ABN AMRO hosts 'Banking for
Better' Investor Day
Investor Day highlights
-
A high-return responsible investment
proposition
-
Strong progress on strategy execution and
disciplined delivery on financial targets since IPO
-
Refreshed strategic priorities: supporting
clients' transition to sustainability; reinventing the customer
experience; and building a future-proof bank
-
Focused, moderate, profitable growth,
increasingly working with partners
-
Demonstrable delivery on cost savings, with
Innovation & Technology a critical enabler for efficiency
-
Moderate risk, delivering attractive results and
high capital returns
Guidance and financial
targets
-
Flattish loan book in 2019-20 period, moderate
growth in the medium term
-
On track for cost savings by 2020, around EUR 50
million of restructuring charges foreseen in Q4 2018
-
New cost/income target <55% by 2022, based on
ABN AMRO Group economic outlook, including for GDP, interest rates
and the housing market
-
Estimated Basel IV RWA inflation around 43%;
Basel IV CET1 post mitigations (excluding CIB refocus) above
13.5%
-
Basel III capital target range 2019 unchanged at
17.5-18.5%, subject to 2019 SREP requirement
-
Legal merger of ABN AMRO Group and ABN AMRO Bank
to be explored, to simplify the group structure and expected to
improve the leverage ratio by 20bps in 2019
-
Well-placed to consider additional dividends, on
top of 50% of sustainable profit
'Banking for
Better'
Today, ABN AMRO's Executive Committee is hosting an Investor Day in
London. Its theme: 'Banking for Better'.
Kees van Dijkhuizen, CEO, comments: "Today, the
Executive Committee presents what we have delivered since our IPO
almost three years ago. We have shown strong revenue growth, while
actively managing our cost base, resulting in significantly
increased profitability which has enabled us to increase our
dividend every year. At the same time, we have grown our capital
position in anticipation of Basel IV and are well on track to
achieve all of our four financial targets for 2020."
"We will also elaborate on our refreshed strategic
priorities today. ABN AMRO is successfully making a serious
contribution to a sustainable society. And we can do more. Our
purpose guiding us through this change is 'Banking for better, for
generations to come.' We will be focusing on three value-creating
strategic pillars: supporting our clients' transition to
sustainability; reinventing the customer experience; and building a
future-proof bank. In doing so, we will focus on further
digitalisation of products and processes to increase speed and
efficiency, and we will team up with partners to offer more
innovative products. We expect to deliver attractive results and
high capital returns."
A high-return responsible
investment proposition
Today's presentations demonstrate that ABN AMRO is a domestic
champion in Retail, Private, Commercial and Corporate Banking in a
digitally-savvy Dutch market. The majority of our clients conduct
their banking activities digitally. Five years ago, we started
rejuvenating our core systems, giving us a competitive digital
offering and a solid IT basis today. Going forward, we will further
simplify the IT landscape and gradually reduce the IT spend while
increasing competitiveness. We'll evolve client offerings by
reinventing client journeys and further leveraging
partnerships.
Reinventing the customer experience is Retail
Banking's key priority. Retail Banking is the largest contributor
to group profit, with a client-driven and digitally-focused
business model, consistently focusing on improving the customer
experience, both digital and non-digital. Short-term revenue
pressures caused by continued low interest rates should be
mitigated by accelerating the shift to digital first, expanding the
product offering and growing fee income through investments and
insurance products.
Private Banking is transforming into a more
scalable Private Bank in North West Europe, with organic and
inorganic growth potential. Its standard client offering today is
sustainable investments. Efficiency will be further enhanced
through harmonisation and digitalisation, the aim being to reduce
the cost/income ratio to below 70% by 2021.
Commercial Banking is also a solid contributor to
the group results. Sustainability is a clear business opportunity
for the Commercial Bank, in response to the needs of clients and
markets. New propositions, for instance in energy and the circular
transition, offer additional sources of income. In doing so, we
will leverage on partners like we do in other parts of the bank as
well.
