ABN Amro Bank has announced its financial results for the third quarter, surpassing expectations with a net profit of €759 million ($812.2 million). This figure exceeded the anticipated €583 million and the previous year’s €743 million.
Positive growth in credit demand
Chief Executive Robert Swaak highlighted the bank’s robust credit demand, noting that both the mortgage and corporate loan books experienced growth during this period.
Operating income and net interest
ABN Amro Bank recorded operating income of €2.21 billion, slightly exceeding the consensus of €2.18 billion. However, net interest income fell by 5% compared to the previous quarter due to factors such as deposit migration, limited asset margin pressure, and decreased trading activities. The bank’s net interest income amounted to €1.53 billion, falling short of the expected €1.63 billion.
Impairment release
A positive development for ABN Amro Bank was the impairment release on financial instruments, totaling €21 million. This amount surpassed the consensus estimate of a €96 million charge. Primarily originating from the corporate banking division, this release was partially offset by a higher management overlay for mortgages.
With these strong quarterly results and a positive outlook, ABN Amro Bank has revised its cost guidance for 2023 downwards. This is promising news for the bank as it continues to navigate the evolving financial landscape.
Operating Expenses Decrease, but Expected to Rise in 2023
The operating expenses for the bank in question were EUR1.23 billion, which was lighter than the consensus estimate of EUR1.29 billion. Although operating expenses were 2% lower compared to the previous year, they were higher than the previous quarter due to regulatory levies.
Looking ahead, the group anticipates its costs for 2023 to be between EUR5.1 billion and EUR5.2 billion. This estimate takes into account cost control measures and delayed investments due to the tight labor market. In August, the bank revised its cost guidance to around EUR5.2 billion from an initial estimate of EUR5.3 billion, and it also abandoned its 2024 cost target of EUR4.7 billion. Swaak, a representative of the bank, explained that while they remain committed to cost discipline, they anticipate higher costs in the coming year due to data capabilities, digitalization of processes, and sustainable finance regulation.
It is important to note that 49.5% of the bank is owned by the Dutch State. The bank plans to provide updates on its financial targets and capital framework during its fourth-quarter results announcement. At the end of the third quarter, the bank’s common equity Tier 1 capital ratio, which measures its resilience, stood at 15.0%. This exceeded expectations of a 14.9% ratio.