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ABN AMRO Slides Into The Red As Impairments Jump

Tom Burroughes Group Editor 14 May 2020

ABN AMRO Slides Into The Red As Impairments Jump

Another major European bank unsurprisingly reported that rising impairments hit its bottom line.

ABN AMRO today reported that it swung into the red for the first quarter of 2020, posting a €395 million ($428.3 million) loss versus a €478 million profit a year earlier because of surging impairment charges linked to the coronavirus pandemic. The lender gave no specific details about its private banking arm that this publication was able to find.

Operating income fell by 8 per cent year-on-year to €1.924 billion, while operating costs fell by 2 per cent to €1.3 billion, the Netherlands-listed banking group said in a statement yesterday. 

The lender’s Common Equity Tier 1 ratio – a standard international yardstick of capital strength – was 17.3 per cent, narrowing from 18 per cent a year before. Its cost/income ratio fattened to 67.6 per cent from 63.8 per cent.

“At the FY 2019 results, we announced a review of Corporate & Institutional Banking’s (CIB) activities. Although in the past few years some progress has been made in improving returns, this has not resulted in the required profitability. Also, the risk profile of parts of CIB is not fully aligned with that of the bank. The ongoing CIB review is a short-term priority for me and we will share the outcome in August,” Robert Swaak, chief executive, said. 

Swaak - who’s appointment as CEO was confirmed last month - referred to the bank tightening its anti-money laundering stance, a possible reference to how the bank has been criticised in the past by authorities for inadequate controls. 

“My priorities in the coming period, in addition to the CIB review, are to navigate the COVID-19 crisis and to focus on anti-money laundering activities (AML). In addition, we will review our strategy to ensure we deliver on our three strategic pillars going forward and will provide an update after the summer, also addressing operational efficiency, financial targets and capital,” Swaak said.

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