ABN AMRO reports net profit of EUR 1,160 million over 2013 and a net loss of EUR 47 million for Q4 2013.
Net profit over 2013 of EUR 1,160 million included a number of large releases on loan impairments
The cost/income ratio over 2013 suffered mainly from higher pension costs and amounted to 65%
A EUR 47 million net loss was reported over Q4 2013 due to the bank tax (EUR 106 million) and high loan impairments (EUR 555 million)
The core Tier 1 ratio improved further to 14.4%. The Tier 1 ratio was 15.3% and the total capital ratio 20.2%
A final dividend of EUR 200 million will be proposed, bringing the total dividend for 2013 to EUR 350 million
Gerrit Zalm, Chairman of ABN AMRO Group, comments:
"Net profit over 2013 amounted to EUR 1,160 million. This result was positively impacted by sizeable releases on our Madoff and former Greek files. Adjusting for these and other special items, net profit came to EUR 752 million yielding a return on equity of 5.5%, which declined mainly as a result of high impairment charges of EUR 1.7 billion and higher pension costs.
All in all, it has been a difficult year which has led to a modest result for ABN AMRO. We ended 2013 with a loss-making quarter as significant impairment charges were taken and the bank tax was paid. We are predominantly exposed to the Dutch economy, where domestic spending has declined since 2008. In particular, SMEs with a domestic focus have felt the effects of lower domestic spending and the number of businesses in our portfolio that are suffering from financial difficulties was at elevated levels. Our levels of provisioning for commercial real estate were confirmed by the DNB to be adequate. The review it recently performed on this portfolio, which also looked at RWA levels, was positive.
In terms of the individual business segments, Retail Banking performed well and Private Banking performed as expected. Commercial Banking posted a small loss over 2013 due to high loan impairments, although this business has made good progress on improving efficiency over the past two years. Within Merchant Banking, the Markets division posted a loss. We are currently conducting a strategic review of this division with a view to improving results.
We expect that 2013 was the bottom of the economic cycle. Looking ahead, we see signs of an improving housing market, with prices stabilising and mortgage applications on the rise. Sentiment improved over the course of 2013, with the Purchasing Managers’ Index rising and consumer confidence moving towards the long-term average. GDP declined last year, although Q4 showed positive growth. In line with this development we expect GDP to grow again in 2014. However, even if the economy does turn the corner, impairments are expected to remain elevated in 2014."