Message from the Chairman of the Managing Board
2015 was a good year for the bank. We strengthened our relationships with our clients, and our engaged workforce moved the bank forward on various fronts while consistently maintaining its client focus. We recorded a net profit of over EUR 1.9 billion, the highest level since the new bank began operations in 2010. A milestone was our successful IPO. While writing this new chapter in our history, we worked to create long-term value for all our stakeholders.
A dynamic environment
The economic environment in the Netherlands was favourable in 2015. Growth of the Dutch economy was broad-based and picked up speed in the course of the year. The regulatory landscape, meanwhile, is dynamic and subject to constant change. As a financial institution, we provide highly detailed and wide-ranging information to the supervisory authorities and clients. This involves higher costs for us, while some regulations will open up banks to increasing competition. As regulations change, become ever more complex and multiply in number, the risk of breaching rules grows. So we will need to remain vigilant as these developments unfold. At the same time, as we work to comply with the demanding regulatory requirements, we also recognise that they are designed to create a bigger safety net and provide more transparency. We see it as part of our profession to adjust to this new regulatory environment.
Long-term stakeholder value: the heart of our story
This year ABN AMRO is taking the next step toward integrated reporting, meaning we focus more attention in this Annual Report on the bank’s future and strategy and provide more non-financial data and targets. In 2015 we regularly met with our stakeholders – clients, investors, employees, the environment and society at large – to discuss both our strategic priorities and the issues that are of material importance to them. The results of these in-depth dialogue sessions are presented in our Annual Report. The move to integrated reporting is in line with our drive to deliver long-term value to all our stakeholders.
First and foremost, we are committed to maintaining long-term relationships with our clients. One benefit of forging lasting relationships with our clients is that we understand them, their business and their industry. This is evident at our Corporate Banking business, which has reclaimed its position in the corporate market in recent years; it also made good progress this past year in delivering sector-based advice to all its clients. Corporate Banking’s industry experts understand the context in which their clients operate and use their sector expertise to proactively offer tailored advice.
In this rapidly changing digital world, we are investing in our future by enhancing our IT landscape, a process that has been gaining momentum since 2013. Among the steps we took in 2015, we installed an on-premise dedicated private cloud and migrated the first applications to this environment. Retail Banking will continue to invest in innovative ways to ensure that our mobile services – already very popular – are future-proof. Most mobile and online services of Retail Banking are also offered by Private Banking and Corporate Banking.
Our people are our future, and we continued to pursue our Top Class Employer strategy in 2015. We offer staff a rewarding workplace and an array of attractive employee benefits. The 2015 score in our Employee Engagement Survey was 76%, compared with the global financial industry’s score of 74%. We also raised our gender diversity targets: our goal is to place women in 30% of senior management positions and in 35% of upper middle-management positions by 2020 (year-end 2015: 23% and 25% respectively).
As part of our efforts to be positively recognised for our position on sustainability, we defined and published our sustainability metrics and targets. At the same time, our core business of providing finance and investment services is becoming increasingly sustainable. For instance, we apply environmental, social and governance criteria (ESG) when assessing potential investment opportunities for our clients. And we continue to endorse international standards, such as the UN Global Compact. The bank also issued a EUR 500 million five-year Green Bond in May 2015 which was chosen as SRI (Socially Responsible Investment) bond of the year at the annual IFR (International Financing Review) awards.
All business segments, meanwhile, made progress in our Reliable and Responsible Banking programme, which will help us register client data more efficiently and effectively in the years to come. All of this helps us to maintain a moderate risk profile and to avoid serving clients we do not want to serve.
Financial results for 2015
We delivered good results in 2015. The underlying net profit for full-year 2015 was EUR 1,924 million, an increase of 24% compared with full-year 2014. We achieved a cost/income ratio of 61.8% in 2015 (60.2% in 2014). We aim to get the cost/income ratio back in the 56-60% range by 2017. The ROE increased to 12.0% from 10.9% in 2014 and was within the target range of 10-13%. The capital position continued to grow and the fully-loaded CET1 ratio was 15.5%, compared with 14.1% at the end of 2014. We have increased the proposed dividend payout ratio for 2015 from 35% to 40% of the reported full-year net profit, or EUR 0.81 per share. This is EUR 764 million, of which EUR 414 million (EUR 0.44 per share) is proposed as final cash dividend.
We are grateful to our clients for doing business with us and to our employees for their willingness and ability to adapt in times of continuous change. With their commitment and determination, we are confident that the bank is equipped to take on the opportunities and challenges that will come our way in the years ahead.
This is an extract from the Message from the Chairman of the Managing Board in the 2015 Annual Report of ABN AMRO.
Read the full message (PDF 137 KB)