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ABN Amro shares fall more than 6% after fourth-quarter profit misses forecast

Reuters with CNBC.com
Key Points
  • Clifford Abrahams, chief financial officer of ABN Amro told CNBC: "Q4 was operationally solid and steady...But we had a couple of specific items in Q4, we had some expenses and elevated impairments."
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ABN Amro resilient to market volatility, CFO says

Dutch bank ABN Amro on Wednesday missed analysts' expectations with a 42 percent fall in fourth-quarter net profit as loan impairments increased.

Net profit was 316 million euros ($358.2 million), compared with 542 million euros profit a year earlier, and an average expectations of 446 million euros in a Reuters poll of analysts.

Clifford Abrahams, chief financial officer of ABN Amro told CNBC Wednesday: "Q4 was operationally solid and steady...But we had a couple of specific items in Q4, we had some expenses and elevated impairments."

"But for the year as a whole, the bank is in good shape and you see we posted an ROE (return on equity) of 11 percent and we are confirming our guidance for 2019," he added.

Shares tanked to the bottom of the European benchmark shortly after the open, down by more than 6 percent.

Loan impairments soarded to 208 million euros from 34 million a year earlier, as shipping, oil services, jewellery and some other sectors continued to struggle despite a strong recovery in the Dutch economy and rising oil prices.

ABN Amro last year said it would limit trade and commodity finance operations in the offshore energy, diamond and shipping sectors, to improve profitability.

Net profit was also dented by 85 million euros in extra costs for the scrutiny of clients, as the bank stepped up its fight against money laundering and other criminal activities.

This followed a record $900 million fine paid by fellow Dutch bank ING Groep NV in September for failing to spot criminal activities financed through its accounts for years.

Jasper Juinen | Bloomberg | Getty Images

Outside the Netherlands, Denmark's largest bank - Danske is involved in a money laundering scandal in Estonia, and Germany's biggest, Deutsche Bank, also faces money laundering allegations.

The core capital adequacy ratio was 18.4 percent at the end of December, compared with 18.6 percent three months earlier and near the upper end of the 17.5 percent-18.5 percent range set for 2018, the bank said.

Dividend over 2018 was set at 1.45 euros per share, increasing the pay-out ratio to 62 percent of net income from 50 percent a year earlier.