Agribusiness banking specialist Rabobank has announced a strong financial performance in 2018 for its New Zealand Group, reporting a net profit after tax (NPAT) of $138 million and net lending growth of $859 million for the year.
Chief Executive Officer Todd Charteris said the results were pleasing and reflected a healthy business performance and a strong capital position in what had been a second consecutive year of broad-based profitability for New Zealand’s agricultural sector.
“We saw strong returns for agricultural producers across the dairy, sheep and beef, horticultural and viticulture sectors last year, and the majority of the bank’s food and agribusiness clients had a successful year financially in 2018,” he said.
“A further year of good returns is anticipated for agricultural producers in 2019 and the bank is very well positioned to continue to support its existing customers and to explore new lending opportunities with other leading operators across New Zealand’s food and agribusiness sector.”
Mr Charteris said Rabobank New Zealand Group’s 2018 profit result was a small lift on the NPAT of $132 million recorded in 2017, and was achieved due to a combination of strong net lending and income growth and low loan provisions.
“Our agricultural lending portfolio (inside the farm gate) grew substantially last year, increasing by $611 million and pushing the bank’s total rural portfolio up to $11 billion. This represented a 5.8 per cent lift in our rural portfolio from the previous year, with this rate of growth much higher than the 3.4 per cent growth recorded across New Zealand’s overall agricultural lending market,” he said.
“We also saw excellent growth last year in our corporate post-farm gate portfolio, which grew by $248 million.”
The Group’s impairments for 2018 were $600,000, with $35 million of provisions held against $12.14 billion of loans and advances.
“We’ve seen very low provisions over the last couple of years and, given the excellent asset quality within our portfolio and the positive outlook for New Zealand’s key agricultural sectors, we do not expect further significant provisions for the bank over the course of 2019,” Mr Charteris said.
Mr Charteris said the strong 2018 results had been achieved despite a rise in costs, with this rise primarily due to one-off projects and increased regulatory and compliance headcount.
“During 2018, Rabobank continued to invest to ensure it was adapting to the changing needs of its clients and the evolving banking environment. This included heavy investment in technology which will enable us to roll out an enhanced mobile and internet banking experience for our clients in 2019.”
Mr Charteris said the robust capital position of the global Rabobank Group and its local incorporated entity, Rabobank New Zealand Limited (RNZL), provided the New Zealand Group ample scope for further portfolio growth.
“All of RNZL’s profits are reinvested here in New Zealand to support local food and agribusiness operators,” he said. “This reinvestment of earnings saw RNZL’s total capital ratio sitting at 13.26 per cent at the conclusion of 2018, allowing plenty of room for continued growth in the coming years.
Mr Charteris said the bank’s strong capital ratio also meant it was well placed to meet proposed new capital requirements the banking sector is currently working through with the Reserve Bank.
“Like all banks we’ll need to see where the new capital requirements end up, but Rabobank supports the intent of the changes which is to ensure a strong and resilient New Zealand banking sector,” he said.
“Subject to seeing the details, we believe we are well positioned to meet the proposed capital requirements.”
During 2018, the bank’s deposits grew by $185 million, lifting the overall deposit portfolio to $4.7 billion.
“This deposit growth was achieved in an intensely competitive deposit market and ensures Rabobank continues to have a balanced funding mix,” Mr Charteris said.
Mr Charteris said Rabobank’s five regionally-based client councils around New Zealand, continued to provide a sounding board for the bank on its service offering to clients, and to assist it to invest in community initiatives relating to the client councils key focus areas – agricultural education, sustainability, farming reputation, disruption and rural health.
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