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ABN Amro Delays Buyback Decision as It Clarifies Capital

The ABN Amro Group NV corporate headquarters in Amsterdam. Photographer: Peter Boer/Bloomberg (Peter Boer/Bloomberg)

(Bloomberg) -- ABN Amro Bank said it needs more time to decide on the next share buyback as it comes to terms with new capital rules. 

The implementation of global capital standards “is taking longer than anticipated,” the Dutch lender said in its third-quarter earnings statement on Wednesday. As a result, it has postponed a decision on “potential room” for buybacks to the publication of its second-quarter results next year, scheduled for August.

The announcement was previously slated for fourth-quarter earnings, which will happen in February.  

The delay is “disappointing,” RBC analyst Anke Reingen said in a note, despite an otherwise “good set of results.”

ABN Amro’s shares fell as much as 1.8% in early trading in Amsterdam.

The bank said it’s in the midst of simplifying the last part of its credit risk models and is at the same time preparing for new capital regulation known as Basel. 

“In order to do a proper assessment, we would need to take some prudent assumptions for these implementation uncertainties,” Chief Financial Officer Ferdinand Vaandrager said on Bloomberg TV. “So rather than base it on that at 4Q, we decided to put the evaluation moment to 2Q next year,” 

By that time, ABN Amro will also likely have completed the acquisition of Germany’s Hauck & Aufhäuser Lampe Privatbank AG, he said. 

The Amsterdam-headquartered bank in May said it had completed a €500 million buyback program that it had pledged earlier this year. Its CET1 ratio — a key measure of financial strength — stood at 14.1% in the third quarter, above estimates. 

Net income came in at €690 million ($732 million) for the three months through September, compared with analyst expectations of €563 million. The result was helped by better-than-expected lending income and the release of money it had set aside for doubtful loans.

ABN Amro has been reaping the benefits of higher interest rates, a tailwind that’s now set to fade as central banks have begun cutting rates. The bank is also seeking a replacement for Chief Executive Officer Robert Swaak who will step down next year.

What Bloomberg Intelligence says:

ABN Amro’s 3Q consensus beat on net interest income (2%), fee income (3%) and cost of risk (net release) lifted pretax profit 23% above estimates and, combined with a 13.8% CET1 ratio (14.1% pro forma for 3Q retained profit), boosts share buyback prospects for 2025. Costs (up 9%, in line with consensus) remain a weak point and, while repurchases were postponed to after 2Q25 results, we see upside scope to analysts’ expectations for €400 million in buybacks next year..

— Philip Richards, BI banking analyst

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Net interest income, or the difference between what a bank earns on loans and pays on deposits, rose to €1.64 billion in the third quarter, beating estimates. ABN Amro reaffirmed its outlook for net interest income to be above €6.4 billion in the year.

The bank released €29 million for bad loans in the quarter, it said. Analysts had anticipated provisions of €85 million. 

“The resilient macro environment, low unemployment and the high credit quality of our portfolio led to limited inflow of individual impairments,” Swaak said in the statement.

The Netherlands is among European countries seeking to exit the stakes that were acquired in banks during the financial crisis. The Dutch state, which remains ABN Amro’s largest shareholder since its bailout, is now in the midst of paring its stake to about 30%, from 40.5%.

--With assistance from Macarena Muñoz.

(Updates with share move, details and analyst comment from fourth paragraph.)

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