                                                                                           in the Netherlands

Investor Relations                                                                                                                                           8
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
•   Merger of 106 local Rabobanks with central          customer call center and operational service      •     Further optimization of omnichannel client
    entity to one legal entity with one banking         centers                                                 service model
    license and one balance sheet                  •    Incorporated digitalization as an integral part   •     250 Market teams ensure customer intimacy
•   More flexible, simple and adaptive structure        of the strategy and change agenda                       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)

Investor Relations                                                                                                                                    9
…resulting in higher client appreciation and efficiency

Net Promotor Score (domestic market)                        FTE development Rabobank Group
                                                                                              -8,390*
          NPS private banking customers                60         52,013
          NPS retail customers
                                                       56
          NPS business customers
                                                       52

                                                                                     45,567                      -106**

                                                                                                        43,729             43,623

     37
     33
                                                                                                                                              38,500

     21

     Dec 15               Dec 16          Dec 17   Jun 18         Dec 15             Dec 16             Dec 17             Jun 18           Ambition
                                                            * 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

Investor Relations                                                                                                                                 10
100% Digital convenience in everything
Digitizing our traditional services and channels

     Solid base of digital clients                                               Distinctive improvement in digital sales and servicing

     >80% Active online corporate customers                                   Before year-end 2018 we will improve the 30 most important customer
     >50% Digital onboarding for private individuals                          journeys in the               . Examples include:
                                                                                              • Opening of a joint current account
     >95mn Visits per month in the app
                                                                                                to 5 minutes from 30 days
     >85 Features available in the app                                                        • Digitally temporary blocking of cards resulting in
                                                                                                ~10% less cards distributed per month
                                                                                              • Strong growth in use of payment request +135% in
                                                                                                last 6 months

                                                                                 Preparing ourselves for Open Banking & Platform
     Business driven data solutions
                                                                                 Banking
 •   Development of self-learning prediction model that classifies sales                                   • Addition of Bunq account information,
     leads, leading to substantial increase in leads conversion success and                                  payment initiation recently launched
     creating an efficiency-drive in sales                                                                 • Developers platform launched with
 •   Credit risk forecasting in business lending with advanced early                                         expanding API’s and platform
     warning system using machine learning (>85% accuracy rate)                                              capabilities
 •   With Google Assistant customers can check their account balance or
     set a spending budget using their voice

Investor Relations                                                                                                                           11
Growth with innovation on three dimensions

We deliver innovations for our clients          We help our clients innovate                      We actively invest in start-ups and
                                                                                                  scale-ups that fit our innovation focus
                                                                                                  and strategy

 IBAN name check launched with major Dutch      International Food & Agri innovation              Leading blockchain platform for SME clients,
 banks, preparing for international expansion   ecosystem. Active on 3 continents, 1,300 start-   commercially live as of July. Developed with
                                                up applications pitching from > 30 countries      other European banks, Rabobank first Dutch
                                                                                                  bank with working platform in international
                                                                                                  trade market

 Internal start-up enabling simple digital      Robotica innovation initiative, which executes
 currency hedging. Adoption by Scandinavian     Roboscans. Via this ecosystem robotica was
 bank will support international expansion      introduced to 450 customers                       Investment in JoinData to facilitate data
                                                                                                  streams in the Food & Agri sector

 Recent winner of our internal Moonshot         We are partner of YES!Delft, the #1 tech
 campaign. Focused at digital cattle            incubator in Europe. > 200 Start-ups have         New mobile and online payment service in the
 management by newly developed tech solution    collaborated (of which 65% Rabobank clients),     Netherlands, a joint initiative of Rabobank and
 using ear-tags                                 with > € 30mn capital funding provided by         other Dutch banks
                                                Rabobank

Investor Relations                                                                                                                            12
Sustainability
We invest in the local and global community

Sustainability: integrated in our day-to-          Sustainability: Rabobank is a leader              Sustainability: partnership with UN
day work                                           We allocate ample resources to sustainability.    Rabobank and UN Environment are working on
We help clients to make a positive impact on       For example with € 19bn Sustainable               an ambition to finance $ 1bn to boost
their community with financial solutions, advice   Finance in total, Rabobank is a leading           sustainable food production
and network knowledge:                             renewable energy projects financier
             • GreenDepot: finance solution                                                          Our mission fits naturally within the
                 to invest in energy saving        Rabobank was first to launch                      UN Sustainable Development
                 measures in houses                ESG Leader CP/CD program (€ 5bn),                 Goals (‘SDG’). We also use SDG for
                                                   driven by Rabobank's 'ESG Leader'                 internal steering and target setting
                                                   status as assessed by Sustainalytics.
             •   We support clients in             Under this program Rabobank issues short term
                 embedding circular practices      funding labelled as ESG investment                We developed client photos reflecting the
                 into their businesses                                                               sustainability performance of our larger
                                                   In H1 2018 we were mandated several               business clients. This is used in the credit
                                                   Sustainable Revolving Credit Facilities,          approval and monitoring process

             •   July 2018: introduction of        for example by:
                 Circular Economy financing                               first sustainable RCF in
                 guidelines (in cooperation with                          Dutch construction
                 other banks)                                             market
                                                                          a leading F&A company
                                                                          in Spain

Investor Relations                                                                                                                              13
Optimization of Rabobank’s balance sheet is on track
Creating room for further growth of the core operations of the bank

                                                                                     Non-exhaustive selection of balance sheet initiatives
                                                                                                                          2016 - 2017                                                H1 2018

 
Funding
                     •    Further diversification of our funding base
                          (covered bonds, DLL asset backed
                          securities, TLTRO, etc.)
                                                                                           Inaugural
                                                                                            € 500mn
                                                                                          Green Bond
                                                                                                               Green STORM
                                                                                                               2016 and 2017
                                                                                                                                   Launch of € 25bn
                                                                                                                                    Covered Bond
                                                                                                                                     programme
                                                                                                                                                      $ 500mn asset
                                                                                                                                                          backed
                                                                                                                                                         securities
                                                                                                                                                                         $ 824mn asset
                                                                                                                                                                             backed
                                                                                                                                                                            securities
                                                                                                                                                                                                € 1.25bn
                                                                                                                                                                                            FORDless STORM
                                                                                                                                                                                              and € 550mn
diversification                                                                                                                                                                              Green STORM
                     •    Decreasing funding costs via collateralized                                                                                                                             2018
                          lending

