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ABN Amro gain slides; it warns slowing growth could hit future profits

Amsterdam

ABN Amro's quarterly net profit plunged by a fifth and fell short of expectations and the Dutch bank also warned that slowing economic growth and low interest rates could hit future earnings.

CEO Kees van Dijkhuizen said the impact of those factors could become more apparent after interest income fell 6 per cent in the first three months of the year. "The Dutch economy is still doing relatively well, but growth is weakening and that will bite. We also expect interest rates to remain very low for a long time," he said on Wednesday. "We will continue our cost saving efforts, while looking for ways to increase revenues."

ABN said the fall in first quarter net profit to 478 million euros (S$733 million) was mainly due to incidental gains on equity investments made in the previous year. Analysts had forecast a figure of 500 million euros on average in a Reuters poll.

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ABN Amro, which since its bailout by the Dutch state in 2008 has refocused its operations on its domestic market, last year said it would limit trade and commodity finance operations in the offshore energy, diamond and shipping sectors, to improve profitability.

Rising regulatory fees and falling interest income pushed up ABN's cost-to-income ratio to 63.8 per cent in the quarter. Mr Van Dijkhuizen said the ratio would fall below 60 per cent in the remainder of the year, and reiterated the bank's goal of getting it down to 56-58 per cent next year.

Loan impairments, which dragged down ABN's earnings in the last three months of 2018, declined 51 per cent to 102 million euros, as the bank wound down part of its corporate banking activities. REUTERS