Actions are being taken to make Corporate and
Institutional Banking (CIB) future-proof and increase their ROE to
above 10%. Long-term relationships with multi-product clients are
at the core of its business model, and its profitability should be
improved through focus, reduction of costs and RWA, and disciplined
capital allocation.
Guidance and financial
targets
We aim to deliver reliable earnings and strong capital generation
through profitable growth and disciplined cost management while
maintaining our moderate risk profile. Our financial targets for
ROE and dividend pay-out target remain unchanged, we extend the
current capital range to 2019 and we set an additional C/I target
for 2022.
We are on track to meet the 56-58% C/I by 2020,
having realised nearly two-thirds of the targeted EUR 1 billion
cost savings. As interest rates are expected to remain low in the
next two years, negatively impacting deposit margins and growth
prospects, we will focus strongly on realising the remaining
savings by 2020, also to enable investments in innovation. Further
restructuring charges are foreseen to be taken, of which around EUR
50 million in Q4 2018 for existing programmes in Commercial
Banking, Retail Banking and I&T. We have decided to sharpen our
C/I target for 2022 to <55%, based on ABN AMRO Group economic
outlook, including for GDP, interest rates and the housing market.
The new target for 2022 is based on the following assumptions: loan
volumes to normalise and grow again after 2020 by 1-3% per
annum; our sustainability growth initiatives to contribute, also
resulting in modest fee growth; and the expectation that IT spend
as a percentage of income will start to decline.
With a Basel III CET1 ratio of 18.6% (Q3 2018), we
are well-positioned in our current target capital range of
17.5-18.5%. Estimated Basel IV RWAs increased from around 35% (YE
2017) to around 43% (Q3 2018) due to some updates to our
calculations and also to relative growth in corporate lending and
some data adjustments. We expect to be able to mitigate
approximately 20% of this increase through mitigations, keeping RWA
inflation around 35% and the Basel IV CET1 ratio above 13.5%. As a
result, the Basel III capital target range remains unchanged at
17.5-18.5% for 2019, subject to the SREP 2019 requirement. We have
not changed our ambition to meet the fully loaded Basel IV
requirements early in phase-in period.
The leverage ratio of 4.1% (Q3 2018) is a
constraint in the short term. In the longer term, we expect to
realise a 0.5%-point uplift from new SACCR rules for clearing
exposures. To manage the leverage ratio in the short term, we are
exploring the option to merge the holding company ABN AMRO Group
into ABN AMRO Bank in 2019. This would simplify the legal structure
and also improve the leverage ratio by 0.2%. Such a merger is
subject to several approvals, including from regulators and various
stakeholders.
The year-to-date dividend accrual for 2018 was
increased to 60% with the Q3 results. The final decision on the
2018 dividend will be taken at the time of the FY2018 results,
reflecting the SREP, leverage ratio, Basel IV outlook and
industry-wide NPE guidance. We expect to be well-placed to consider
additional dividends on top of 50% of sustainable profit
attributable to shareholders, subject to similar preconditions.
Webcast
All Investor Day presentations are available online and can be
followed live via webcast from 10.30 CET on
https://www.abnamro.com/ir.
ABN AMRO Press Office
Jeroen van Maarschalkerweerd
Head of Media Relations & PR
pressrelations@nl.abnamro.com
+31 20 6288900 |
ABN AMRO Investor Relations
Dies Donker
Head of Investor Relations
investorrelations@nl.abnamro.com
+31 20 6282282
|
This press release is published
by ABN AMRO Group N.V. and contains inside information within the
meaning of article 7 (1) to (4) of Regulation (EU) No 596/2014
(Market Abuse Regulation]
ABN AMRO hosts ‘Banking for Better’
Investor Day
This
announcement is distributed by West Corporation on behalf of West
Corporation clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: ABN AMRO via Globenewswire
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