ABN Amro shares jump 6.2% to record high as Q2 profit beats forecast

Investing.com -- Dutch lender ABN Amro Group NV shares jumped as much as 6.2% to a record high of €42.28 on Wednesday after the bank reported second-quarter profit that beat even the highest analyst forecast, helped by surging fee income and lower bad-loan costs.

Net profit for the second quarter rose 29% to €781 million from €606 million a year earlier, beating the average analyst estimate of €686 million and topping even the highest forecast of €775 million in a consensus compiled from 15 sell-side analysts.

Earnings per share came in at €0.90, above the consensus average of €0.78 and the high estimate of €0.89. Operating income reached €2.42 billion, ahead of the consensus average of €2.33 billion and above the high estimate of €2.41 billion, the bank said.

Net fee and commission income climbed 25% to €617 million from €492 million, beating the consensus average of €587 million and the high estimate of €608 million. 

The bank said growth was driven by an increase in client assets and continued strong Clearing results, with fees benefiting from higher market activity following geopolitical developments.

Net interest income rose 11% to €1.70 billion from €1.53 billion, which the bank attributed to growth in commercial net interest income supported by the integration of Hauck Aufhäuser Lampe, Clearing performance and growth in client deposits. 

Net interest margin held at 149 basis points, above the consensus average of 144 basis points and within range of the high estimate of 151 basis points.

Operating expenses totaled €1.30 billion, below the consensus average of €1.34 billion and within the forecast range of €1.30 billion to €1.39 billion. Personnel expenses were €789 million, above the consensus average of €767 million and within the range of €714 million to €810 million.

Cost of risk fell to 4 basis points, better than the consensus average of 9 basis points and below the lowest estimate of 5 basis points. Impairment charges on financial instruments totaled €24 million, below the consensus average of €60 million and under the lowest estimate of €36 million.

The bank said the figure reflected additions for individually impaired corporate loans, partly offset by releases in residential mortgages tied to model changes, management adjustments and overlays.

Profit before taxation was €1.10 billion, above the consensus average of €932 million and the high estimate of €1.05 billion. Income tax expense was €319 million, above the consensus average of €246 million and the high estimate of €271 million.

The cost/income ratio improved to 53.7%, better than the consensus average of 57.5% and below the best-case estimate of 54.5%. Return on equity rose to 12.1% from 9.4% a year earlier.

Loans and advances to customers stood at €275.75 billion, above the consensus average of €269.92 billion.

Due to customers was €303.19 billion, within range of the consensus average of €303.61 billion.

Risk-weighted assets were €136.43 billion, below the consensus average of €136.94 billion. Total equity was €27.34 billion, close to the consensus average of €27.36 billion.

The CET1 capital ratio stood at 15.9%, matching the highest analyst estimate and above the consensus average of 15.7%. The bank set an interim dividend of €0.68 per share, above the consensus average of €0.64 and the high estimate of €0.67.

"ABN AMRO delivered another strong quarter, supported by continued client demand and high fees," CEO Marguerite Bérard said in a statement.

The bank completed its acquisition of NIBC Bank on August 1, after the reporting period.