 
Balance sheet
                      •    Creating flexibility for new lending and a
                           solid balance sheet by investor participation
                                                                                           € 1.0bn
                                                                                          mortgage
                                                                                         portfolio sale
                                                                                                               € 1bn RMBS
                                                                                                              Purple STORM
                                                                                                               transaction
                                                                                                                                    € 3.0bn capital
                                                                                                                                         relief
                                                                                                                                      transaction
                                                                                                                                                         € 600mn
                                                                                                                                                        mortgage
                                                                                                                                                       portfolio sale
                                                                                                                                                                                   € 2.0bn capital
                                                                                                                                                                                        relief
                                                                                                                                                                                     transaction
flexibility           •    This will not change the commercial
                           relationship of our clients with Rabobank

 
Balance sheet
                     •    Focusing on the core of our strategy::
                          Banking for the Netherlands and Banking
                                                                                        € 1.1bn sale of
                                                                                       Athlon Car Lease
                                                                                                             Sale of remaining
                                                                                                               Robeco stake
                                                                                                                                     Sale of Van
                                                                                                                                   Lanschot stake
                                                                                                                                                       Sale of Orix
                                                                                                                                                      Group stake*
                                                                                                                                                                             Sale of
                                                                                                                                                                        substantial parts
                                                                                                                                                                        of Bouwfonds**
                                                                                                                                                                                             Sale of € 1.3bn
                                                                                                                                                                                             CRE portfolio

reduction                 for Food
                     •    Reduction of non-core activities

 
Strengthening •           Building and preserving our strong
                                                                                       € 1.25bn perp AT1
                                                                                        securities (coco)
                                                                                                              $ 1.5bn 10-year
                                                                                                                Tier 2 notes
                                                                                                                                       € 1.5bn
                                                                                                                                     Rabobank
                                                                                                                                     Certificates
                                                                                                                                                      $ 500mn 12NC7
                                                                                                                                                        Tier 2 notes

capital base              capital position

* Orix/Robeco will remain an important and trusted financial partner for Rabobank ** Multiple transactions between 2016 and 2018

Investor Relations                                                                                                                                                                                   14
Valuable progress on our financial targets

Financial targets and results                                                              Achievements in H1 2018

                                                      Jun       Dec     Jun Ambition       •   Overall, we are well on track to deliver on our promises
                                                     2017      2017    2018    2020        •   CET1 ratio increased by ~1%-point over the last 12 months as a result of
                                                                                               adding net profit to retained earnings
                         Fully loaded                                                      •   We are well positioned to absorb the impact of new regulations such as
                                                    14.7%     15.5%   15.8%       >14%
                         CET1 ratio                                                            Basel IV and MREL, as our capital ratios are well in excess of our 2020
 Capital
                         Total capital                                                         targets
                                                    25.5%     26.2%   26.1%       >25%
                         ratio*                                                            •   ROIC exceeded our 2020 ambition level on the back of enhanced
                                                                                               efficiency and continued impairment releases
                         ROIC                        7.8%      6.9%    8.8%        >8%     •   C/I ratio improving due to stable income generation and ongoing
                                                                                               restructuring program
 Profitability           C/I ratio                  67.6%     71.3%   64.6%                •   Further improvement of C/I ratio will remain a priority in the coming
                                                                                53-54%         years, though our target has become challenging given the ongoing low
                         Underlying                                                            interest rate environment and the acceleration of IT investments
                                                    63.9%     65.3%   62.9%
                         C/I ratio                                                         •   Wholesale funding slightly increased due to the growth of our balance
                         Wholesale                                                             sheet
 Funding                                           € 171bn   € 160bn € 164bn   < € 150bn
                         funding
See slides 29 and 30 for further details on MREL

Investor Relations                                                                                                                                             15
Topics

 Update on strategy
 H1 2018 results
 Appendix:
 •    Dutch economy, housing market and credit ratings
 •    Financial results
 •    Loan portfolio
 •    Capital, funding & liquidity
 •    Current & future developments
Investor Relations                                       16
Positive net profit development

Profit & Loss account                                       Main developments
In € mn                       H1 2017   H2 2017   H1 2018   •   Net profit +12% to € 1,698mn
                                                            •   Stable top line despite the challenging interest rate environment
Net interest income             4,454     4,389     4,274
                                                            •   Operating expenses down 4% in line with headcount reduction
Net fee & commission income      988       927       981    •   Negative impairment charges continue to bolster net profit
                                                            •   Decrease in income tax mainly due to US tax reform
Other results                    496        747       774
                                                            •   € 1.2bn of net profit added to retained earnings to further strengthen
Total income                    5,938     6,063     6,029       our balance sheet and finance future growth (H1 2017: € 0.9bn)

Operating expenses              3,755     4,299     3,611
                                                            Net profit (in € mn)
Regulatory levies                258        247      284                                                 2,674
                                                                                                                                         H2
Impairment charges                -67      -123       -37          2,214
                                                                                      2,024                                              H1
                                                                                                         1,158
Operating profit before tax     1,992     1,640     2,171          692
                                                                                      1,027
Tax                              476       482        473
Net profit                      1,516     1,158     1,698          1,522                                 1,516              1,698
                                                                                       997

                                                                   2015               2016               2017               2018

Investor Relations                                                                                                                  17
Continued strong underlying performance

Main developments                                                                                   Underlying profit before tax (in € mn)
                                                                                                                            +2%
•     Rabobank was able to match its strong underlying performance realized
      in H1 2017                                                                                                                        2,326
                                                                                                              2,276
•     Lower net releases from impairment allowances were offset by several                                                 2,189         155     Exceptional items
      favorable items in Other results                                                                         284

                                                                                                                            549

Exceptional items included in operating profit before tax
    In € mn                                          H1 2017          H2 2017          H1 2018
    Fair Value items*                                     -186             -127             -133
                                                                                                                                         2,171   Operating profit before tax
    Restructuring costs                                    -98               -61             -22              1,992

    Provision RNA                                             0            -310                 0                          1,640

    Derivatives framework                                     0              -51                0
    Total effect                                          -284             -549             -155

* H1 2017 and H2 2017 Fair Value items consist of results on (i) hedge accounting and (ii) issued
  debt instruments (structured notes). As from 2018 onwards the latter will be nil due to the
  adoption of IFRS 9                                                                                         H1 2017      H2 2017      H1 2018

