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ABN Amro Q2 net profit up YOY to €693M

ABN Amro Bank NV reported a year-over-year increase in second-quarter attributable net profit despite extra costs for efforts to bolster its resources to detect financial crime.

The Netherlands-based lender reported net profit attributable to owners of the parent company of €693 million for the second quarter, up from the restated €684 million a year earlier.

The lender noted that the second-quarter result included a €114 million provision for the customer due diligence remediation program at its retail banking segment and a €130 million gain from the sale of 75% of mortgage administration services unit Stater NV.

"After our announcement [in the fourth quarter of 2018] on detecting financial crime, we centralized and bolstered our [customer due diligence] activities," CEO Kees van Dijkhuizen said.

"Recently, the Dutch central bank determined that we are to review all our retail clients in the Netherlands. Consequently, we will undertake further measures and extend our [customer due diligence] remediation program, for which we have made an additional provision of €114 million," van Dijkhuizen said. "The regulator is focusing on capital regulation and we expect further regulatory impact going forward."

EPS for the quarter amounted to 71 cents, unchanged from a year earlier. Return on average equity for the group was 13.6% in the period, compared to 13.5% a year earlier.

Net interest income rose on a yearly basis to €1.68 billion from €1.66 billion. The net interest margin came in at 170 basis points in the quarter, compared to 164 basis points in the second quarter of 2018.

Net fee and commission income reached €413 million, down year over year from €425 million.

Impairment charges on financial instruments declined to €129 million in the period from the year-ago €134 million.

For the first half, ABN Amro's attributable profit declined on a yearly basis to €1.17 billion from €1.27 billion. EPS for the period also decreased, to €1.19 from €1.30.

The lender's fully loaded common equity Tier 1 ratio stood at 18.0% at the end of June, unchanged from March-end and down from 18.4% at Dec. 31, 2018. The CDR leverage ratio was 4.2% at June-end, compared to 4.3% at the end of March and 4.4% at the end of 2018.

An interim dividend of 60 cents per share was set for the first half, compared to 65 cents a year ago, with the bank noting that it is in line with its dividend payout ratio of at least 50% of sustainable profit.