Rabobank: Navigating the Crisis, But Profit Targets Remain Elusive
Rabobank reported a 2020 net profit of EUR 1.1 billion, down 50% Year-on-Year (YoY) reflecting the impact of the COVID-19 pandemic, as loan loss provisions doubled to EUR 1.9 billion and income declined by 8% to EUR 10.8 billion. Results included exceptional items of EUR - 402 million compared to EUR - 253 million in the previous year, when the Bank benefitted from the sale of its foreign retail operations (RNA). On a like-for-like basis (excluding RNA's contribution in 2019 and other exceptional items in 2019 and 2020) total income was down by 3.5% YoY. The Bank's return on equity (ROE) for 2020 was 2.7% and the cost-to-income ratio (CIR) was 65.8% compared to an ambition of 6-7% and low 60% respectively. After last year announcing a downwards revision of its 2022 profitability target, the Bank has now adjusted the time horizon to 2024 in order to meet these goals, reflecting our view, that it will be challenging to improve profitability in the current difficult operating environment.
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