ABN Amro Falls as Quarterly Net Interest Income Misses Estimates

Updated on
  • Net interest income misses estimates, Kepler Cheuvreux says
  • Bank’s CET1 ratio was unchanged at 17.6% in third quarter

ABN Amro Group NV fell the most since May after the Dutch lender reported a third-quarter decline in earnings from banking and a capital ratio that fell short of estimates.

The stock dropped as much as 3.3 percent in Amsterdam trading and was down 1.8 percent as of 9:15 a.m. Net interest income declined 1 percent to 1.57 billion euros ($1.82 billion), which is about 2 percent below consensus estimates, according to a Kepler Cheuvreux note.

Chief Executive Officer Kees van Dijkhuizen has focused on lowering costs while the bank seeks to grow its domestic retail, private-banking and investment units. Expenses fell mainly due to divestments, lower markets and clearing fees, private equity results and accounting effects. Improved information technology is also helping lower costs he said.

While net income beat analyst estimates, much of the result was driven by cost cuts. Operating expenses dropped 12 percent in the third quarter from a year earlier, the Dutch state-controlled bank said in a statement on Wednesday. ABN Amro’s CET 1 ratio was 17.6 percent as of Sept. 30, unchanged from the end of June, and below consensus estimates, according to Kepler Cheuvreux.

Third-quarter net income rose to 673 million euros, from 607 million euros a year earlier. That compares with 598 million euros, the average of three analyst estimates compiled by Bloomberg. Net interest income was lower partly due to the sale of its Asian private banking unit, ABN Amro said. Excluding the sale, NII was little changed.

Selling Holding

The Dutch state has been selling down its holding in ABN Amro after floating its stock on the Amsterdam stock exchange two years ago. The Netherlands, which spent 22 billion euros in 2008 to rescue the bank after a botched takeover attempt, reduced its stake to about 56 percent with its third share sale in September. Selling the remainder may get easier after the bank said a strong Dutch economy again boosted the bank’s results.

There’s an increasing likelihood that so called Basel IV rules will come into force soon, raising capital requirements for lenders including ABN Amro, Chief Financial Officer Clifford Abrahams said in a Bloomberg TV interview. The bank is “well prepared” for any such changes, he said.

The former global banking giant was cut back to a largely domestic Dutch lender in the wake of the financial crisis and the CEO has focused on lowering costs while the bank seeks to grow its domestic retail, private-banking and investment units. The shares have climbed 23 percent since the beginning of the year, when van Dijkhuizen took over.

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