ABN AMRO Reports 40 Per Cent Dip In Private Banking Profit

Amisha Mehta Deputy Editor 18 August 2016

ABN AMRO Reports 40 Per Cent Dip In Private Banking Profit

The Netherlands-headquartered group, which operates in regions including Asia, saw its first-half profitability dip as volatile markets hit fees and commissions.

ABN AMRO posted a private banking profit of €96 million ($108 million) for the first half of 2016, a decline of 40 per cent year-on-year, as operating income fell 3 per cent to €660 million.

The division's operating result (operating income less operating expenses) slid by a quarter to €132 million, partly due to higher expenses, including regulatory charge, and higher loan impairments.

Client assets fell to €192.8 billion at 30 June 2016 from €199.2 billion at the start of the year.

“Uncertainty and volatility in the financial markets in H1 2016 had a negative impact on the stock markets, leading to a decline in average client assets and lower transaction volumes versus Q2 2015,” ABN AMRO said in its results statement.

The group generated a net profit of €866 million during the period, down 24 per cent from a year earlier. Its operating income was down by 3 per cent year-on-year at €4.17 billion while operating expenses jumped 5 per cent to €2.58 billion, leading to an operating result of €1.59 billion, down 13 per cent from the first half of 2015.

Although fees and commissions were negatively impacted by volatile markets, the group said costs were contained and loan impairments remained low. However, its underlying cost/income ratio rose to 61.8 per cent in the first half of this year, versus 57.4 per cent a year earlier.

To invest in growth and reach its target cost/income ratio range of 56-60 per cent by 2017, ABN AMRO aims to make €200 million of cost savings in support and control activities. A significant part of these staff and non-staff related costs will be realised next year.

ABN AMRO's common equity tier one ratio increased from 14 per cent to 16.2 per cent and the board declared an interim dividend of €0.40 per share.

It noted that its recently launched Tikkie app for sharing payments has almost 100,000 active users. Through Tikkie, which enables users to send payment requests via WhatsApp, clients can now make investment orders via their mobile banking app.

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