Investor Relations                                                                                                                                               18
Total income slightly up despite challenging interest
rate environment
Total income (in € mn)                                                      Development of (underlying) income
                      5,938             6,063             6,029
      Other results                                                         •   Corrected for the appreciation of the euro, total income was up 4%
                       682                874               907             •   Net interest income (NII) was down 4%. Excluding FX effects NII
      Net fee and                                                               declined by 2% due to the ongoing low interest rate environment and a
commission income      988                                                      lower average loan portfolio
                                          927               981
                                                                            •   Net fee & commission income remained more or less stable:
                                                                                • DRB: up 2% driven by higher commissions on payment accounts and
                                                                                   AuM
                                                                                • WRR: down 3%, but in local currency up 4% mainly due to a strong
                                6,124             6,190             6,162          performance of our M&A division
                                                                                • Leasing: sharp rise due to higher fees on syndicated financial leases
                                                                                   in the US and a change in accounting treatment
Net interest income    4,454             4,389             4,274                • Real Estate: fee level much lower due to the downscaling of the
                                                                                   activities of FGH Bank and Bouwfonds IM

                                                                            •   Sharp rise in underlying Other results, driven by:
                                                                                • a book profit on the sale of FGH Bank’s non-core CRE financing
                                                                                   activities and a positive revaluation in the loan portfolio of ACC
                       -186              -127              -133                 • higher results at area developer BPD
        FV items
                      H1 2017           H2 2017           H1 2018               • the reversal of an impairment taken by DLL in H2 2017

Investor Relations                                                                                                                                19
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)*                                                                             Main developments
                                                                                       1.39%           1.41%
     1.32%           1.33%           1.33%            1.29%           1.33%                                        •   Net interest margin improved slightly, mostly driven by a lower average
NIM (12m-rolling average)                                                                                              balance sheet total
                                                                                                                   •   Low and negative interest rate environment continues to affect net
                                                                                                                       interest income (NII) due to:
                                                                                                                       • lower margins on savings and payment account balances
                                                                                                                       • the cost of prudently managing the Group’s sizeable liquidity buffer
                                                                                                                       • continued high - but declining - level of early repayments on
                                                                                                                           mortgage loans
                     4,657
                                                                                                                   •   DRB: stable NII due to positive impact from new business margins on
     4,482                           4,375           4,368           4,454           4,389           4,274             mortgages and SME lending
                                                                                                                   •   WRR: NII slightly down, but improved in local currency in line with loan
                                                                                                                       portfolio growth
                                                                                                                   •   Leasing: NII down, mainly due to lower new lending margins
                                                                                                                   •   Real Estate: NII reduced to almost nil following the sale of virtually the
                                                                                                                       whole CRE loan portfolio

    H1 2015        H2 2015         H1 2016         H2 2016         H1 2017         H2 2017         H1 2018

*   Balance sheet total fluctuates during the year due to fair value items (such as derivatives) and the size of
    the liquidity buffer. The figures up to and including 2016 are including Athlon

Investor Relations                                                                                                                                                                       20
Multi-year transformation program is paying off

Operating expenses (in € mn)            4,299                               Development of (underlying) expenses
                Derivatives framework     51
                                         310                                •     Corrected for the appreciation of the euro, operating expenses were
                        Provision RNA
                   3,755                  61                                      down 2%, driven by lower restructuring costs
Restructuring                                              3,611
                    98                                                      •     Staff costs decreased due to ongoing headcount reductions, a lower
        costs                                               22
                                                                                  (final) payment in connection with a pension guarantee and FX effects
                                                                            •     Other operating expenses (excluding restructuring costs) more or less
                                         1,611                                    stable, despite higher project expenses related to legacy files and
 Other Opex        1,451                                   1,462                  regulatory compliance
                                                                            •     Since 2015 our underlying cost base has been reduced by almost
                                                                                  € 600mn on an annual basis
                                                                            •     The C/I ratio improved by 3%-points
                                                  3,877
                              3,657                                 3,589

  Staff costs      2,206                 2,266             2,127
                                                                            Development cost/income ratio incl. regulatory levies
                                                                                                                    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%
                  H1 2017               H2 2017           H1 2018

Investor Relations                                                                                                                               21
Asset quality continues to benefit from economic tail wind

Impairment charges (in € mn and in bps of average lending)   All segments benefited from benign economic environment
                                                             •   For the third consecutive 6-month period negative impairment charges
                   -3 bps      -6 bps          -2 bps
                                                                 (IC), albeit somewhat smaller than in the previous two periods
                  -€ 67mn     -€ 123mn       -€ 37mn

       Leasing       41                                      •   IC at -2 bps of average lending (10-year average: +34 bps)

                                                             •   Limited or even negative IC in all business segments:
          WRR        105                                         • DRB: smaller net release of allowances; residential mortgage
                                 65                                 portfolio continued to perform well with negligible IC
                                                    35
                                 -2           0                  • WRR: IC decreased to nil; nearly all business lines and regions
         Other       -14
                                                  -42               reported lower IC
    Real Estate      -43         -73                    -3       • Leasing: IC remained at a stable and moderate level
                                              -27                • Real Estate: small release of allowance
                                 -10
                                                                 • Other: negative IC due to partial sale and revaluation of a legacy
                                                                    investment portfolio
Domestic Retail     -156        -103

                  H1 2017      H2 2017        H1 2018

Investor Relations                                                                                                               22
Non-performing loans improve on a like-for-like basis

NPL development*                                                        Non-performing loans (NPL)
(in € mn and in % of total loans & advances)
                                                                        •   Rabobank is frontrunner in applying the EBA ‘Definition of Default’ to its
                                                                            portfolio as from 1 January 2018. One-off impact on NPL stock:
  3.6%       3.4%       3.5%        3.8%                       3.5%         + € 1.9bn, mainly in the mortgage portfolio
                                                                        •   NPL stock further affected by:
                                                                            • Conservative write-off policy
19,763      18,873     18,315      20,215                      18,755       • Helping clients with ample prospects getting through tough times
                                   1,900          1,460                 •   NPL decreased as a result of the favorable economic environment and
                                                                            the sale of non-core CRE exposure by FGH Bank
                                                                        •   Overall asset quality is improving, further evidenced by still favorable
                                                                            impairment charges and declining level of impairment allowances
                                                                        •   NPL level of remaining non-core CRE portfolio (ACC Ireland) is above
                                                                            average; excluding ACC the NPL ratio would be 3.2%
                                                                        •   NPL Coverage ratio decreased to 23% from 27% (Dec 2017) mainly as a
                                                                            result from:
                                                                            • sale of non-core CRE loans, which were highly provisioned
                                                                            • one-off increase in level of NPL in mortgage portfolio as a result of
                                                                                application of the EBA ‘Definition of Default’
 Dec 15     Dec 16      Dec 17     Jan 18      Net portfolio   Jun 18
                                               development              *   NPL includes both Stage 3 Loans & Advances and NPL in Financial Assets at Fair Value

