Dutch bank ABN Amro beats profit expectations after smaller rise in bad loans
ABN Amro reported expectation-beating results, despite posting a 46 per cent drop in third quarter profit as losses on bad loans due to the Covid-19 pandemic rose less than expected.
The Dutch lender posted a net profit of €301m (£268m) for the three months to September, beating bank-compiled analyst forecasts of €111m, but almost half the €558m profit posted for the same period last year.
Loan impairments jumped to €270m from €112m a year earlier amid the coronavirus crisis, but the figure was significantly less than the half-billion euros hit predicted by analysts for the quarter.
“While impairments were lower than in prior quarters, we remain cautious,” chief executive Robert Swaak said.
Swaak added that the third quarter results showed “good operational performance and moderating impairments under challenging circumstances”.
ABN Amro lowered its forecast for full-year write-offs to around €2.5bn from €3bn. Write-offs at its corporate bank hit €1.4bn in the first half of the year, as oil and gas sector loans soured and Asian clients got into trouble.
The bank’s cost/income ratio for the quarter was 61.5 per cent, while its return on equity was 5.6 per cent.
Net profit in the third quarter was helped by a book gain on the sale of ABN’s office building in Paris, which was partly offset by costs for the wind-down of its corporate bank activities.
ABN Amro said in August it would end all trade and commodity financing after a series of losses, exiting the United States, Asia, Australia and Brazil, except for clearing operations.