The private banking unit of Dutch lender ABN Amro has reported an underlying profit of €30m for the fourth quarter of 2017, a slump of 38% compared to €49m in the year ago quarter.
The bank said that the decline in profit was mainly due to goodwill impairment.
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The unit’s operating profit before tax for the quarter ended 31 December 2017 was €37m, down 32% from €54m in the corresponding year ago period.
Compared to last year, the unit’s operating income dropped 3% to €328m and net interest income dipped 2% to €166m. The division’s operating expenses rose 4% year-on-year to €287m.
The cost/income ratio of the private banking arm was 87.6%, as against 82.1% in the previous year.
Client assets at the end of December 2017 totalled €201bn, with €1.7bn of net new assets.
Overall, the banking group posted underlying profit of €542m for the fourth quarter of 2017, a 63% jump compared to €333m a year earlier. The group attributed the rise in profit to higher operating income, a lower cost base and net impairment releases.
ABN Amro CEO Kees van Dijkhuizen said: “The Q4 2017 result was solid, with a net profit of EUR 542 million. Net interest income remained robust, despite the challenging interest rate environment, and loan impairment releases were recorded. The full -year 2017 profit of €2,791m benefited from a gain on the sale of Private Banking Asia and impairment releases. All major loan books (mortgage, commercial and corporate) grew in 2017 and the underlying cost trend is benefiting from cost savings and the IT transformation programme.
“Excluding the gain on Private Banking Asia, the cost/income ratio would be 61.2% (target is 56- 58% by 2020) and the return on equity, helped by impairment releases, 13.4% (target is 10- 13%). Our capital position remained strong with a fully -loaded CET1 ratio of 17. 7% at year -end 2017. So all in all, good progress was made on our financial targets.”