Investor Relations                                                                                                                                                 23
Loan portfolio increased after a few years of slight
contraction
Composition of private sector loan portfolio (in € bn)                    Main developments
                              +2%
                                                                          •   Domestic residential mortgages portfolio slightly down as new
     411                             416                                      production was more than offset by continued elevated level of early
                     408*
                                     29      Leasing
                                                                              repayments
      27              27
                                                                          •   Domestic CRE lending** further down in line with strategy
      37              36              37     WRR Rural & Retail
                                                                          •   WRR: exposure growth concentrated in Wholesale, both domestic and
                                                                              abroad (especially in North America)
      62              61              65     WRR Wholesale (excl. CRE)
                                                                          •   Leasing: steady underlying growth
      42                                                                  •   72% of private sector loan portfolio outstanding in the Netherlands
                      42              43     Domestic Retail other SMEs
                                                                          •   47% of loan exposure to private individuals, 29% to trade, industry &
      27              27             27      Domestic Retail F&A
                                                                              services and 24% to F&A
      23              22             22      Domestic CRE **

     193              193            192     Domestic Retail mortgages

                                                                          * Due to the adoption of IFRS 9 as at 1 Jan. 2018 the loan portfolio declined by € 2.9bn
                                                                          ** This includes the aggregate exposure of the Domestic Retail Banking, WRR and Real Estate
    Dec 17           Jan 18         Jun 18                                   business segments to CRE

Investor Relations                                                                                                                                           24
Loan-to-deposit ratio improved slightly

Deposits from customers and private sector lending (in € bn)                                           Main developments
           1.21                                             1.20          LtD ratio                    •   Deposits DRB: up € 6.3bn, partly supported by seasonal effects. The
    411                     408*                     416                                                   increase was split evenly over:
                                                                                                           • Private savings: typically vacation bonuses paid out in May,
                  341                       343*                    347                                        temporarily boosting balances of accounts held by private
                                                                                                               individuals
                  84                         86                     87     WRR and Other                   • Other deposits: increase in current accounts held by SME clients
                                                                                                       •   RaboDirect: balances decreased as we are withdrawing from the Irish
                  28                         28                     25     RaboDirect                      retail market
                                                                                                       •   Deposits WRR and Other: mainly balances from corporate customers,
                                                                                                           which remained more or less stable

                  229                       229                     235    DRB
                                                                                                       •   Loan-to-deposit (LtD) ratio slightly improved

        Dec 17                     Jan 18                  Jun 18
          Lending                           Deposits from customers
* Due to the adoption of IFRS 9 as at 1 Jan. 2018 the loan portfolio declined by € 2.9bn and deposits increased by € 2.5bn

Investor Relations                                                                                                                                                       25
Capital position provides strong basis for regulatory
developments
CET1 development (Fully loaded)                                                      CET1
                                                                                     •   CET1 capital well above target and capital requirements
                                 15.5%      +0.6%          -0.3%           15.8%
                 13.5%                                                               •   Ratio strengthened by 30bps, driven by retained earnings and despite
         12.0%
                                                                                         the -14bps IFRS 9 impact
                                                                                     •   With a 15.8% fully loaded CET1 ratio Rabobank is solidly positioned for
                                                                                         the manageable impact of Basel IV
                                                                                     •   Rabobank is committed to its >14% CET1 target and continues to
         2015    2016            2017    Profit minus       Other          H1 2018       further strengthen its CET1 base in anticipation of Basel IV
                                         distributions

Total capital development (Transitional)                                             Total capital
                                                           MREL eligible
                                                                           26.5%
                                                           capital
                                                                                     •   Rabobank has been building up its capital buffers to protect its senior
                         25.0%                    26.2%                    26.1%
         23.2%                                                                           funding against the (unlikely) risk of bail-in
                                                    7.4%                    7.3%
Tier 2                   7.4%                                                        •   The total capital ratio of 26.1% offers a strong capital buffer to protect
         6.8%
                                                    3.0%                    3.0%         Rabobank’s senior funding base and future NPS holders
AT1      2.9%            3.6%
                                                                                     •   The introduction of NPS allows for optimization of Rabobank’s MREL
                                                                                         stack
                         14.0%                    15.8%                     15.8%
         13.5%
CET1                                                                                 •   Including the grandfathered AT1s and amortized part of Tier 2 with a
                                                                                         maturity >1yr, Rabobank holds 26.5% of MREL eligible capital
         2015            2016                       2017                   H1 2018

Investor Relations                                                                                                                                          26
Rabobank solidly positioned for future MREL
requirement
MREL requirement                                                                                  MREL requirement and position
(in % of RWA)
                                                                                                  •   Rabobank has received a binding MREL requirement of 30.96%
                                                                                                      (~€ 65bn – FYE2016). This number:
                                                                                                      • Includes the binding Basel I floor in the Recapitalization Amount
                                                                                                      • Is based on BRRD I - future MREL subject to ongoing political
                                     4.06%           30.96%                                               developments (European trilogue) with regards to the risk reduction
                    11.65%                                           26.50%
                                                                                                          package
                                         8% TLOF                                                  •   With MREL eligible instruments of >30.96%*, Rabobank already meets
                                                                                                      its MREL requirement. As a result, no transition period is set
    15.25%                                                                                        •   Rabobank intends to meet its MREL requirement with a combination of
                                                                                                      Own Funds and Non-Preferred Senior only
                                                                                                  •   With MREL eligible capital of 26.5%, the additional MREL issuance is
                                                                                                      very manageable

     LAA             RCA         CBR including     Total MREL     MREL eligible   MREL eligible
                                  adjustments      requirement      capital       instruments*

*   Under BRRD I preferred senior is MREL eligible and included in calculations

Investor Relations                                                                                                                                                    27
Limited MREL issuance in light of Rabobank’s
redemption profile
The role of NPS in the capital stack (in € bn)                                          MREL strategy
                    PONV                                    Resolution
                                                                                        •   Rabobank’s substantial own funds (€ 52.8bn) provide a significant buffer
                                                                                            for NPS investors
            Own funds: € 52.8bn               15.6
                                     15.4                                               •   The introduction of NPS could gradually diminish the role of Tier 2 as
                       6.0
                                                                                            key instrument to meet MREL requirements
     31.4
                                                                         13.7           •   Rabobank intends to maintain a best-in-class Tier 2 layer protecting
                                                                                            NPS holders

    CET1                AT1          Tier 2     Non-Preferred Senior Preferred Senior

