Financial Results

ABN AMRO Results Hit BY AML Costs

Jackie Bennion Deputy Editor 13 February 2020

ABN AMRO Results Hit BY AML Costs

Profits for 2019 are down at the Dutch bank as it works through the punitive effects of an AML investigation and putting stronger de-risk measures in place.

In 2019 earnings released yesterday, Dutch bank ABN AMRO reported net profit of €2.046 billion ($2.234 billion) down by 13 per cent for the year.

The bank said that the Q4 2019 net profit of €316 million, which was down by 43 per cent compared with Q3 the previous year but flat on the same quarter of 2018, was hampered by low interest rates and high loan impairments in sectors of its corporate and institutional banking (CIB) division.

“We will continue to de-risk part of the CIB loan portfolio and will conduct a further review of CIB’s activities,” chief executive Kees van Dijkhuizen said. The bank reported a cost/income ratio of 61 per cent for the year, in line with the Basel III capital position, and a CET1 ratio of 18.1 per cent. Its Basel IV CET1 ratio stood at over 14 per cent. Profits at the bank for 2019 delivered a return on equity of 10 per cent.

It said progress has been made on remediation and detecting financial crime activities, two areas that have notably driven up costs at the bank. Financial crime activities refer to the punitive effects of an ongoing probe into the bank’s AML oversight, also levied at other leading European banks last year. In the Dutch case, authorities have accused the state-owned bank, the country's third largest, of being too slow to report suspicious transactions or not reporting them at all over a lengthy period, in what has become a familiar pattern of inadequate controls being exerted by banks to curtail dirty money flows. This newswire reported on the issue last September.

ABN AMRO said new due diligence provisions had been reviewed by independent experts and findings shared with the Dutch regulator. Van Dijkhuiz indicated there had been no update by the Dutch public prosecutor on the investigation. “We currently face several regulatory uncertainties” and as a result “propose maintaining the dividend pay-out stable at 62 per cent and paying a final dividend of €0.68 per share, bringing the financial year 2019 dividend proposal to €1.28 per share,” he said, adding that the bank expected to complete its review of financial crime activity by 2022.

Costs being applied to weeding out money laundering would be offset by further IT savings, the bank said. As a result, it anticipates costs of "around €5.1 billion in 2020 and below €5 billion thereafter."

In private banking, the group said that the volume of client assets invested sustainably for the period more than doubled to €19 billion, a year ahead of target. “Our efforts to be a sustainable bank are reflected by our inclusion in the Dow Jones Sustainability Index, which ranks us in the top 10 per cent of most sustainable banks worldwide,” said van Dijkhuizen, who is set to depart as CEO in April. His successor has not been named.

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