By Gareth Vaughan
Specialist rural lender Rabobank New Zealand, whose credit rating was cut two notches to AA from AAA by Standard & Poor's yesterday, has recorded another strong period of lending growth.
The bank's General Disclosure Statement for the nine months to September 30 shows gross loans rose NZ$422.254 million in the three months to September 30 to NZ$7.866 billion, from NZ$7.444 billion at June 30.
Rabobank, which recently took naming rights for its new Auckland office tower headquarters, accounted for nearly 65% of new lending to the New Zealand rural sector in 2010 according to KPMG's Financial Institutions Performance Survey Review. Speaking to interest.co.nz in August Bert Bruggink, chief financial officer at parent Rabobank Nederland, acknowledged Rabobank had been lending more money to the New Zealand rural sector than other banks and said it intended to continue doing so.
Rabobank's September quarter rural lending growth appears to have accounted for a significant chunk of overall sector growth with the Reserve Bank's sector credit data showing agriculture debt up NZ$553 million to NZ$47.654 billion in the three months from June 30 to September 30.
The September quarter lending growth came as Rabobank's deposits went the other way. The bank's deposits, including through its RaboDirect business, fell NZ$295.588 million in the quarter to NZ$3.079 billion. Meanwhile, total assets rose NZ$552.833 million to NZ$7.963 billion and total liabilities rose NZ$539.247 million to NZ$7.286 billion.
Profit drops
Unaudited profit after tax more than halved at Rabobank in the September quarter to NZ$13.586 million from NZ$30.6 million in the same period last year with impairment losses on loans coming in at NZ$10.2 million compared with a gain of NZ$5.45 million in the same period last year after the bank released a NZ$9.6 million provision for risk.
Net interest income fell to NZ$50.79 million from NZ$52.83 million. Total net operating income fell NZ$2.25 million, or 4%, to NZ$51.34 million with operating expenses rising NZ$1.11 million, or 5%, to NZ$22.24 million.
Rabobank's key capital ratios both weakened. The bank's tier one capital ratio dropped to 7.31% at September 30 from 7.65% at June 30 and its total capital ratio fell to 10.96% from 11.32%. Although both remain comfortably above the Reserve Bank minimums of 4% and 8% respectively, these are set to rise to at least 8.5% and 10.5% from January 1, 2013.
Assets at least 90 days past due but not impaired rose NZ$14.3 million, or 36%, to NZ$54.090 million from NZ$39.776 million at June 30.
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10 Comments
I hold Rabobank Perpetual Capital Notes RBOHA
When purchased they were paying 9.46% now it is 3.70%
Because they are perpetual they can only be sold on the market
currently selling at 77.5 which is a loss of 21.5%
The interest paid is well below the rate of inflation not to mention the loss after paying tax.
Rabobank tells me they have $900million of these notes out
For which they loan out at market rates
I'm sure that is not 2.5 times less than when they were originally floated
Therefore they are getting a substancial return at the expense of note holders.
Rabo bank are not prepared to rectify the situation
The moral how safe is an investment with a bank with a AAA rating
Stirling, are these from the mammoth NZ$900 mln 2007 Rabobank issue? http://www.rabobank.com/content/news/news_archive/securities_offer_NZD9…
Gareth
After I contacted Rabobank I got a phone call from Sydney
I was told that the securities were part of the $900million float.
They are well aware of the injustice of the situation and the discontent of security holders
I think its now a case of individuals voicing there concern,afterall the reputation of the bank is at stake. They need to do something about this.
The question must be asked how safe is your investment in a bank with an AAA rating.
I note the securities are now trading at 77 a capital loss of 23%
Hi Stirling, I am also a holder of these Rabo bonds. I've read that Rabo have chosen to redeem them in the second call of 2035. If they chose to redeem them in the next call of 2017 then Im sure you'd see there price come back up. I think most people were sold this as a fairly safe investement, so a current price of 77 cents is a bit painful. I agree with you, I think its a case of voicing concern. Give me a email at thekiwi@suremail.info if you want to swap research :-) Thekiwi.
Everything going int the wrong direction there - profits, provisions, net interest margin, return on capital, credit rating, deposit balances.
The only think that will happen now is that their 'great rates' (previously due to being AAA) are about to increase rapidly...
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