ABN AMRO posts strong Q2 profit of EUR 870 million amid higher interest rates

AMSTERDAM: ABN AMRO, a Dutch bank, has reported a net profit of EUR 870 million for the second quarter of 2023, up from EUR 393 million in the same period last year.

The bank’s return on equity (ROE) was over 16%, reflecting high net interest income (NII) and impairment releases. All client units contributed with improved net profit, the bank said in a press release.

The bank’s NII, which is the difference between interest income and interest expenses, increased by 4% year-on-year to EUR 1,622 million, benefitting from the higher interest rate environment. Fee income was stable at EUR 471 million. Operating expenses decreased by 7% year-on-year to EUR 1,283 million, mainly due to lower regulatory levies. The bank’s cost-to-income ratio improved to 51.6%, compared to 60.4% in Q2 2022.

The bank’s credit quality remained solid in Q2, with impairment releases of EUR 69 million, compared to impairment charges of EUR 703 million in Q2 2022. The bank said that the impact of the economic slowdown on its loan portfolio so far remained limited and that it expected the cost of risk for 2023 to remain well below the through-the-cycle cost of risk of around 20 basis points. The bank also said that it had buffers in place against uncertainties in the economic outlook.

The bank’s capital position remained strong, with a fully-loaded Basel III common equity tier 1 (CET1) ratio of 14.9% and a Basel IV CET1 ratio of around 16%. The bank announced an interim dividend of EUR 0.62 per share, which amounts to EUR 537 million.

Robert Swaak, CEO of ABN AMRO, commented on the results: “In the second quarter, we once again delivered a very strong financial result, driven by high net interest income and impairment releases, in an environment where macroeconomic and geopolitical uncertainty persisted. I am proud of the continued commitment we demonstrated to our clients in the past quarter.”

He also said that the bank would present its updated financial KPIs and capital framework at publication of the Q4 results. He added that the bank was facing challenges such as inflation, a tight labour market, and anti-money laundering (AML) requirements. He said that the bank was focused on cost discipline, but that it no longer expected to reach its cost target of EUR 4.7 billion in 2024.

ABN AMRO is one of the largest banks in the Netherlands and serves retail, private and corporate banking clients. The bank’s purpose is “Banking for better, for generations to come”.

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