2018-2021 senior unsecured maturity profile (in € bn)                                   Issuance plans
                                                                                        •   Upcoming senior unsecured redemptions (€ 63.7bn until 2021) allow for
                                                                                            gradual refinancing into NPS to address MREL needs. Based on current
                                                                                            RWAs, the MREL shortfall (excluding senior unsecured) is limited
                                                                                        •   Rabobank expects NPS issuances of € 3-5bn per annum. This range is
       19.3
                                                                                            subject to regulatory and peer group developments and includes early
                              15.9               14.4                    14.1               anticipation of the expected Basel IV impact

       2018                   2019               2020                    2021

Investor Relations                                                                                                                                          28
Funding strategy: optimization and diversification

Product base further diversified (in € bn)                                   Funding strategy: global market approach
30                                                                           •   Diversified wholesale funding mix achieved by tapping different
                 Senior Unsecured       Green      Covered          TLTRO
                                                                                 markets, maturities, currencies and products
20                                                                           •   Rabobank’s funding target for 2018 has been set at € 10 - 12bn including
                                                             13.7
                                                                                 NPS (subject to balance sheet developments) of which ~€ 9bn has been
10                                                           13.7                funded in H1 2018:
                                                                                 • Year-to-date issuance is distributed over USD, EUR, AUD and NZD
 0                                                                                    benchmarks, topped up with private placements in various markets
         2015            2016               2017               H1 2018
                                                               2018 H1       •   Continued commitment towards strategic and liquid benchmark curve
                                                                             •   In line with Rabobank’s strategy of reducing its wholesale funding
Currency diversification                                                         dependency, it is likely that Rabobank remains a net negative issuer
                                                                                 (also including NPS)

                                   7%                                EUR
                              3%
                         7%                                          USD
                       6%
                                                                     AUD
                                          55%                        GBP
                       22%
                                                                     JPY
                                                                     Other

Investor Relations                                                                                                                               29
Topics

 Update on strategy
 H1 2018 results
 Appendix:
 • Dutch economy, housing market and credit ratings
 •    Financial results
 •    Loan portfolio
 •    Capital, funding & liquidity
 •    Current & future developments
Investor Relations                                    30
The Dutch economy is still growing, albeit more slowly

Key figures Dutch economy (Sep 2018)*                         Key characteristics Dutch economy
                               Actual   Forecast   Forecast   •   Population 17mn
Year-on-year change (%)
                                2017      2018       2019     •   GDP € 738bn
Gross Domestic Product          2.9       2.9        2.3      •   GDP per capita 5th in the EU, 13th in the world
                                                              •   Household savings deposits € 351bn
Private consumption             1.9       2.6        2.6
                                                              •   Pension funds assets € 1,510bn (205% of GDP)
Government spending             1.1       2.1        2.7      •   Household gross mortgage debt € 696bn
Business investment             4.7       6.0        3.4
                                                              Economic Outlook
Residential investment          12.0      6.6        1.9
                                                              •   The Dutch economy has fully recovered from the financial crisis, with
Exports                         5.3       2.5        3.6          above EU-average GDP growth
Imports                         4.9       2.8        4.2      •   Unemployment rate is rapidly declining
                                                              •   Private consumption rising because of higher disposable income, high
                                                                  consumer confidence and rising house prices
Inflation (%)                   1.3       1.7        2.5      •   Housing market boom showing signs of fatigue with the number of
                                                                  transactions declining in the first half of 2018
Unemployment (% labor force)    4.9       3.9        3.6
                                                              •   Inflation will increase further in 2018 and 2019, in part due to
Government budget (% GDP)       1.1       0.6        0.9          pro-cyclical economic policy
Government debt (% GDP)         56.6      52.8      49.0      •   The downside risks are mostly international in origin, in the form of
                                                                  rising trade tensions and geopolitical risks
*   Source: RaboResearch
Investor Relations                                                                                                                31
Dutch housing market characterized by strong price
growth but decreasing sales activity
House Price Index and number of transactions                                 •   House Price Index: 122.5 (June 2018; 2015 = 100) versus 120.9 peak in
                                                                                 August 2008
 300                                                                   160   •   In 2017 a record number of ~242,000 existing homes were sold. Year-to-
                                                                                 date sales were down 8% y-o-y. Forecast full year 2018: 225,000
                                                                                 transactions
                                                                       140
 250                                                                         •   Prices rose by 8.8% in Q2 2018 (7.6% in 2017; 5.0% in 2016) and are
                                                                                 expected to rise by 8.7% in 2018 and 7% in 2019
                                                                       120   •   Overall affordability remains relatively good, except for first-time buyers
 200
                                                                             •   Owner occupation rate is 56%, comparable to surrounding EU countries
                                                                       100   •   Underlying fundamentals hint at further price increases in the short run:
 150                                                                             • Increasing number of households and high income growth forecasted
                                                                       80        • Housing shortage, also visible in the non-regulated rental segment
                                                                                     where rent levels are rising quickly
 100                                                                             • Limited land available for housing and limited new production
                                                                       60
                                                                                 • Favorable tax regime: interest paid on mortgage loans, taken out for
                                                                                     owner-occupied houses, is income tax deductible. This makes house
  50                                                                   40            purchase vis-à-vis renting an attractive option
    2000             2006                  2012                 2018
                                                                                 • Strict mandatory underwriting criteria and strong legal system
              12-months total of number of
                                        os homes sold (x 1,000) (l)                  mitigate credit risks
              House Price Index (2015=100)
                                (2010=100) (r)          (x 1,000)                • Interest rates remain low

Investor Relations                                                                                                                                  32
National Mortgage Guarantee contributes to the
strength of the Dutch mortgage market
About the National Mortgage Guarantee (NHG) fund
•   Offers financial protection to both lender and borrower in the event the borrower is left with residual debt
•   Benefits from a back-stop government guarantee
•   Rated Triple A by Fitch and Moody’s
•   Underwriting criteria:
    • Maximum house price € 265,000
    • For homes that are subject to energy-efficiency investments the maximum house price is € 280,900
    • Affordability criteria (max. ratio of loan expenses-to-income and maximum 100% LTV) comparable to the criteria for non-NHG loans

Specifically for borrowers
•   Residual debt will in principle be forgiven
•   Lower interest rate
•   Borrowers pay a one-off guarantee fee of 1% of the mortgage loan

Specifically for mortgage lenders
•   Due to the credit cover by the fund, regulatory capital requirements are lower
•   Extensive cover: not only residual debt, but also interest arrears and disposal costs
•   For mortgages originated after 1 January 2014 the lender will participate for 10% in any loss claims made under NHG
•   20% of Rabobank’s mortgage portfolio benefits from National Mortgage Guarantee

