ABN Amro private banking division has reported a net profit of €46m ($50m) for Q4 2019, a 31% slump compared to €67m in the same quarter of 2018.
The unit’s pre-tax profit for the three-month period ended 31 December 2019 was €66m, a decrease of 22% from €85m the prior year.
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Operating income of €302m in Q4 2019 was 1% lower than the previous year.
Net interest income dipped 9% year-on-year to €158m, which was said to be due to a low interest rate environment.
Net fee and commission income rose 8% to €132m from €121m over the period. The bank attributed the rise to higher asset management fees.
The unit’s operating expenses increased 3% to €236m on a year-on-year basis, largely due to an increase in personnel expenses.
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By GlobalDataThe performance of the unit was affected by ABN Amro’s purchase of the Belgian private banking arm of Societe Generale last year.
Moreover, in 2019, ABN Amro sold its Channel Islands operations to Butterfield.
Net inflows remained €5.7m negative, driven by the outflow of custody assets.
The private banking arm’s cost/income ratio at the end of December 2019 was 78.1%, versus 75.3% last year.
ABN Amro CEO Kees van Dijkhuizen said: “At Private Banking, the volume of client assets invested sustainably more than doubled to EUR 19 billion, one year ahead of our target.”
Group highlights
At a group level, the Dutch lender’s net profit remained flat at €316m in Q4 2019.
Operating income at the group in Q4 2019 stood at €2.1bn, down 3% from last year. Operating expenses dropped 9% to €1.38bn from €1.51bn.
The group’s CET1 ratio was 18.1% at end-December 2019, compared with 18.4% in the previous yeara.
Dijkhuizen added: “Net profit in Q4 2019 of EUR 316 million was impacted by low interest rates and high loan impairments in specific sectors at Corporate & Institutional Banking (CIB). We will continue to de-risk part of the CIB loan portfolio and will conduct a further review of CIB’s activities. Net profit for 2019 was EUR 2,046 million, resulting in an ROE of 10.0%.
“Our capital position remains strong at 18.1%, despite material add-ons anticipating TRIM and model reviews. We currently face several regulatory uncertainties and propose maintaining the dividend pay-out stable at 62% and paying a final dividend of EUR 0.68 per share, bringing the FY 2019 dividend proposal to EUR 1.28 per share.”
