Pretax profit at Rabobank's Irish unit down almost 41%

RABOBANK IRELAND, the Irish operation of Dutch financial group Rabobank, saw profits fall in 2009, largely due to an increase in impairment provisions in the year.

It recorded a profit of € 26.3 million before taxation for 2009, down almost 41 per cent on 2008, having increased its provisions for impairment, up by 81 per cent to €31.2 million, in respect of loans and advances to customers currently in default. This provision is based on the discounted cash flows expected.

The bank, which concentrates on the areas of treasury management, structured finance, corporate lending and management services, and operates from the IFSC, also saw its balance sheet fall significantly during the year, down by € 5.5 billion to € 14.6 billion. It attributed this decline mainly to reduced activity with other Rabobank group entities.

The bank also suffered a significant decline in interest income, down by almost 70 per cent to €263.6 million for 2009, while it also incurred a loss in its net trading income of € 8 million, compared to a gain of € 3.2 million in 2008.

Operating income at the bank remained steady, at € 72.3 million, compared to € 76.8 million for 2008, while it also boosted its Tier 1 capital, up to € 725.9 million, and therefore its regulatory capital ratio to 24.2 per cent – far in excess of the Financial Regulators minimum requirement of 8 per cent.

Operating expenses declined slightly, down from €15.3 million in 2008 to €14.8 million in 2009.

The bank employs 78 people, an increase of one on 2008, while staff costs were also up in 2009, increasing by € 790,000 to € 8.4 million.

Rabobank’s other Irish subsidiary, ACCBank, as previously reported made losses of €394 million last year, which the bank attributed to the “unprecedented fall in Irish property values”.

As part of its plans to reduce its workforce and branch network, ACC took an exceptional charge of €38 million last year

Fees to non-executive directors at the bank fell by 11.7 per cent down to € 53,000, but other benefits for executive directors increased by 55 per cent per cent to € 794,000, while their pension costs increased almost five-fold to €173,000.