Investor Relations                                                                                                                       33
Credit ratings remained strong in H1 2018

                              Dec 2017                                                                                        Jun 2018
                              Issuer ratings                                PS                 NPS                     T2                    AT1              Issuer ratings

                              A+/Positive/A-1                                A+                   A-                   BBB+                      -            A+/Positive/A-1

                              Aa2/Negative/P-1                               Aa3                  A3                   Baa1                   Baa3            Aa3/Stable/P-1

                              AA-/Stable/F1+                                 AA-                 AA-                     A                    BBB-            AA-/Stable/F1+

                              AA/Stable/R-1(high)                            AA                    -                      -                      -            AA/Stable/R-1(high)

PS: Preferred Senior; NPS: Non-Preferred Senior; T2: Tier 2; AT1: Additional Tier 1

AA/Aa2

  A-/A3

BB/Ba2         NL                             Rest of Europe                                                                      Rest of world

Graph based on the average rating score assigned by Fitch, Moody’s and S&P (July 2018) of the world’s 60 largest commercial banks (the Banker, July 2018), plus major Dutch banks

Investor Relations                                                                                                                                                                  34
Topics

 Update on strategy
 H1 2018 results
 Appendix:
 •    Dutch economy, housing market and credit ratings
 •    Financial results
 •    Loan portfolio
 •    Capital, funding & liquidity
 •    Current & future developments
Investor Relations                                       35
Rabobank posted 12% higher net profit

in € mn                                       Jun 2017   Jun 2018     Change
Net interest income                             4,454       4,274          -4%
Net fee & commission income                       988        981           -1%
Other results                                     496        774           56%
Total income                                    5,938      6,029           2%
Operating expenses                               3,755      3,611          -4%
Gross result                                    2,183      2,418           11%
Impairment charges                                 -67        -37       +45%
Regulatory levies                                 258        284           10%
Operating profit before tax                     1,992       2,171          9%
Tax                                               476        473           -1%
Net profit                                      1,516      1,698           12%
ROIC                                             6.9%       8.8%    +1.9%-pnt
Cost/income ratio (incl. regulatory levies)     67.6%      64.6%    -3.0%-pnt
Impairment charges                              -3 bps     -2 bps      +1 bps

Investor Relations                                                    36
Underlying performance by business segment (I)
(in € mn)
Domestic Retail Banking (DRB)                                         Main developments Domestic Retail Banking
                                                    0%
                                                                      •   Total income remained stable: downward pressure on NII (due to lower
                                 1,463                       1,459
                                                   1,371                  margins on savings and payment accounts) was compensated by favorable
                                   49                          4
            Exceptional items                       54                    new lending margins and an increase in net fee & commission income
                                                                      •   Lower operating expenses (-7%), driven by a lower headcount due to the
                                                                          digitalization and centralization of services
  Operating profit before tax    1,414             1,317     1,455    •   As in H1 2017, impairment releases contributed to operating profit, but to a
                                                            2,731
                                                                          much lesser extent (€ 27mn versus € 156mn)
                                          1,715
                                                                      •   Slight reduction of loan portfolio due to continued elevated level of early
                                                                          mortgage repayments
                                H1 2017           H2 2017   H1 2018
Wholesale, Rural & Retail (WRR)                                       Main developments Wholesale, Rural & Retail
                                                  +14%
                                                                      •   Corrected for the appreciation of the euro, the improvement in total income
                                                             784          (+5%) outpaced the increase in operating expenses (+3%)
                                 688                          0
                                                   639                •   Excluding FX effects NII was up 7%, in line with loan portfolio growth
            Exceptional items     0
                                                                      •   Non-interest income corrected for FX effects 6% up, partly due to a strong
                                                   312                    performance of our M&A and Private Equity divisions
                                                             784
  Operating profit before tax    688                                  •   Profit improvement driven by € 105mn lower impairment charges
                                                   327                •   Loan portfolio grew by 6%

                                H1 2017           H2 2017   H1 2018

Investor Relations                                                                                                                               37
Underlying performance by business segment (II)
(in € mn)
Leasing                                    16%
                                                              Main developments Leasing
                                                              •   Total income up 5%, driven by the reversal of an impairment taken in
                                                     283
                                                      4
                                                                  H2 2017
                                 244
                                                              •   Marginally higher operating expenses due to business growth
                                            177               •   Impairment charges decreased by 15% to € 35mn, well below long-term
                                             6                    average
                                                     279
  Operating profit before tax    249                          •   Financial lease portfolio grew by 6%
                                           171                •   Outlook positive for Leasing due to the shift to a ‘pay for use’ economy

                                  -5
            Exceptional items
                                H1 2017   H2 2017   H1 2018
Real Estate                                                   Main developments Real Estate
                                           68%

                                           302
                                                              •   Includes area developer BPD, investment manager Bouwfonds IM and FGH
                                           29                     Bank; the latter was dissolved mid-2018
                                                              •   Performance improvement driven by BDP, which closed 20% more
                                                                  transactions of new residential units
                                                     156
                                                      4       •   Segment result benefited from a book profit on the sale of FGH Bank’s
                                  93       273
                                                                  remaining non-core CRE loans
            Exceptional items     0
                                                     152      •   NII plummeted due to a conscious reduction of the loan portfolio
  Operating profit before tax     93
                                                              •   As in H1 2017, impairment charges contributed to operating profit, but to a
                                H1 2017   H2 2017   H1 2018
                                                                  lesser extent (€ 3mn versus € 43mn)
                                                              •   In August 2018 Rabobank reached agreement on the sale of BPD France
Investor Relations                                                                                                                    38
Topics

 Update on strategy
 H1 2018 results
 Appendix:
 •    Dutch economy, housing market and credit ratings
 •    Financial results
 •    Loan portfolio
 •    Capital, funding & liquidity
 •    Current & future developments
Investor Relations                                       39
Total assets up due to business growth

 in € bn                                                  Dec 2017   Jan 2018   Jun 2018
 Assets                 Loans and advances to customers      432.6     429.4       439.3
                        Cash                                  66.9      66.9        67.5
                        Loans and advances to banks           27.3       26.9       25.8
                        Securities                            31.6       34.7         31.7
                        Derivatives                           25.5       25.5       24.7
                        Other                                19.1       19.1       18.8
                        Total Assets                        603.0      602.5      607.8

