ABN Amro profit beats estimates on fees, bad loan provisions

[AMSTERDAM] ABN Amro Bank reported first-quarter profit that beat expectations after higher fees and lower-than-forecast provisions for souring loans helped offset the effect of declining interest rates.

Profit at the Amsterdam-headquartered bank came in at 619 million euros (S$902.8 million) for the three months through March, compared with the analyst estimate of 543 million euros in a Bloomberg survey. Fee income grew 8 per cent due to higher assets under management and increased trading volumes that drove income from clearing, better than estimated.

“Fee growth is continuing, and the business momentum is good,” chief financial officer Ferdinand Vaandrager said in an interview. 

The results are the first to be presented by Marguerite Berard, a former BNP Paribas executive who was named to the bank’s top role last month. She takes over the reins as the continent’s banks grapple with the European Central Bank’s interest rate cuts and the potential economic fallout of tariffs. 

ABN Amro is also working on containing expenses arising out of an increase in staff it had brought in to boost data capabilities and for regulatory programmes over the past year. In April, the firm imposed a hiring freeze to help achieve cost targets.

“After a few quarters of rising costs, we managed to reduce our underlying costs” in the first quarter compared with the previous three months, Berard said in a statement. “To deliver on our guidance of keeping underlying costs broadly flat compared with last year, cost discipline remains a priority,” she said.

The firm forecasts costs of between 5.3 billion euros to 5.4 billion euros this year and reiterated its outlook for net interest income.

Berard is set to lead a review of the bank’s activities to improve profitability, with ABN Amro’s next strategic plan due to be presented at a capital markets day in November. This comes as the Dutch government, which is the lender’s largest shareholder since its bailout, is in the midst of reducing its stake to about 30 per cent. 

ABN Amro has previously said it will provide an update on a potential share buyback along with second-quarter results. BLOOMBERG