The private banking arm of Dutch lender ABN AMRO has posted an underlying profit of EUR43m for the first quarter of 2016, down 50% compared to EUR87m in the year-ago quarter.
For the quarter ended 31 March 2016, the unit’s operating profit before tax was EUR54m, a fall of 49% from EUR106m in the corresponding quarter of 2015.
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Operating income decreased 7% to EUR318m from EUR341m in the prior year, the bank said in its earnings statement.
Net interest income increased 4% to EUR158m from EUR152m a year earlier, while net fee and commission income dipped 9% to EUR144m from EUR159m a year ago.
The division’s operating expenses increased 6% to EUR260m from EUR244m in the first quarter of 2015.
Cost/income ratio for private banking stood at 81.6%, a rise of 10.1 percentage points compared with the first quarter of 2015.
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By GlobalDataClient assets declined to EUR193.7bn at 31 March 2016 compared with EUR209bn at 31 March 2015. Net new assets (NNA) in first quarter of 2016 was EUR1.1bn negative as net outflow was recorded in the Netherlands, which was partly offset by net inflow in the international activities.
Overall, the banking group posted underlying profit of EUR475m for the first quarter of 2016, a drop of 13% from EUR543m a year ago.
ABN AMRO Group chairman of the managing board Gerrit Zalm said: "2016 got off to a challenging start due to turmoil in the financial markets, caused by concerns over the Chinese economy and initially a further decline in the oil price, combined with a further reduction in already negative interest rates. Net profit for the first quarter of 2016 was EUR 475 million, a decline of EUR 68 million compared with the same period in 2015. The first quarter of 2016 included regulatory levies of EUR 98 million compared with nil in the first quarter of 2015.
"The decline in profitability was the result of lower revenues caused by market volatility in the first two months, combined with higher operating expenses (up 8%) due to regulatory levies – all this resulted in a 31% drop in the operating result. The decline in operating profit was largely offset by a sharp decrease in loan impairments to almost nil, well below the average through-the-cycle and levels seen in the first quarter of 2015."
