Rabobank Australia & New Zealand Group (RANZG) has achieved its seventh consecutive year of profit growth, posting a net profit after tax (NPAT) of A$294.1 million for 2016. This represented an increase of 5.9 per cent ($16.3 million) on the previous year.
Rabobank Australia & New Zealand Group managing director Peter Knoblanche said the 2016 results represented a very strong performance by the bank, on the back of a healthy and growing food and agribusiness sector.
Part of the global Rabobank Group, the world’s leading food and agribusiness banking specialist, Rabobank Australia & New Zealand Group is one of Australasia’s largest agricultural lenders and a major provider of corporate and business banking services to the region’s food and agribusiness sector.
Mr Knoblanche said the bank had achieved solid growth in its Country (rural) Banking business in 2016.
“Once again, good growth was achieved in this division against strong competition in the agricultural banking market in both countries,” he said. “And also in the face of considerable challenges in the New Zealand market where the country’s dairy sector struggled with the impact of very low global commodities prices throughout much of the year.”
Mr Knoblanche said Rabobank’s strong 2016 results and the record growth it had seen over the past seven years was testament to the healthy growth in the Australian and New Zealand food and agribusiness sector – were the bank conducted the majority of its business.
“As part of an international banking cooperative specialising in food and agribusiness, Rabobank Australia & New Zealand Group is in a strong position to continue to support agricultural producers and the food and agribusiness sector in this part of the world as they develop into the future,” he said.
Mr Knoblanche said Rabobank Australia & New Zealand Group’s key financial measures had once again improved in 2016.
Total income for the year to December 31, 2016 was up on 2015 by 2.5 per cent ($19.0 million), with revenue of $769.3 million.
While total costs had increased due to non-recurring items relating to business reorganisation, provisions were significantly down.
“The level of total provision charges significantly reduced in 2016 to $26.1 million (down 41.1 per cent),” Mr Knoblanche said. “This was the result of continued improvement in credit quality of the loan portfolio in both Australia and New Zealand.”
Although total costs for the year increased by 4.8 per cent ($15.3 million), this was primarily due to non-recurring business restructuring costs, which had been undertaken by the bank to optimise the cost base for future years, Mr Knoblanche said. “Excluding the one-off costs, total costs remained almost flat increasing by just 0.7 per cent,” he said.
After excluding the non-recurring extraordinary costs, RANZG’s total cost-to-income ratio was 41.4 per cent. This was down from 42.2 per cent in 2015, and continued to compare favourably against the Australian banking industry average, Mr Knoblanche said.
RANZG’s two primary local banking entities in Australia and New Zealand – Rabobank Australia Limited and Rabobank New Zealand Limited – maintained a strong capital position.
Total regulatory capital ratio – a key measure of solvency – increased to 14.38 per cent for Rabobank Australia Limited at December 31, 2016, while Rabobank New Zealand Limited’s decreased slightly to 13.57 per cent. This saw both continue to sit well above the regulatory capital requirements.
Most importantly, the majority of the total regulatory capital consists of Common Equity Tier 1 capital for both countries, Mr Knoblanche said.
He said RANZG’s Country Banking division (including the bank’s specialist online retail savings business RaboDirect) had grown strongly against significant competition in 2016, with the division’s revenue improving by 4.5 per cent on the previous year.
RANZG’s total retail deposits – including RaboDirect – reached $16.9 billion, a 9.7 per cent increase on the previous year.
The bank’s Wholesale Banking division saw revenue decline in 2016 by -6.3 per cent – impacted by subdued market conditions and margin pressures due to surplus liquidity in the corporate banking market.
Mr Knoblanche said all profits earned and deposits raised by Rabobank Australia & New Zealand Group were retained and reinvested in the local rural and corporate agricultural markets in Australia and New Zealand.
The local Rabobank Australia & New Zealand results follow the announcement from global parent, Rabobank Group, of a net profit of EUR2.0 billion (an 8.6 per cent decline compared with 2015). The Group’s Common Equity Tier 1 capital ratio and total capital ratio – key measures of solvency – continued to strengthen to 14.0 per cent (compared with 13.5 per cent in 2015) and 25.0 per cent (compared with 23.2 per cent in 2105) respectively, while the leverage ratio rose to 5.5 per cent (5.1 per cent in 2015 was). The liquidity position remained strong, with the total liquidity buffer increasing to EUR 103 billion (2015 was 98 billion).
Mr Knoblanche said RANZG had an overall positive outlook on the year ahead in Australian and New Zealand agriculture.
“The bank’s view is that there is generally an optimistic outlook for most agricultural commodities which should flow through into a strong and profitable sector in the year ahead,” he said. “There are a number of factors which are positioned in favour of agriculture and agribusiness for the year ahead, including the projected rise in global economic growth, generally high farmgate prices for a number of commodities important to Australia and New Zealand, including livestock and wool, plus what is shaping up to be good seasonal conditions in many parts of both countries.
“For dairy, which has been particularly challenged in the past few years, the recovery in global commodity prices is expected to start flowing through to the farmgate in Australia and New Zealand in 2017/2018. And we are well positioned to support clients in that recovery phase.
“Grains remain the exception in terms of positive price outlook, with the sector still weighed down by large global supply.
“On farm across the board though, confidence levels are generally strong among producers and their investment intentions are increasing.”
Rabobank Australia & New Zealand Group is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has nearly 120 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 40 countries, servicing the needs of approximately 8.6 million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 94 branches throughout Australia and New Zealand.
Media contacts:
Denise Shaw
Head of Media Relations
Rabobank Australia & New Zealand
Phone: 02 8115 2744 or 0439 603 525
Email: denise.shaw@rabobank.com
Skye Ward
Media Relations Manager
Rabobank Australia
Phone: 02 4855 1111 or 0418 216 103
Email: skye.ward@rabobank.com