ABN Amro Bank N.V. Shares Dip

Shares of ABN Amro Bank N.V. (AS:ABNd) (VIE:ABNd) declined on Wednesday after the company postponed a decision on potential share buybacks until the second quarter of 2025.

At 4:05 am (0905 GMT), ABN AMRO Bank was trading 3.4% lower at €14.64.

Management attributed the delay to ongoing complex model updates taking longer than expected.

The bank reiterated its dividend payout ratio target of 50% of reported net profit and maintained its capital goal of achieving a Basel IV CET1 ratio of 13.5% by the end of 2026.

However, the timeline for assessing the potential for share buybacks has been delayed, affecting the current consensus forecast for a €400 million buyback in 2025. This is a reduction from previous estimates of €500 million in 2024, with analysts projecting that buybacks could boost earnings per share by 3%.

Despite the uncertainty around capital returns, ABN AMRO reported an earnings beat in Q3. Net profit surged to €651 million, well above the €528 million consensus. Underlying pre-tax profit hit €938 million, compared to market expectations of €769 million. The bank's outperformance was fueled by a €29 million release in loan loss provisions, unlike the forecasted €73 million charge, attributed to an improved mortgage model.

Net interest income exceeded estimates at €1.638 billion, and when excluding non-recurring items, NII stood at €1.628 billion, surpassing the €1.608 billion consensus. The bank benefitted from a higher treasury result, adding €40 million quarter-on-quarter.

Mortgage growth remained modest at 1%, with deposit levels steady. Management reiterated the guidance for 2024 NII to exceed €6.4 billion, aligning with market expectations. Fee income also increased by 3% quarter-on-quarter, coming in slightly above consensus, reflecting strength across all business segments.

Operating expenses matched expectations, increasing 6% year-on-year due to salary hikes. ABN reiterated its 2024 cost target of €5.3 billion, including levies.

Capital metrics showed strength, with the Basel III CET1 ratio improving to 14.1%, ahead of the 13.9% consensus, due to lower risk-weighted assets. However, the delay in buyback discussions overshadowed these positive developments.

Looking ahead, ABN’s replicating portfolio, a key driver of NII, is expected to decline. The bank forecasts a €400 million drop in portfolio income for 2025, with similar reductions anticipated through 2028. Still, treasury results and client deposit rates are expected to partly mitigate these declines. For 2025, ABN projects an NII of about €6.2 billion, slightly below the €6.322 billion consensus.

The bank reaffirmed its 2026 targets, aiming for a return on equity of 9-10%, a cost-to-income ratio of around 60%, and a through-the-cycle cost of risk at 15-20 basis points.