Wednesday 11 November 2020 7:27 am

Dutch bank ABN Amro beats profit expectations after smaller rise in bad loans

ABN Amro reported expectation-beating results, despite posting a 46 per cent drop in third quarter profit as losses on bad loans due to the Covid-19 pandemic rose less than expected. 

The Dutch lender posted a net profit of €301m (£268m) for the three months to September, beating bank-compiled analyst forecasts of €111m, but almost half the €558m profit posted for the same period last year. 

Loan impairments jumped to €270m from €112m a year earlier amid the coronavirus crisis, but the figure was significantly less than the half-billion euros hit predicted by analysts for the quarter.

“While impairments were lower than in prior quarters, we remain cautious,” chief executive Robert Swaak said. 

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Swaak added that the third quarter results showed “good operational performance and moderating impairments under challenging circumstances”.

ABN Amro lowered its forecast for full-year write-offs to around €2.5bn from €3bn. Write-offs at its corporate bank hit €1.4bn in the first half of the year, as oil and gas sector loans soured and Asian clients got into trouble.

The bank’s cost/income ratio for the quarter was 61.5 per cent, while its return on equity was 5.6 per cent.

Net profit in the third quarter was helped by a book gain on the sale of ABN’s office building in Paris, which was partly offset by costs for the wind-down of its corporate bank activities.

ABN Amro said in August it would end all trade and commodity financing after a series of losses, exiting the United States, Asia, Australia and Brazil, except for clearing operations.