ABN Amro Upgrades Full-Year Net Interest Income Forecast Amid Higher Rates

2 min read | August 07, 2024 12:00 AM PDT | By Team Kalkine Media

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ABN Amro Upgrades Full-Year Net Interest Income Forecast Amid Higher Rates — Image source: Shutterstock

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Increased Forecast: ABN Amro has raised its full-year net interest income (NII) forecast to €6.4 billion, exceeding the previous estimate of €6.3 billion, following better-than-expected second-quarter results.

Positive Performance: The bank's NII for the second quarter was €1.61 billion, surpassing analysts' predictions, and net profit came in at €642 million despite a 26% decline from the previous year.

Operational Changes: ABN Amro has also implemented a new collective labour agreement, increased personnel expenses, and announced an interim dividend, while the CEO plans to step down in 2025.

Dutch lender ABN Amro on Wednesday upgraded its full-year net interest income (NII) forecast to €6.4 billion ($6.98 billion), after surpassing second-quarter expectations, which led to a 3% rise in its share price. The previous estimate of €6.3 billion was aligned with 2023 figures.

Similarly, Dutch banking peer ING raised its 2024 income forecast to over €22 billion following a strong second-quarter performance. ABN Amro's second-quarter NII exceeded forecasts, benefiting from the sustained higher interest rates that have favored its financial performance compared to other major euro zone banks and boosted its position within financial stocks.

ABN Amro's CEO, Robert Swaak, highlighted the robust performance of the Dutch economy, including a rebound in the housing market and a surge in new mortgage clients. Despite a 1% decline in second-quarter NII compared to the previous year, the result of €1.61 billion exceeded the analysts' estimate of €1.58 billion.

Net profit for the quarter was €642 million, beating expectations but showing a 26% decrease from last year. The bank's CET1 ratio, a key measure of capital adequacy, fell to 13.8%, consistent with analysts' forecasts.

In addition, ABN Amro recently negotiated a new two-year collective labour agreement with a salary increase, raising personnel costs to €659 million from €612 million the previous year. Despite this, the bank maintained its cost guidance for the year at approximately €5.3 billion.

The bank also announced an interim dividend of €0.60 per share, to be distributed on September 11. Last week, ABN Amro disclosed that CEO Robert Swaak would step down in 2025, though no successor has been named.

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