ABN Amro tops profit estimates in first quarter, boosting shares

By Mateusz Rabiega and Jakob Van Calster

(Reuters) - Dutch bank ABN Amro posted a smaller drop in its quarterly net profit than analysts had expected on Wednesday, sending its shares to a six-year high in early trading.

Net profit was 619 million euros ($692.7 million) in the first quarter, helped by strong income from fees and commissions and limited impairment charges. Analysts polled by the lender were expecting a profit of 586 million euros on average.

As of 0755 GMT, the shares were up 7.2%, after touching their highest price since April 2019, with J.P.Morgan analysts highlighting the potential that a share buyback could be unveiled by the next quarterly report in August.

"Next quarter, we will assess our capital position in light of a potential share buyback," finance chief Ferdinand Vaandrager told analysts.

ABN Amro's CET1 ratio - measuring a bank's liquidity to its risk exposure - rose to 14.7% from 13.8% a year earlier, above analysts' estimate of 14.2%.

Its operating costs came down 19% from the previous quarter and stood at 1.31 billion euros.

"After a few quarters of rising costs, we managed to reduce our underlying costs," CEO Marguerite Bérard said in a statement. "To deliver on our guidance of keeping (them) broadly flat compared to last year, cost discipline remains a priority."

The bank reiterated its annual cost guidance of 5.3 billion to 5.4 billion euros.

In early April, it imposed a temporary hiring freeze that applied to all of its departments, units and regions of operation.

However, its net interest income of 1.56 billion euros was slightly below analysts' expectations, hurt by margin pressure from mortgages and lower volumes of corporate loans.

While roughly stable year-on-year, the interest income declined by 109 million euros from the last quarter, as deposit margins were pushed down by declining interest rates.

The European banking sector benefited from rising interest rates during the period of high inflation, but that boost has waned after the European Central Bank cut its key rates seven times over the past year, with another cut expected in June.

($1 = 0.8937 euros)

(Reporting by Mateusz Rabiega and Jakob Van Calster in Gdansk, editing by Milla Nissi-Prussak)