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ABN Amro Bank Shares Fall on Missed Net Interest Income

James L. Flint

• November 08, 2023

Shares of ABN Amro Bank dropped to their lowest price in almost a year following disappointing third-quarter results. The Dutch lender's net interest income (NII) for the three months ended September 30 fell short of expectations, causing shares to plummet by as much as 8.5% during morning trade.

As of 0908 GMT, shares in Amsterdam were down EUR1.01, or 7.7%, at EUR12.15.

ABN Amro Bank, in which the Dutch state holds a 49.5% stake, reported NII of 1.53 billion euros ($1.64 billion) for the third quarter, marking a 20% increase compared to the same period last year but a 5% decrease from the previous quarter. The figure was below the market consensus estimate of EUR1.63 billion.

"Compared with the previous quarter, NII was affected by deposit migration to higher yielding products, a shift to other income, limited asset margin pressure, and lower results in trading activities," ABN said.

Investors had been closely watching the NII metric, which measures the difference between what banks earn on loans and what they pay clients for deposits, ahead of the earnings release. According to UBS analysts, there were no significant one-off factors affecting NII and instead, a combination of smaller factors negatively impacted the results. They believe the bank could experience another NII decline in the fourth quarter.

Despite the NII miss, net profit exceeded expectations, with revenues, costs, and provisions all surpassing projections, according to Jefferies analysts.

However, ING points out that the shortfall in NII and a worsened cost guidance for 2024 will overshadow the strong impairments line.

ABN Amro Group stated that it anticipates higher costs in the coming year but has adjusted its cost guidance for 2023 to a range between EUR5.1 billion and EUR5.2 billion due to delays in investments driven by a tight labor market.

RBC Capital Markets notes that while the lower costs for the remainder of 2023 provide some relief, they are likely to be temporary.