Supervision Levy affected quarterly profit at ABN Amro – Financieele Dagblad

Supervision taxes and an increase have pitted the provision for SME clients with interest rate derivatives on net income of ABN Amro over the last quarter of 2015. Subject to the line remained about € 272 million, down 32% from the previous quarter. The supervision charges (bank tax, resolution funds and deposit guarantee scheme) totaled € 190 million. The expansion of the derivative file is not specified. Revenues fell due to lower interest income by 4% to € 2.1 billion

Content

Chairman Gerrit Zalm nevertheless expressed satisfaction over the past year. Positives were an improved margin on the loan portfolio .. Provisions for bad loans fell by more than half to € 505 million, reflecting the economic recovery begun last year in the Netherlands. Fluctuations in the last quarter were in energy prices, but a limited effect on the results of ABN Amro. Risk costs for the division ECT increased by half a percentage point. The bank devotes to the limited impact the choice especially not to provide subordinated loans with collateral and funding on an accrual basis so that adjustments can be made in time. However, customers in this sector are sharply monitored.

Derivatives

the bank found itself in the fourth quarter forced to increase the supply of SME clients with an interest rate derivative. That is the direct result of a finding of regulator AFM that the reassessments of these files had to be edited. ABN said to be in talks with the regulator about the consequences of a re-evaluation process. The costs were 8% over the year by high investments in IT and digitization of records and higher pension costs. The ‘ever-changing demands of the regulators’ drove the burden. That came on top of the supervision duties.

Net profit for the year amounted to €

1.9 billion. The bank is on track with the targets issued for the IPO. The return on equity is 10.9% just within the range of 10-13%. Equity of 15%, well above the statutory requirements. Only the so-called leverage ratio (debt to equity) is 3.8%, still below the target of 4% by this government. In Europe, moreover, a sufficient standard of 3%. The costs are at 61.8%, slightly above the self-imposed ceiling of 60%. The Bank’s dividend for the whole of 2015 amounted to € 0.81 per share

Risks

For this year, the bank calls the long-term bond yields and increasing competition from insurers in the mortgage market as a major risk, in addition to the regulations. “One thing we know for sure. The legal fees will continue to increase in 2016 “, says CEO Gerrit Zalm.

Consumer Bank

quarterly profit of consumententak was 5% lower at € 227 million. This was due to provisions for legal claims, including Euribor mortgages. Margins on mortgages for individuals improved thanks herprijzingen. Mortgages before the crisis, low margins and are now closed. The effect was somewhat offset by lower selling mortgages.

Companies Bank

the bedrijventak kwrtaalwinst saw a 49% decrease to € 151 million by raising the supply of SME derivatives and by compulsory statutory levies. Interest income remained unchanged at € 545 million, while commission income rose by 6% to € 186 million.