ABN AMRO reports net profit of EUR 817 million for H1 2013 and EUR 402 million for Q2 2013.
Net profit for H1 2013 was EUR 817 million, a decline of 3% compared with H1 2012. The H1 2013 results benefited from two large releases on loan impairments
Excluding special items, H1 2013 net profit declined by 36% compared with last year. Top-line growth was offset by higher loan impairments and higher pension costs
Net profit for Q2 2013 amounted to EUR 402 million, 3% lower than Q1 2013 as the improved operating result was offset by higher loan impairments. The cost/income ratio for Q2 2013 was 60%
The core Tier 1 ratio improved further to 13.3%. The Tier 1 ratio was 14.2% and the total capital ratio 19.2%
Gerrit Zalm, Chairman of ABN AMRO Group, comments:
"ABN AMRO posted a net profit of EUR 817 million for the first half of 2013, down slightly from the corresponding period in 2012. Net interest income and net fee income increased by 6% and 5% respectively. Together, they represent the vast majority of our operating income and have proven to be a stable source of revenue. Sizeable releases helped our results. We managed to recoup an additional EUR 221 million after tax on our Madoff exposure, which we had prudently impaired for the full amount. Similarly, in the first quarter we had already reported a large release related to our Greek exposure.
Excluding special items, net profit for the first half of 2013 would have been EUR 510 million, 36% lower than the previous year. We are predominantly exposed to the Dutch economy and hence to the current economic downturn, which led to a sharp rise in loan impairments. Domestically-focused SMEs in particular were hit hard by the decline in consumer spending. Consumers have lower disposable income but are nonetheless increasing their savings, as evidenced by the steady rise in customer deposits. A growing number of businesses that managed to weather the decline in revenues for a number of years are now reaching the end of their reserves. We are seeing increased inflow into the Financial Restructuring & Recovery department and a higher number of write-offs. Mortgage impairment charges rose to 23 bps over the first half of the year compared with 11 bps a year ago. We expect loan impairments (excluding special items) for 2013 to rise above last year's level as the economic conditions in the Netherlands are set to remain challenging for the remainder of 2013.
Retail, Private and Commercial Banking recorded significantly higher operating results. Retail Banking’s higher operating result more than offset the increase in impairments, which was not the case for Commercial Banking. Our Merchant Banking results have been disappointing, with results across a wide range of activities lower compared with last year. The strategic decision to terminate those equity derivatives operations that are unrelated to client activities also had an adverse effect on the results, as foreseen. Despite the economic downturn, our core Tier 1 capital ratio has continued to improve and now stands at 13.3%, placing us in a solid position ahead of the introduction of Basel III."
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