Agribusiness banking specialist Rabobank New Zealand Limited (RNZL) recorded a solid performance in 2016, reporting a net profit after tax (NPAT) of $89.5 million for the year.
RNZL chief executive officer Daryl Johnson said the results reflected healthy business performance in what had been an especially challenging year for the New Zealand agricultural sector, particularly in dairy. He said the bank was in a strong position to continue to grow its business and support the country’s food and agribusiness producers as the sector recovered.
Mr Johnson said while RNZL’s 2016 NPAT was down on the $104 million in 2015, it demonstrated a very strong achievement in last year’s market conditions.
“The bank’s lending portfolio remains in good shape and the 2016 result was achieved due to a combination of net lending growth, a lift in income and modest growth in costs,” he said.
Mr Johnson said the bank achieved a record gross result, however increases in provision levels saw the NPAT drop in comparison with the previous year.
“Given the challenging dairy industry conditions experienced in recent seasons, it was prudent to increase provisions to $15.1 million in 2016,” he said. “This represented a significant increase on 2015 provisioning levels – when low collective provisions and a number of specific loan provision recoveries had resulted in an overall net recovery of provisions. This increase in provisions was the principal contributor to the fall in NPAT in comparison with 2015.”
Mr Johnson said the bank’s 2016 net lending growth of $209 million was down on the prior year but reflective of the slowdown in the overall agricultural sector debt growth rate, which fell to 4.2 per cent from 8.6 per cent in 2015.
“The net lending growth in 2016 represented a 3.1 per cent increase to our portfolio and gave RNZL an overall agricultural debt market share of 15.2 per cent. Our portfolio growth over the past several years has closely mirrored that of the overall market and, as a result, our market share has remained relatively stable during this period,” he said.
“We are comfortable with this level of growth which illustrates our consistent approach to supporting operators in the food and agribusiness sector, whilst at the same time maintaining high credit standards.”
Mr Johnson said the outlook for the majority of New Zealand’s key agricultural sectors was positive and the bank expected business growth to continue in 2017.
“The bank has adhered strictly to our risk principles and as a result we are well positioned to support our clients who are wishing to expand as well as exploring opportunities to bring on good quality new business."
In addition to its sound financial results, Rabobank New Zealand again recorded excellent client satisfaction in its core rural banking market, measured independently by Research Consultancy TNS*.
Mr Johnson said RNZL continued to retain all profits to bolster its already-strong capital ratio and to reinvest for further sustainable growth in the food and agribusiness market in New Zealand.
“At the conclusion of 2016, RNZL’s total capital ratio was sitting at 13.57 per cent following reinvestment of earnings. This strong ratio allows plenty of room for continued growth in the coming years,” he said.
RNZL maintained a robust liquidity position, Mr Johnson said, with further strengthening of its core funding ratio. “The core funding ratio was maintained well in excess of minimum regulatory levels – from reinvestment of earnings, retail deposit levels being maintained and increase in long-term wholesale funding.”
Rabobank’s specialist online retail savings business RaboDirect continued to grow its deposit portfolio, recording $145 million of deposit growth in 2016. Much of this growth came in the second half of the year following the successful launch of the 60 day notice saver product in August. RaboDirect’s net promoter score (NPS) – a key indicator of customer satisfaction – continued to track at record high levels, driven largely through the excellent service provided by the RaboDirect call centre.
* TNS 2016 Brand Health Survey
Rabobank New Zealand is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 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 about 10 million clients worldwide through a network of close to 1000 offices and branches. Rabobank New Zealand is one of the country's leading agricultural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 32 offices throughout New Zealand.
Media contacts:
David Johnston
Media Relations Manager
Rabobank New Zealand
Phone: 04 819 2711 or 027 477 8153
Email: david.johnston@rabobank.com
Denise Shaw
Head of Media Relations
Rabobank Australia & New Zealand
Phone: +612 8115 2744 or +61 2 439 603 525
Email: denise.shaw@rabobank.com