Roadshow booklet
Q2 2024 results
Investor Relations, 07 August 2024
Key messages Q2 2024, continued strong results with 642m net profit
- Continued strong results: Net profit of 642m and a 10.8% return on equity, driven by improved net interest income and net impairment releases
- Good business momentum: Our mortgage loan book expanded by 1.6bn, continuing our market leadership into Q2, while the corporate loan book grew by 0.7bn
- Improved net interest income outlook: Benefitting from continued favourable interest rate environment, guidance for FY2024 has been adjusted upwards to above 6.4bn
- Costs remain under control: New collective labour agreement reached, starting H2 2024
- Solid credit quality: Net impairment releases of 4m, reflecting net additions for individual files offset by a decrease in the management overlays
- Strong capital position: Basel III CET1 ratio of 13.8% and Basel IV CET1 ratio of around 14%. Interim dividend has been set at 0.60 per share
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Executing on our strategy
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Customer experience |
Sustainability |
Future proof bank |
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A personal bank in the digital age, |
Distinctive expertise in supporting |
Enhance client service, |
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for the resourceful and ambitious |
clients' transition to sustainability |
compliance and efficiency |
- Creation of leading private bank in Germany with acquisition of Hauck Aufhäuser Lampe
- Reached 10 million active users of Tikkie, our app for payment requests
- New target for our lending in renewables and other decarbonisation technologies to 10bn by 2030
- 67% of our total loan portfolio covered by Climate Strategy, including additional targets for Trucks and Vans
- Launch of ABN AMRO GPT, a secure, compliant and in-house version of ChatGPT
- Secure and reliable banking services demonstrated by 'Advanced' BitSight 1) rating and almost 100% availability for online payment services
Our purpose - Banking for better for generations to come
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1) BitSight is an external, independent scanning service to provide insight into how secure and protected our digital attack surface is against cyber-attacks. With a rating of 800 out of 820, |
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ABN AMRO is industry leader in the Netherlands |
ABN AMRO outperformer in new mortgage production
ABN AMRO outperformer in new production 1)
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EUR bn |
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ABN AMRO |
Total market |
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+22% |
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+60% |
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32 |
39 |
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8 |
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5 |
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YTD2023 |
YTD2024 |
YTD2023 |
YTD2024 |
Mortgage market dynamics changing 1)
% of total application market
Main banks Other
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52% |
62% |
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48% |
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38% |
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Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
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2023 |
2024 |
• ABN AMRO outperformer in new mortgage production with a 60% increase Y-o-Y versus 22% for total new mortgage production.
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Market leader for the second consecutive quarter with a market share of 20% in Q2 |
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• Strong recovery in house prices with a growing share of first-time buyers, has contributed to strong volume growth in mortgage |
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market |
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• Outlook on housing market positive resulting in upward revision of forecast 2): |
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expected number of transactions increased to 10% from 0.5% in 2024 |
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house prices expected to increase by 7.5% from 6% in 2024 |
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• Main banks have majority of market share in mortgage application market since the beginning of 2023, with currently 62% |
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1) |
Source new production & market applications = Hypotheken Data Network (HDN); main banks are ABN AMRO, ING, Rabobank & Volksbank. New production is excluding bridge loans |
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2) |
Group economics forecast of 16 July 2024 |
Dutch economy remains relatively strong 1)
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2023 |
2024e 2025e 2026e |
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Netherlands GDP (% yoy) |
0.1% |
0.5% |
1.3% |
1.4% |
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Inflation (indexed % yoy) |
4.1% |
2.7% |
2.2% |
2.1% |
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Unemployment rate (%) |
3.5% |
3.8% |
4.0% |
4.2% |
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Eurozone GDP (% yoy) |
0.5% |
0.7% |
1.6% |
2.0% |
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Inflation (indexed % yoy) |
5.5% |
2.4% |
2.0% |
2.0% |
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Unemployment rate (%) |
6.7% |
6.5% |
6.8% |
6.4% |
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- Growth in the Netherlands expected to pick up in 2024 after slight contraction in Q1
- Growth to pick up from government spending and household consumption
- Household purchasing power to benefit from declining inflation, strong wage growth and stimulus measures as announced in new coalition agreement
Spending positive, PMI and confidence decreasing 2) Dutch bankruptcies increasing from a low base 2)
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Consumer spending (lhs) |
Consumer confidence (rhs) |
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PMI index (rhs) |
20%
10%
0%
-10%
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-20% |
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2020 |
2021 |
2022 |
2023 |
2024 |
# per quarter businesses & institutions
702500
352000
1500
0
1000
-35
500
-700 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24
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1) |
Group Economics forecast of 25 June 2024 |
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2) |
Statistics Netherlands (CBS); Cons. spending % change yoy, consumer confidence seasonally adjusted (eop), PMI is Nevi NL Manufacturing PMI (eop) expansion >0 and contraction <0 |
Growth in core client lending and client deposits
Good business momentum for client loans
EUR bn
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1.6 |
0.7 |
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-0.2 |
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238.2 |
240.3 |
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Q1 2024 |
Mortgages |
Corporate loans |
Consumer loans |
Q2 2024 |
Total client deposits increased
EUR bn
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3.0 |
0.6 |
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-1.2 |
-2.9 |
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Total client deposits up 2.4bn |
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261.3 |
260.8 |
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Q1 2024 |
Demand deposits |
Time deposits |
Current accounts |
Professional deposits |
Q2 2024 |
- Continued growth of mortgage portfolio supported by an increase in new customers; market leader in Q2 with a 20% market share
