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ABN Amro’s quarterly profit beats estimates despite rising costs
Global Banking & Finance Review®
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AMSTERDAM (Reuters) -Dutch bank ABN Amro beat analyst expectations on Wednesday with a jump of 21% in second-quarter net profit to 475 million euros ($485 million), as the release of previous impairments offset rising costs.
AMSTERDAM (Reuters) -Dutch bank ABN Amro beat analyst expectations on Wednesday with a jump of 21% in second-quarter net profit to 475 million euros ($485 million), as the release of previous impairments offset rising costs.
Analysts in a company-compiled poll had predicted net profit of 312 million euros for April-June, down from 393 million euros a year ago.
ABN’s earnings were lifted by an economic recovery in the Netherlands, which stimulated demand for corporate and mortgage loans and improved the credit quality of existing clients.
This mitigated an 8% increase in operating expenses, driven by rising costs of anti-money laundering efforts and investments relating to regulatory changes.
Costs came in higher than analysts’ estimates, while net interest income slightly missed expectations as it dropped 3% to 1.27 billion euros.
Still, the lender said it expects net interest income to bottom out in the second half of the year as interest rates climb, leading to a total interest income of around 5.2 billion euros for the full year.
ABN, one of three dominant banks in the Netherlands, had previously guided for net interest income of around 5.1 billion euros.
ABN said the European Central Bank had approved a potential share buyback worth 250 million euros, conditional on the potential sale of shares by the Dutch state, which still holds a 56% stake.
($1=0.9793 euros)
(Reporting by Bart Meijer; Editing by Clarence Fernandez and Sherry Jacob-Phillips)
Net profit is the amount of money a company earns after all expenses, taxes, and costs have been deducted from total revenue. It is a key indicator of a company's profitability.
Operating expenses are the costs associated with running a business, excluding the costs of goods sold. These can include rent, utilities, salaries, and other day-to-day expenses.
A share buyback occurs when a company purchases its own shares from the marketplace, reducing the number of outstanding shares and often increasing the value of remaining shares.
An impairment is a reduction in the value of an asset, indicating that it is worth less than its carrying amount on the balance sheet. This can affect a company's financial performance.
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