ABN AMRO said that the net loss in Q1 2020 is due to high impairments of €1.11bn caused by the prevailing Covid-19 crisis, low oil prices, and market developments
ABN AMRO net loss in Q1 2020 driven by high impairments of €1.11bn. (Credit: ABN AMRO Bank N.V.)
ABN AMRO has reported a net loss of €395m for the first quarter of 2020, compared to €478m net profit in the first quarter of 2019.
The Dutch banking group said that the net loss in Q1 2020 is due to high impairments of €1.11bn caused by the prevailing Covid-19 crisis, low oil prices, and market developments. In the first quarter of 2019, the impairment charges on financial instruments were €102m.
ABN AMRO reported a net profit after tax of €316m in the fourth quarter of 2019 after recording impairment charges of €314m.
The earnings per share in Q1 2020 came down from €0.48 in Q1 2019 to -€0.45.
ABN AMRO’s operating income was down by 8% to €1.92bn in the reported quarter compared to €2.08bn earned in Q1 2019.
The banking group’s net interest income decreased by 3% to €1.52bn in Q1 2020 compared to €1.57bn in the year before quarter. The decline was primarily due to deposit margin pressure caused by the continued low interest rate environment, said the Dutch bank.
ABN AMRO brought down its operating expenses in the first quarter of 2020 by 2% to €1.3bn compared to €1.32bn reported in Q1 2019.
The retail banking unit of the Dutch banking group had a 10% drop to its Q1 2020 net interest income at €678m, while the profit after tax fell 43% to €150m, in comparison to the same quarter the year before.
ABN AMRO’s commercial banking business had a 4% decrease in its Q1 2020 net interest income at €373m compared to Q1 2019, while there was a net loss after tax of €31m compared to net profit of €110m in the year before quarter.
The private banking business saw a 12% drop in net interest income at €153m and a 31% decline in net profit after tax at €28m, compared to the previous year quarter.
On the other hand, the corporate and institutional banking (CIB) unit saw its Q1 2020 net interest income remain stable at €302m compared to Q1 2019. However, the unit reported a net loss after tax of €575m in Q1 2020 compared to the €76m profit after tax made in the same quarter in the year before.
ABN AMRO CEO comments on the Q1 2020 results
ABN AMRO CEO Robert Swaak said: “At the FY 2019 results, we announced a review of Corporate & Institutional Banking’s (CIB) activities. Although in the past few years some progress has been made in improving returns, this has not resulted in the required profitability.
“Also, the risk profile of parts of CIB is not fully aligned with that of the bank. The ongoing CIB review is a short-term priority for me and we will share the outcome in August.
“My priorities in the coming period, in addition to the CIB review, are to navigate the Covid-19 crisis and to focus on anti-money laundering activities (AML). In addition, we will review our strategy to ensure we deliver on our three strategic pillars going forward and will provide an update after the summer, also addressing operational efficiency, financial targets and capital.”