ABN AMRO reports net profit of EUR 415 million for first quarter of 2013.
Net profit for Q1 2013 was 17% lower than the Q1 2012 net profit of EUR 503 million, but significantly higher compared with the loss of EUR 38 million in Q4 2012
Excluding large items, net profit was under pressure year-on-year as non-interest income was lower and loan impairments further increased, driven by continued weak economic conditions in the Netherlands
The cost/income ratio was 68%, up from 57% in Q1 2012 and down from 79% in Q4 2012. Excluding large items and the bank tax, the cost/income ratio would have been 64%, 57% and 61% respectively
The core Tier 1 ratio was 11.6%, the Tier 1 ratio 12.4% and the total capital ratio 17.4%
Gerrit Zalm, Chairman of ABN AMRO Group, comments:
"The first quarter of 2013 can be qualified as a difficult quarter. The Dutch economy has not recovered and both the number of bankruptcies and unemployment levels continued to rise. Although the net profit of EUR 415 million is a good result at first glance under these circumstances, the development of net profit was affected by several large items. Excluding these large items, which include Greek exposures, a net profit of EUR 290 million would have remained. This is a EUR 185 million decline compared with Q1 2012, but an increase of EUR 173 million compared with Q4 2012. Given the current economic conditions and excluding large items, the profitability of Retail Banking, Private Banking and Commercial Banking held up well, whereas Merchant Banking posted a sharp decline in profit.
Net interest income and net fee and commission income increased both year-on-year and quarter-on-quarter. The deterioration of the cost/income ratio to 68% was caused by the decline in other non-interest income and higher pension expenses. Large items had a negative impact of approximately 4 percentage points on the Q1 2013 cost/income ratio. Loan impairments for SMEs and retail clients (both the mortgage and consumer loan books) reflect the weak economic conditions and the rise in the unemployment level in the Netherlands. The increase in loan impairments was more than offset by the release of the impairment allowance for our Greek government-guaranteed exposures following the sale of a second tranche of these exposures.
As unemployment is still on the rise and no economic growth in the Netherlands is expected for 2013, we remain cautious for the remainder of the year."