ABN Amro Quarterly Profit Rises 11% on Greek Provision

ABN Amro Group NV, the state-owned Dutch lender preparing to sell shares to the public, said third-quarter profit rose 11 percent after releasing a provision set aside for Greek loans.

Net income rose to 390 million euros ($525 million) from 351 million euros a year-earlier, the Amsterdam-based company said in a statement today. The earnings were boosted by the release of 101 million euros from a provision for Greek government-guaranteed loans.

The Netherlands said in August that it plans to sell ABN Amro Group in an initial public offering in 2015. The sale of the company, formed after the collapse of Fortis in 2008, will depend on economic recovery, as well as its ability to reduce costs and bolster earnings at private, commercial and merchant banking units, the government says.

“A number of economic indicators seem to point to a bottoming out of the downturn,” Chairman Gerrit Zalm said in the statement. “We are, however, still very cautious.”

Third-quarter operating income rose to 731 million euros from 708 million euros a year earlier as net interest income increased 5.4 percent to 1.33 billion euros. The bank will pay 150 million euros in interim dividends to the Dutch state, it said today.

The Dutch economy emerged from a year-long recession in the third quarter, as investments rose and annual exports benefited from a nascent recovery in the 17-nation euro region, national statistics bureau CBS said yesterday. Household consumption fell 2.3 percent in the third quarter compared with the year-earlier period, while there were 160,000 fewer jobs.

Bad Debt

ABN Amro, which gets more than 80 percent of operating income from the Netherlands, said it expects provisions for non-performing loans to rise in the fourth quarter compared with the third, when it set aside 347 million euros excluding the Greek loan release.

The company has set a goal of reducing the cost-to-income ratio to 56 percent to 60 percent by 2017 from 63 percent in the first nine months of this year. It’s also seeking return on equity of 9 percent to 12 percent by then, compared with 8 percent excluding one-time items in the first nine months.

ABN Amro, the third-biggest Dutch bank, was formed after the Netherlands took over the Dutch banking and insurance units of Fortis, which had joined a 71.9 billion-euro takeover of ABN Amro Holding NV with Royal Bank of Scotland Group Plc and Banco Santander SA (SAN) in 2007.

To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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