Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ABN AMRO Bank NV (ABMRF, Financial) reported a strong profit of EUR690 million for Q3 2024, driven by higher net interest income, fee income, and net impairment releases.
- The bank's mortgage book showed solid growth, with production rising by 50% compared to the previous year, contributing to a net growth of EUR4 billion since January.
- ABN AMRO Bank NV (ABMRF) maintained a strong capital position with a Basel III CET1 ratio of 14.1%, well above the requirement of 11.2%.
- The bank has introduced innovative solutions such as the Call Check feature to enhance security for clients and is actively supporting clients in transitioning to sustainable business models.
- Fee income increased by 6% year-to-date, surpassing the growth ambition of 3% to 5%, with contributions from all client units.
Negative Points
- The decision to postpone the assessment of a potential share buyback to Q2 2025 due to uncertainties related to Basel IV implementation and data remediation.
- Higher costs were reported due to a new collective labor agreement and additional hiring, impacting the overall expense structure.
- The Dutch economy faces potential risks from the worsening economic outlook in Germany and geopolitical uncertainties, which could impact growth.
- The bank's corporate loan book saw a decrease in asset-based finance volumes outside the Netherlands, reflecting a capital allocation assessment.
- Net interest income (NII) is expected to face challenges due to potential ECB rate cuts and the volatility of treasury results, which could impact future earnings.
Q & A Highlights
Q: On Basel IV, we are close to its implementation. Can you provide more precise numbers, and what has surprised you in the process? Also, could the 13.5% capital target change?
A: We continue to use a rounded number for Basel IV as we complete our conversion. The process is delayed due to data remediation and model simplification. We maintain our 13.5% capital target for 2026, and any changes will be assessed in 2025.
Q: Regarding net interest income (NII), how sensitive is it to ECB rate cuts, particularly in corporate banking?
A: Both asset and liability margins are stable, with a net interest margin of 165 basis points. Treasury results are expected to be structurally higher next year, but this is not guidance. The competitive landscape for deposit rates remains unchanged.
Q: Can you explain the decision to delay the share buyback and your confidence in a buyback in 2025?
A: We have not sought regulatory approval yet due to uncertainties from data remediation and Basel IV conversion. We aim to base our capital assessment on a final Basel IV number in 2025, which will guide our decision on share buybacks.
Q: What are the main factors affecting costs in 2025, and can you maintain the EUR5.3 billion cost target?
A: The new Collective Labor Agreement (CLA) will increase costs, but we plan to absorb this within the EUR5.3 billion target. We continue to hire strategically while maintaining cost discipline.
Q: Why is ABN Amro the only bank delaying its decision on Basel IV and share buybacks?
A: The delay is due to the complexity of implementing Basel IV alongside model simplification. We are focused on simplifying our model landscape, which is a strategic priority for us.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