 Equity & liabilities   Equity                                39.6       39.6      40.5
                        Deposits from customers              340.7      343.2     346.6
                        Long-term issued debt                122.7      122.3     124.8
                        Short-term issued debt                37.7       37.7       39.0
                        Banks                                18.9       18.9       19.9
                        Derivatives                          28.1       28.6       26.5
                        Other                                15.3       12.2       10.5
                        Total equity & liabilities          603.0      602.5      607.8

 Encumbered assets      According to EBA guidelines           10%        10%        11%
Investor Relations                                                               40
Diversified loan portfolio with focus on the Netherlands

Group private sector loan portfolio by business segments                                          Group private sector loan portfolio € 415.7bn
in € bn                                        Jan 2018*            Jun 2018             change                          Leasing
                                                                                                                           7%                                            Domestic CRE*
Group total                                          408.1              415.7               2%                                                                               5%

•   Domestic Retail Banking                          279.9              279.9               0%

•   WRR                                               99.9              106.2               6%         WRR (excl.
                                                                                                      domestic CRE)
    −     Domestic Wholesale                           17.1               18.2              6%           25%

    −     International Wholesale                      47.1               50.7              8%

    −     International Rural & Retail                 35.7               37.3              4%
                                                                                                                                                                               Domestic Retail
•   Leasing                                            27.1              29.0               7%                                                                                   mortgages
                                                                                                                                                                                   46%
    −     Domestic                                      1.2                1.5             25%         Domestic Retail
                                                                                                        other SMEs
    −     International                               25.9                27.5              6%             11%

•   Real Estate                                         0.7                0.3            -57%
                                                                                                             Domestic Retail F&A
•   Other                                               0.4                0.3            -25%                      6%

*   Loan portfolio as at 1 Jan. 2018 declined by € 2.9bn due to the adoption of IFRS 9            *   This includes the aggregate exposure of the Domestic Retail Banking, WRR and Real Estate
                                                                                                      business segments to domestic CRE

Investor Relations                                                                                                                                                                    41
Rabobank largest financier of the Dutch economy

Domestic lending by client category                                                            Domestic private sector portfolio € 300.2bn
                                                                                               (72% of Group loan portfolio)
in € bn                                         Jan 2018          Jun 2018           change
                                                                                                         Wholesale               Leasing
Total Domestic lending                              299.3             300.2               0%             (excl. CRE)               1%
                                                                                                             5%
•    Mortgages                                       193.1            191.8              -1%     Other SMEs
                                                                                                    14%
•    Food & Agri retail                               27.0             26.6              -1%

•    Commercial real estate*                          21.7             22.0               1%

•    Other SMEs                                       41.9             43.4               3%     CRE *
                                                                                                                                             Mortgages
                                                                                                  7%
                                                                                                                                               64%
•    Wholesale (excl. domestic CRE)                   13.9             14.2               5%

•    Leasing                                           1.2               1.5            25%

•    Other                                             0.4               0.3            -25%              Food & Agri retail
                                                                                                                9%
*   This includes the aggregate exposure of the Domestic Retail Banking, WRR and Real Estate
    business segments to domestic CRE

Investor Relations                                                                                                                            42
Well diversified international loan portfolio

International private sector loan portfolio                                    International private sector portfolio € 115.5bn
                                                                               (28% of Group loan portfolio)
                                                            Rural &
 in € bn                                        Wholesale             TOTAL
                                                             Retail

 Total international portfolio                                                                 Leasing
                                                                                                24%                                     Rural & Retail
 •   WRR                                             50.7      37.3    88.0                                                                 32%

     −     Europe excl. the
                                                     13.8         -     13.8
           Netherlands

     −     North America                             16.3      16.2     32.5

     −     South America                              8.1       3.7     11.8                                                       Wholesale
                                                                                                                                     44%
     −     Australia & New Zealand                    3.4      17.0     20.4
                                                                               •   Breakdown international loan portfolio WRR:
     −     Asia                                       8.3       0.4      8.7       • Wholesale:            58%
                                                                                   • Rural & Retail:       42%
     −     Africa                                     0.2         -      0.2
                                                                               •   Focus on Food & Agri business: F&A lending 60% of total WRR loan
 •   Leasing                                                            27.5       portfolio
                                                                               •   Leasing: share of Food & Agri business in total lease portfolio 35%
Breakdown of loan portfolio based on country of residence

Investor Relations                                                                                                                                       43
Credit quality loan portfolio further improved

NPL and allowances                                                          Main developments
                                                             % of loans &   •   Declining levels of NPL and Impairment allowances evidence of
in € mn                                          Jun 2018
                                                                advances        continuing improvement of the credit quality of the loan portfolio
Non-performing loans   Domestic Retail Banking     12,061            4.3%
                                                                            •   January 2018 one-off impact on level of:
(NPL)                  WRR (incl. Other)            6,108            2.8%
                       Leasing                        518            1.7%       • NPL stock: +€ 1.9bn (application of EBA ‘Definition of Default’)
                       Real Estate                     68           13.5%       • Allowances: -€ 1.1bn (adoption of IFRS 9)
                       Total Rabobank              18,755            3.5%   •   NPL ratio calculation according to EBA definition; excluding remaining
                                                                                non-core CRE portfolio (ACC Ireland) the NPL ratio would be 3.2%
                                                 Jan 2018                   •   NPL Coverage ratio calculated according to EBA definition, i.e.
                       Total Rabobank              20,215           3.8%        excluding IBNR (IAS 39) and Stage 1 + 2 (IFRS 9) allowances; decrease to
                                                                                23% from 27% (Dec 2017) mainly as a result from:
                                                 Jun 2018
Allowances                                                                      • sale of non-core CRE loans, which were highly provisioned
                       Domestic Retail Banking      2,601
(Stages 1, 2 & 3)      WRR (incl. Other)             1,147                      • one-off increase in level of NPL in mortgage portfolio as a result of
                       Leasing                         255                         application of the EBA ‘Definition of Default’
                       Real Estate                      55
                       Total Rabobank               4,058

