The economic rebound relative to 2020 created a tailwind for Rabobank. Although COVID-19 continued to impact society in 2021, government support measures cushioned its hold on the economy, which grew significantly. Improved market conditions led to a net release of loan impairment charges and positive asset revaluations. Rabobank’s business performance was sound, as reflected by the resilient and growing Food & Agri portfolio and dominant position in the Dutch residential mortgage market. In this environment, Rabobank posted a net result of EUR 3,692 million.
“Last year was unquestionably marked by the unpredictable character of the COVID-19 pandemic, including the emergence of new variants of the virus and the resulting restrictive measures. Worldwide supply chain challenges, including labour shortages, and increasing inflation were also part of the economic uncertainty. On top of that, 2021 was also marked by severe climate-related events and the IPCC report reiterating the urgency of combatting climate change. However, despite these challenges, we saw economies worldwide recover quickly and better than expected. We also see this recovery reflected in the performance of the majority of our clients and the bank,” said Chair of the Managing Board, Mr Wiebe Draijer.
“Our employees showed dedication and resilience in the face of the ongoing effects of the COVID-19 pandemic and guided our clients in the challenges they faced. I would like to express my gratitude for their commitment in yet another extraordinary year,” he added.
“Whether we are performing our role as financial gatekeeper or enhancing our operating model, we remain focused on creating value for society. We are progressing on our road to reaching the Paris Climate Agreement as you will see in the Impact Report, where we describe our “four-step approach.” Together with our clients, we aspire to speed up the vital transitions taking place in food, climate and energy, and toward a more inclusive society,” said Mr Draijer.
Rabobank’s net profit in 2021 was EUR 3,692 million, compared to EUR 1,096 million in 2020. Sound business performance as well as improved market conditions contributed to the bank’s strong 2021 financial results, whereas the 2020 results were significantly impacted by the effects of the pandemic.
Due to the economic recovery, the anticipated deterioration in credit quality of Rabobank’s business loan portfolio did not materialize. Instead, Rabobank recognized a net release of loan impairment charges on financial assets of EUR 474 million in 2021 (minus 11bps of the average loan portfolio), which is EUR 2,387 million lower than in 2020. The total outstanding exposure to vulnerable sectors further reduced to EUR 9.6 billion (which is 2.3% of the total loan portfolio compared to EUR 15.3 billion (3.7%) in 2020), reflecting Rabobank’s sound asset quality.
Rabobank’s total income increased by 13%. This increase was supported by positive revaluations of the bank’s equity participations as well as good performance of Rabo Investments’ portfolio. In addition, the participation in the TLTRO III programme resulted in a benefit of EUR 334 million, increasing the net interest income by 4%. Corrected for TLTRO, net interest income would have remained relatively stable as the bank continued to see the low interest rate environment putting pressure on deposit margins in its domestic operations. Largely driven by business growth, net interest income in Wholesale and Rural improved by 11%. Net fee and commission income strongly rebounded compared to 2020 and was EUR 228 million (or 13%) higher. This increase was the result of good performance of the event driven businesses and higher fees related to payment services and investments.