Financial Results

Quarterly Profit Affected ABN AMRO As It Pays For German Private Bank Deal; Whole-Year Results Stronger

Tom Burroughes Group Editor London 20 February 2015

Quarterly Profit Affected ABN AMRO As It Pays For German Private Bank Deal; Whole-Year Results Stronger

The firm reported a generally stronger set of results on an underlying basis at its private banking arm; acquiring a German private banking business affected figures in the short-run.

ABN AMRO, the Netherlands-headquartered group, said its private banking arm reported an underlying profit after income taxes in the fourth quarter of 2014 of €15 million ($17 million), down 46 per cent year-on-year, while its full-year 2014 profit was €150 million, up 54 per cent from the level of 2013.

The bank said net interest income in Q4 was €156 million, a rise of 12 per cent on the year; for 2014, net interest income was €597 million, up 13 per cent.

The fall in profit in the latest quarter was driven by higher operating costs and the consolidation of the German private banking activities of Credit Suisse. (To read about the bank’s strategy and acquisition of the Credit Suisse business in Germany, see this interview.)

Net fee and commission income grew by 3 per cent year-on-year to €140 million in Q4 2014. Net fees for the international activities increased mainly as a result of the acquired German activities and higher assets under management, ABN AMRO said in a statement today.

Net fees in the Netherlands declined primarily due to higher lead fees paid to retail and corporate banking for providing new prospects. The switch to an all-in fee model for investment products in the Netherlands also pushed down fee income.

Personnel expenses increased by 16 percent, or €17 million, and amounted to €123 million in Q4 2014. The increase was partly attributable to the acquired German activities. Some smaller movements in employee benefits and restructuring provisions accounted for the remainder of the increase.

Assets under management grew by €3.1 billion in the fourth quarter to €187.5 billion at 31 December 2014, with rising markets being the main cause of the increase, the bank said.

With the added costs associated with the German banking acquisition, the cost/income ratio at the private bank rose to 93 per cent at the end of last year from 77 per cent a year before, although full-year 2014 figures suggest the underlying ratio is more stable at 81 per cent, but still up from 2013 at 77 per cent.

Across all of ABN AMRO’s divisions it reported operating pre-tax profit of €567 million in Q4, a 22 per cent fall on the year and for 2014, the figure was €2.035 billion, a surge of 95 per cent from the year before.


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