ABN AMRO reports underlying net profit of EUR 1,201 million for the first nine months of 2012 and EUR 374 million for Q3
The year-to-date underlying net profit, which excludes separation and integration-related expenses, rose 22% to EUR 1,201 million
This result was driven by lower operating expenses and a decline in impairment charges, offset by higher taxes
Excluding the impact of Greek impairments (EUR 125 million release in 2012 versus EUR 500 million charge in 2011), a sharp increase in impairments was recorded compared with the first nine months of last year
The underlying cost/income ratio came to 59%, an improvement from 63% recorded over the first nine months of 2011
Underlying net profit increased 10% from Q2 to EUR 374 million in Q3, driven by a decrease in impairment charges, partly offset by a modest decline in operating result and rising taxes
Reported net profit, which includes separation and integration-related expenses, came to EUR 1,045 million year-to-date, up from EUR 810 million in 2011. Reported profit for Q3 was EUR 302 million
At 30 September 2012, the Core Tier 1 ratio was 11.4% and the Tier 1 ratio and total capital ratio were 12.2% and 17.1% respectively
Gerrit Zalm, Chairman of ABN AMRO Group, comments:
“These results are satisfactory, especially under the current economic conditions which are still far from favourable. In the Netherlands, the gross domestic product is lagging, the number of bankruptcies is rising, the job market is under pressure and the housing market is sluggish. These developments have had a marked impact on fee income and impairment levels. The year-to-date operating result improved by 5% due in part to cost control and integration benefits. The cost/income ratio for the quarter remained stable at 59% and improved 4 percentage points compared with last year. Excluding the Greek impairments the trend in impairments is upward and increased sharply compared with the first nine months of last year.
In the course of 2012, we improved our capital base both in Core Tier 1 capital and in total capital. We issued several capital instruments in order to strengthen our capital base ahead of the implementation of Basel III. I note with satisfaction that we were the first European issuer in years to execute a subordinated transaction in the Singapore dollar market and the first Dutch financial institution to issue unsecured debt in Chinese yuan. These transactions underpin the market’s confidence in the bank.
Although the first three quarters were satisfactory, the outlook for Q4 is unfavourable, as the final quarter is traditionally subject to higher impairments. In addition, the bank tax will be levied in the Netherlands for the first time: a EUR 112 million annual surcharge will be recorded, increasing our expenses and cost/income ratio. The Q4 reported profit may also be influenced by integration costs resulting from the proposed merger of our two Dutch pension funds, which targets to transfer all accrued rights in Fortis Bank Nederland Pension Fund to ABN AMRO Bank Pension Fund.”