- Corporate lending up driven by growth in transition themes (New Energies, Digital and Mobility) in Northwestern Europe
- Decrease in consumer loans continued from run-off of several products and lower client demand due to stricter lending criteria
- Client deposits up, mainly demand deposits related to holiday allowances; migration from current account into higher interest-bearing products further slowed down this quarter
- Professional deposits, which are volatile, decreased in Q2 mainly at Clearing
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Net interest income guidance FY2024 increased to above 6.4bn
Underlying NII increased 1)
EUR m
1,266
1,232
1,314
1,504
1,620
1,604
1,533
1,538
1,560
1,608
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• Positive trend in underlying NII 1) continued, largely reflecting |
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improved deposit margins and growth in client lending |
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• Part of increase is not structural and related to a release |
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of part of the Euribor provision (c.10m) |
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• Margins for corporate loans improved slightly, which |
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was partly offset by limited margin pressure on |
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mortgages |
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• As a result of the higher-for-longer interest rate outlook, |
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NII for FY2024 expected to end above 6.4bn |
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Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
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2022 |
2023 |
2024 |
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• Treasury result expected to improve further in H2, offset by |
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modest margin pressure |
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1) Underlying NII excludes incidentals (release Euribor provision Q2 2022 28m; provision for revolving consumer credit Q2 2022 -110m, Q2 2023 18m and Q4 2023 -34m; positive |
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revaluation DSB claim Q1 2024 29m) and includes TLTRO benefit (Q1 2022 till Q4 2022, 44m, 41m, 44m and 60m) |
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Continuation of good fee and commission income
Fee and commission income up by c.4% Y-o-Y
EUR m
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452 |
469 |
462 |
|||||
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444 |
444 |
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442 |
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Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
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2023 |
2024 |
Underlying other income down vs. last quarter 1)
EUR m
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157 |
237 |
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78 |
85 |
139 |
124 |
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Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
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2023 |
2024 |
- After strong first quarter for Corporate Banking from good capital market fees, fees were slightly lower in Q2
- Personal & Business Banking fees were lower compared to Q1 as fees expenses for outsourced ATM services went up from seasonally larger transaction volumes
- Wealth Management fees Q-o-Q were stable
- Other income decreased versus Q1, driven by modest haircut on further sale of non-core assets and lower FV revaluations of loans with an insurance component, partly offset by higher ALM/Treasury results
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1) Underlying Other income excludes incidental related to a held for sale adjustment of 24m in Q2 2024 |
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Costs under control, FY2024 costs remain at c.5.3bn
Underlying expenses and regulatory levies 1)
EUR m
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244 |
103 |
7 |
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36 |
23 |
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1,162 |
1,165 |
1,193 |
1,278 |
1,234 |
1,255 |
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-49 |
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Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
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2023 |
2024 |
- Increase in underlying expenses in Q2 resulting from higher external staffing costs and IT costs
- Regulatory levies in Q2 only include DGS contribution for which the target size has been reached
- In H2 2024 costs expected to increase from new CLA 2), digitalisation and upscaling of resources for data capabilities and regulatory programs
- Impact CLA in H2 2024 c.100m from salary increase and accrual for annual reward premium (to be paid in 2025)
- FY2024 cost expectation remains at c.5.3bn including regulatory levies
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Underlying expenses |
Regulatory levies |
• For FY2025 an additional CLA impact of c.20m as further |
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salary increase and reward premium are partly offset by |
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a decrease in pension premium from 37% to 30% |
- Underlying expenses exclude incidentals related to handling costs revolving consumer credit of 20m in Q2 2023 and goodwill impairments of 81m in Q4 2023
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2) CLA only for NL with a structural salary increases of 6% from 01/07/2024 and 3.75% from 01/07/2025; additional individual annual reward premium up to 5% |
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Credit quality remains solid, non-performing loans stable
Impaired ratio stable at 1.9%
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Stage 3 loans |
Stage 3 |
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(EUR m) |
coverage ratio |
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Q2 2024 Q1 2024 |
Q2 2024 Q1 2024 |
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Mortgages |
1,360 |
1,316 |
8.9% |
9.4% |
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Corporate loans |
3,251 |
3,276 |
25.16% |
25.6% |
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Consumer loans |
249 |
243 |
46.0% |
47.1% |
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Total |
4,867 |
4,841 |
21.7% |
22.3% |
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Impaired ratio (stage 3) |
1.9% |
1.9% |
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Impairment releases in Q2
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14 |
Impairments (in EUR m) |
CoR (in bps) |
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3 |
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-21 |
-4 |
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-69 |
-83 |
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Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
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2023 |
2024 |
- Impaired ratio stable at 1.9% and stage 3 coverage ratio slightly lower, largely related to write-offs
- Net new inflow for new and existing clients was more than offset by a decrease in management overlays, mainly for products in run- off, resulting in impairment releases in Q2
- Management overlays currently c.230m of which c.40% is related to geopolitical uncertainties
- Credit quality remains solid, FY2024 CoR expected well below through the cycle Cost of Risk of 15-20bps
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Attachments
Disclaimer
ABN Amro Bank NV published this content on 07 August 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 August 2024 14:11:41 UTC.