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ABN Amro Profits Slumps as Low Rates, Brexit Weigh on Lending

ABN Amro posted a worse-than-expected 20% decline in first-quarter profit.

Article originally published by Bloomberg. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

ABN Amro posted a worse-than-expected 20% decline in first-quarter profit as negative interest rates in Europe and Brexit preparations weighed on income from lending.

Net income fell to 478 million euros from 595 million euros a year earlier, the company said Wednesday. Analysts polled by the bank had expected a profit of 499 million euros. Income from lending was impacted by 40 million euros from increasing non-euro funding in preparation for Brexit.

Key Insights

  • Net interest income, by far the largest source of earnings, fell to 6%, highlighting the impact of the low interest rate environment and competition from new players in the Dutch mortgage market.
  • The cost-to-income ratio worsened to 64% from 58% a year earlier. Costs have been rising as the bank steps up compliance and controls following money laundering scandals that engulfed much of Europe‚Äôs financial industry.
  • The bank, still part-owned by the government following a bailout after the financial crisis, has refocused on traditional lending, but growth is hard to come by amid competition and low interest rates.
  • The CET 1 ratio declined to 18% from 18.4% in the previous quarter. The bank still has one of the highest capital buffers in Europe.

This article was written by Ruben Munsterman from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Article originally published by Bloomberg. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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