EFTA01378332

INTERNAL USE ONLY DO NOT DISTRIBUTE IN PART OR IN WHOLE Corporate Credit > Europe Investment Grade RABOBANK NEDERLAND Updated: Oct 30, 2015 Trade Idea: Buy Investment Rationale: - Conservative business profile with pretty good financial fundamentals. Strong domestic market shares: mortgages 22%, savings 36%, SMEs 39%, food & agribusiness 85%. - Unique cross guarantee (local Rabobanks liable for each others obligations (1st level); ensures intra-group credit support (2nd level). - Rabobank released for 1H15 a strong net profit of EUR1.5bn (+41% yoy). The result was primarily based on significantly lower loan loss provisions (70% yoy) which benefited from the recovery in the Dutch economy. Loan impairment charges fell to 16bp of the average loan portfolio which compares well to a long-term average of 36bp. Operating income (-1% yoy; limited growth of the loan portfolio) and expenses (-3% yoy) declined. Fundamentals remain sound, with a fully loaded CET1 ratio of 11.8% (unchanged) and the leverage ratio estimated at 3.9%. The Gi ratio declined to 60.6% (vs. 61.7%). A LCR at 130% and a NFSR at 115% also confirm this. - Management expects a mixed picture for FY15 as a whole, with a positive economic outlook on one hand, and the belief that it will be a difficult year for some customers on the other hand. - Although the spreads recently recovered nicely there seems to be some juice left. Recommendation(s): Trade Ratings Issue Spread Cash View Horizon Ticker CPN Maturity CCY Size Yield Price ISIN S&P Moody's Entry Target Loss Outperform 12 mo RABO 3.87 07/25/202 BBB+ A3 EUR 1.000 229 209 170 225 111.11 XS0954910146 8K 5 3 • Levels as of 10/30/2015 39 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0075501 SDNY_GM_00221685 EFTA01378332