                                                 Jan 2018
                       Total Rabobank               4,361

Investor Relations                                                                                                                              44
Consistently strong-performing domestic residential
mortgage portfolio (I)
Portfolio by type of mortgage                                    •   Loan portfolio –1% to € 192bn, mainly as a result of continued elevated
                                                                     level of early (partly) repayments due to the ongoing low interest rate
           Other                                                     environment
            8%                                Interest only      •   As in H2 2017, releases exceeded new additions to allowances
                                                  22%
                                                                 •   As at 1 January 2018 NPL and allowances increased due to the
           Savings
            23%                                                      introduction of a new definition of default:
                                                                     • potential defaults are recognized at an earlier stage
                                                                     • excluding this one-off effect, the underlying development of the
          Redeeming                      Partial interest only
             18%                                  29%
                                                                         asset quality is still positive
                                                                 •   Number of delinquencies and foreclosures remains very low
                                                                 •   Average loan-to-value ratio: 67% (Dec. 2017: 69%)
Portfolio by contractual fixed interest rate period
                                                                 •   National Mortgage Guarantee (NHG): stable at 20.0% of mortgage
         Fixed 10 Years
          2-3 Years                                 30%          •   Banks are in a preferential position to enforce the liquidation of
             2%                                                      collateral
         4-5 Years                                               •   Bank has full recourse to the borrower
            9%                                                   •   Share of interest only will decline due to prevailing tax regime
                                                6-10 Years
                                                   50%

Investor Relations                                                                                                                   45
Consistently strong-performing domestic residential
mortgage portfolio (II)

in € mn                                                                  Jun 2017                   Dec 2017                  Jan 2018*        Jun 2018   Change Dec 17 – Jun 18

Loans                                                                     194,483                     193,110                     193,110       191,791                      -1%

Non-performing loans                                                         1,293                       1,112                         2,912      2,347                    -19%

−   in % of loans                                                           0.67%                       0.58%                      1.51%         1.22%               -0.29%-pnt

Allowance                                                                      196                         169                          333        237                     -29%

−   in % of non-performing loans                                              15%                         15%                           11%        10%                  -1%-pnt

                                                                                                                                                                        Change
                                                                          H1 2017                     H2 2017                                  H1 2018
                                                                                                                                                              H1 2017 – H1 2018

Loan impairment charges                                                          12                        -10                                      -25                 -€ 37mn

In basis points                                                              1 bps                      -1 bps                                   -3 bps                   -4 bps
*   NPL and allowances increased as at 1 Jan. 2018 due to the implementation of a new definition of default. See also previous slide

Investor Relations                                                                                                                                                      46
Loan-to-value mortgage portfolio decreased further

LTV domestic residential mortgage portfolio                    Loan-to-value (LTV) is not the sole determinant of loan quality
                                                               •   Average LTV portfolio June 2018: 67% (Dec 2017: 69%)
Loan-to-value        NHG Guaranteed           Other    Total
                                                               •   Prudent underwriting standards, including a Loan expenses-to-income
0%-50%                         2.7%           25.6%    28.3%       ratio, and active risk monitoring are the most important factors
                                                                   determining the risks in Rabobank’s mortgage portfolio
50%-60%                        1.8%           10.4%    12.2%   •   LTV figures do not take into account:
                                                                   • free savings accounts of the borrower
60%-70%                       2.6%            11.0%    13.6%
                                                                   • securities and other assets of the borrower
70%-80%                        3.6%           10.3%    13.9%   •   To cover premature death risk, the majority of clients have taken out a
                                                                   life insurance, pledged to the bank
80%-90%                       4.2%             9.7%    13.9%   •   Some clients have taken out an insurance to cover unemployment risk
                                                               •   An LTV>100% does not mean that the loan in question is non-
90%-100%                       3.4%           6.4%     9.8%
                                                                   performing. As long as the borrower is able to meet debt service, the
100%-110%                      1.1%            3.0%     4.1%       collateral value is less of an issue
                                                               •   Declining trend in the share of mortgages with an LTV >100%
110%-120%                      0.3%            1.4%     1.7%       (8% in H1 2018)

>120%                          0.3%            2.2%    2.5%

                             20.0%            80.0%   100.0%

Investor Relations                                                                                                                  47
Well diversified business lending

Group F&A portfolio € 100.0bn                                                            Well diversified business lending
              Sugar             Other                                                    •   Subsectors
               3%                11%
                                                 Animal protein                          •   Geography
      Beverages                                      16%
         3%                                                                              •   Links in the food supply chain
      Food retail & foodservice
                 5%                                 Grains & oilseeds
                                                          20%
                                                                                         F&A portfolio
      Farm inputs
         10%                                                                             •   € 100.0bn (+2%), 24% of total Group loan portfolio, of which:
            Fruit & veg                               Dairy                                  • Domestic retail SMEs: € 26.7bn
               10%                                    22%
                                                                                             • WRR: € 63.3bn
Group non-F&A portfolio € 119.0bn                                                            • Leasing: € 10.1bn
                                                                                         •   Domestic primary F&A market share around 86%
                  Retail non-food        Other   Lessors of real
                         4%              25%         estate        Finance & insurance
            Construction                              12%             (except banks)     Non-F&A portfolio
                4%                                                         11%
                                                                                         •   € 119.0bn (+3%), 29% of total Group loan portfolio, of which:
     Health care                                                            Trade
        6%                                                                   11%             • Domestic retail SMEs: € 59.2bn
    Transport and warehousing                             Professional, scientific           • WRR: € 40.9bn
                5%                                        and technical services             • Leasing: € 18.9bn
     Activities related to real estate                             6%
                                                 Manufacturing
                    8%                                                                   •   Mainly SME lending
                                                     8%

Investor Relations                                                                                                                                           48
Commercial real estate: lower exposure, improving
credit quality
Development domestic commercial real estate lending                                             Main developments
(in € bn)                                                                                       •   CRE exposure being actively managed down (H1 2018: -4%; 2017: -4%;
    28             26
                                  24                                                                2016: -15%)
                                                 23              23             22
                                                                                                •   Improving real estate market is reflected in decreasing LTVs, NPL level
                                                                                                    and impairment allowances
                                                                                                •   LTV of domestic lessors of real estate (i.e. buy-to-let) loan portfolio
                                                                                                    further improved to 68% (Dec 2017: 71%), mainly due to the further
                                                                                                    reduction of non-core exposure and improved market conditions
                                                                                                •   In H1 2018 FGH Bank sold the final part of its non-core loan portfolio to
  Dec 15         Jun 16          Dec 16        Jun 17         Dec 17          Jun 18
                                                                                                    RNHB (deal size: € 1.3bn)
Breakdown of domestic commercial real estate loan portfolio                                     •   FGH Bank merged with Coöperatieve Rabobank U.A. on 30 June 2018

                Other
                18%
                                                                 Offices & mixed use
                Land                                                     25%
                 4%

                Industrial
                   14%                                                    Residential
                Retail outlets                                               23%
                    16%
CRE financing includes the aggregate exposure of the DRB, WRR and Real Estate business segments to domestic CRE

Investor Relations                                                                                                                                                    49
You can also read