Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

ABN Amro shares fall as money-laundering provision boosts costs

Published 18/05/2022, 06:29
Updated 18/05/2022, 12:41
© Reuters. FILE PHOTO: ABN AMRO logo is seen at the headquarters in Amsterdam, Netherlands May 14, 2019.  REUTERS/Piroschka van de Wouw

© Reuters. FILE PHOTO: ABN AMRO logo is seen at the headquarters in Amsterdam, Netherlands May 14, 2019. REUTERS/Piroschka van de Wouw

By Valentine Baldassari and Elena Vardon

(Reuters) -Dutch bank ABN Amro beat first-quarter earnings expectations on Wednesday but higher-than-expected costs, including new anti-money laundering provisions, weighed on the company's shares which dropped around 10%.

The lender reported net profit of 295 million euros ($310.6 million) in the first three months of the year, topping an average analyst estimate of 259 million euros and compared to a loss of 54 million euros in the same period last year after a hefty money laundering fine.

Management said costs were higher than expected, partly due to an additional 50 million euro anti-money laundering provision but also regulatory levies and IT investments. It nevertheless reiterated its target of keeping costs under 4.7 billion euros in 2024.

"I would say that's not a smooth glide path," CEO Robert Swaak said about the cost target on a conference call. "But at this point, we see no reason to adjust the guidance."

Analysts too highlighted the higher costs with some also pointing to disappointment that the bank did not announce a share buyback scheme.

"The strong uptick in costs, higher than even the most bearish analyst in consensus, is especially worrisome. (Anti-money laundering) rearing its head again," KBC Securities analyst Thomas Couvreur wrote in a note.

Regarding share buybacks, Swaak said the group wanted to have "the visibility of full year results" to make a decision, in order to better understand the consequences of the Ukraine crisis.

Quarterly net interest income was broadly in line with expectations at 1.31 billion euros and the bank expects to hit the top end of its 5.0-5.1 billion full-year guidance range.

The results were helped by the Netherlands dropping most coronavirus restrictions, which enabled ABN to partly offset an impairment charge for the potential indirect effects of Russia's invasion of Ukraine.

The largely state-owned bank said its net impairment charge was 62 million euros in the quarter, reflecting the weakened macroeconomic outlook and potential impact from the war.

© Reuters. FILE PHOTO: ABN AMRO logo is seen at the headquarters in Amsterdam, Netherlands May 14, 2019.  REUTERS/Piroschka van de Wouw

"ABN AMRO (AS:ABNd)'s direct exposure to Russia is very limited, but we expect potential second-order effects to have an impact on our clients," Swaak said in a statement, citing higher energy and food prices, supply chain disruptions, sanctions and increased cyber-security concerns.

($1 = 0.9498 euros)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.