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ABN Amro Q1 profit falls 8% YOY as impairment charges rise

ABN Amro Group NV reported first-quarter consolidated profit attributable to owners of the parent company of €555 million, down about 8% from €601 million under IAS 39 in the same period in 2017.

EPS for the quarter was 59 cents per share, compared to the year-ago 64 cents per share. Return on equity declined to 11.5% from 13.2%.

Net interest income rose on a yearly basis to €1.67 billion from €1.60 billion. The net interest margin came in at 166 basis points, compared to 156 basis points in the first quarter of 2017.

Net fee and commission income declined to €431 million from €452 million in the first quarter of 2017. Net trading income amounted to €37 million, compared to €99 million in the year-ago period.

Impairment charges on loans and other advances rose year over year to €208 million from €63 million. ABN Amro said the high impairments reflected provisions for specialized loans in a few specific sectors and noted that impairment provisions for offshore service and offshore shipping clients were elevated amid a continued fragile recovery in those sectors.

As of March 31, the fully loaded common equity Tier 1 ratio stood at 17.5% under IFRS 9, compared to 17.7% at 2017-end under IAS 39. ABN Amro said the ratio is in line with its 2018 CET1 capital target range of 17.5% to 18.5% under Basel III.

The bank's fully loaded CDR leverage ratio was 4.0% at the end of March, compared to 4.1% at 2017-end.

"We are on track to achieve our strategic priorities and financial targets by 2020. In the past 18 months we have realized over half of the €900 million targeted cost savings and we are confident we will achieve the remainder by 2020," CEO Kees van Dijkhuizen said.

From 2018 onward, ABN Amro has set the dividend payout ratio at 50% of sustainable profit, excluding exceptional items that significantly distort profitability.