ABN Amro announces 500 million euro buyback as profit jumps

ABN Amro Bank unveiled a recent share buyback with the Dutch state taking part, as a part of its deliberate promote down within the lender.

The financial institution stated it can repurchase 500 million euros (S$722.5 million) of inventory. Net revenue rose 54 per cent to 545 million euros, beating analyst expectations.

The Amsterdam-headquartered financial institution stated it expects prices, which have been greater than forecast within the fourth quarter, to rise to five.3 billion euros within the present 12 months after it added employees for tech and regulation. It additionally set a goal for return on fairness of 9 per cent to 10 per cent for 2026, considerably beneath the speed achieved final 12 months.

Some of the revenue increase within the fourth quarter got here from falling credit score provisions, a development that’s unlikely to repeat this 12 months, chief monetary officer Ferdinand Vaandrager stated on Bloomberg TV. 

Rising provisions and better prices “mean that RoE for this year will be lower,” Vaandrager stated.

The new buyback means ABN Amro joins a string of European banks which can be paying out billions of euros to shareholders to carry their low valuations after a surge in rates of interest fuelled their income. Yet with charges showing to have peaked, traders are questioning how banks can proceed to develop earnings and whether or not they face greater defaults as debtors grapple with rising prices and financial turmoil.

The Dutch authorities will obtain 200 million euros by taking part in ABN Amro’s buyback, in keeping with a separate assertion from the state’s funding car.

ABN Amro stated internet curiosity revenue, the distinction between what it earns on loans and pays for deposits, fell 4 per cent to 1.50 billion euros from a 12 months earlier. It expects the metric this 12 months to be “broadly in line” with 2023. 

The Dutch lender freed up 83 million euros it had put aside for dangerous loans, in contrast with provisions of 32 million euros a 12 months earlier.

Chief government officer Robert Swaak has pulled ABN Amro out of riskier companies to concentrate on retail and company banking, whereas additionally searching for to attract a line underneath a collection of scandals which have broken the status of Dutch banks.

“ABN Amro delivered a strong annual result,” Swaak stated within the launch. “The financial results for 2023 were marked by a further recovery of our net interest income due to interest rates turning positive, lower operating costs and impairment releases.”

ABN Amro lengthy maintained one of many highest capital ratios amongst European banks, reflecting a risk-averse strategy after the lender’s precursor needed to be rescued by the Dutch authorities within the monetary disaster.

The Dutch lender purchased again inventory for the primary time in 2022 with 500 million euros of repurchases. It carried out a second buyback of the identical dimension final 12 months. BLOOMBERG