ABN Amro profit exceeds estimates as provisions are kept low

[AMSTERDAM] ABN Amro NV posted stronger-than-expected profit as the Dutch bank cut costs and set aside less money to cover potential loan losses.

Net income totaled 301 million euros (S$479 million) in the third quarter, the Amsterdam-based lender said in a statement on Wednesday. That compares with an estimate of 110 million euros by analysts surveyed by Bloomberg. ABN Amro posted losses in the two previous quarters.

ABN Amro was plagued in the first half of this year by loan losses on large individual files in the corporate banking unit, resulting in a group loss for the bank. Chief executive officer (CEO) Robert Swaak announced a plan in August to cut a third of the lender's corporate banking activities.

Provisions totaled 270 million euros in the third quarter, lower than estimates of 547 million euros. Still, the CEO was cautious about the economy in the coming months.

"In mid-October, the Netherlands entered into a partial lockdown. We are therefore cautious about the outlook and concerned about the long-term impact on society," Mr Swaak said in the statement.

Net interest income was the lowest in six years at 1.47 billion euros, missing estimates. Operating costs totaled 1.36 billion euros, which was slightly better than expected. ABN Amro said its on track to meet its cost savings target for the year.

The bank plans to announce a strategic update on Nov 30. In August, it said it will stop providing corporate finance outside Europe and exit trade and commodity financing altogether, meaning as many as 800 jobs will be slashed over three to four years. Meanwhile, the lender aims to modestly grow in its corporate banking business in northwest Europe.

BLOOMBERG