ABN AMRO reports record operating result

Transcription

1 ABN AMRO reports record operating result Third Quarter Results October 23

2 Table of Contents ABN AMRO reports record operating result 3 Operating Performance 4 Asset Quality and Capital 13 Outlook 17 Appendices 19 2

3 ABN AMRO reports record operating result Compared to the third quarter of 22 Operating result up (+23.7%) due to higher revenues Provisioning down (-1.4%) Net profit strongly up (+4.8%) Efficiency ratio improved 33 basis points to 66.2% Tier 1 ratio increased by 79 basis points to 7.79% 3

4 Operating Performance

5 Group performance improves due to increasing momentum in WCS (EUR mln) Q3 3 Q2 3 % change Q3 3/ Q2 3 ytd 3/ ytd 2 Revenues 4,827 4, Expenses 3,195 2, (4.9) Operating result 1,632 1, Net profit Efficiency ratio 66.2% 64.8% Revenues Q3 23 PC 4.8% AM 2.6% WCS 28.2% Other 9.9% C&CC 54.5% Revenues increase, driven by revenue growth in WCS and C&CC Increase in operating expenses largely due to various incidental costs in C&CC, especially BU NA and BU NL Operating result improves for the fourth consecutive quarter 5

6 C&CC shows stable and resilient income stream (EUR mln) Q3 3 Q2 3 % change Q3 3/ Q2 3 ytd 3/ ytd 2 Revenues 2,632 2, Expenses 1,636 1, (6.2) Operating result 996 1,68 (6.7) 17.7 Efficiency ratio 62.2% 58.8% Revenues Q3 23 US 43.5% RoW 9.5% Brazil 17.% Netherlands 3.% Revenues slightly up due to higher commission income in BU NL and BU Brazil Operating expenses up primarily due to incidentals in BU NA and BU NL Operating result remains flat on a normalised basis 6

7 Revenues of BU NL remain on track despite recession % change Revenues Q3 23 (EUR mln) Q3 3 Q2 3 Q3 3/ Q2 3 ytd 3/ ytd 2 Revenues Expenses (3.) Commissions 19.4% Other 1.1% Trading.4% Operating result (5.8) 52.7 Efficiency ratio 79.5% 77.5% Interest 79.1% Revenues up due to an increase in net interest revenue and higher electronic banking commissions Expense growth inflated due to a EUR 2 mln accrual release in Q2. Normalised expense growth amounts to 2.6% mainly driven by higher profit sharing accruals Operating result remains flat adjusted for Q2 incidental items 7

8 Natural servicing hedge supports BU NA income (EUR mln) Q3 3 Q2 3 % change Q3 3/ Q2 3 ytd 3/ ytd 2 Revenues 1,144 1,154 (.9) 5.2 Expenses (1.5) Operating result (1.8) 12.1 Revenues Q3 23 Other 28.9% Trading 3.9% Interest 53.8% Efficiency ratio 51.8% 46.4% The US dollar appreciated on average by 1.6% against the Euro during Q3 In local currency terms: Commissions 13.4% A USD 48 mln mortgage liability reserve was included in Q3 revenues 1.% underlying revenue growth caused by retail and commercial banking activities. Mortgage revenues flat due to higher servicing income Expenses increase mainly due to incidental costs related to rebranding and opening of new operations and technology centre 8

9 BU Brazil revenues improve despite decline in interest rates (EUR mln) Q3 3 Q2 3 % change Q3 3/ Q2 3 ytd 3/ ytd 2 Revenues (11.4) Expenses (2.9) Operating result Efficiency ratio 58.6% 6.5% Revenues Q3 23 Commissions 13.2% The Brazilian real was stable against the Euro compared to Q3 Trading 6.7% Other 8.7% Interest 71.4% Higher revenues reflect volume and spread growth in consumer finance and trading gains. Stable retail revenues Higher expenses due to increase in staff costs reflecting the implementation of the new Collective Labour Agreement in September Operating result improves significantly 9

10 WCS client-led model delivers on commitments % change Revenues Q3 23 (EUR mln) Q3 3 Q2 3 Q3 3/ Q2 3 ytd 3/ ytd 2 Revenues 1,36 1, (5.6) Expenses 1,96 1, (9.1) Trading 25.3% Other 1.5% Interest 39.7% Operating result Efficiency ratio 8.6% 81.1% Commissions 33.5% Higher revenues reflecting better client revenues and improved performance in the BU s Financial Markets, Working Capital and Private Equity Expenses up due to combination of higher bonus accruals reflecting improved performance and investments in BU Financial Markets and BU Working Capital Commitment of positive EP achieved in third quarter 1

11 PC improves its efficiency ratio for the second consecutive quarter (EUR mln) Q3 3 Q2 3 % change Q3 3/ Q2 3 ytd 3/ ytd 2 Revenues Expenses (4.3) 15.1 Operating result (4.4) Efficiency ratio 76.4% 8.9% Revenues Q3 23 Commissions 49.8% Other 7.7% Trading 5.2% Interest 37.3% Revenues remain almost flat despite absence of significant placements of new funds Expenses down due to absence of restructuring costs in France Efficiency ratio improves for second consecutive quarter 11

12 AM continues to leverage on improved market conditions (EUR mln) Q3 3 Q2 3 % change Q3 3/ Q2 3 ytd 3/ ytd 2 Revenues (1.6) Expenses (2.) (1.7) Operating result (1.3) Efficiency ratio 76.8% 81.7% Revenues Q3 23 Other.8% Interest.8% Trading 1.6% Increase in commissions reflects higher level of Assets under Management and improved margins due to changes in asset mix Expenses slightly down due to strict cost control Substantial improvement of efficiency ratio Commissions 96.8% 12

13 Asset Quality and Capital

14 Provisioning is coming down as global economy recovers Overall provisioning lower despite increase in Corporate Centre and BU NL WCS provisioning decreases substantially. Weighted average UCR improves for the third quarter in a row In C&CC, provisioning is down primarily due to a decrease in Brazil. Provisioning in BU NL up driven by further deterioration of the quality of the SME portfolio Overall quality of the portfolio remains solid Loan loss provisioning per SBU (EUR mln) SBU Q3 2 Yr 2 Q1 3 Q2 3 Q3 3 C&CC WCS PCAM Other Total AA 338 1, Annualised provisions / RWA (%) 2.% 1.5% 1.%.5%.% Q1 1 Q2 1 Q3 1 Q4 1 Q1 2 Q2 2 Q3 2 Q4 2 Q1 3 Q2 3 C&CC WCS ABN AMRO Q2 3 14

15 SME portfolio drives provisioning levels up in BU NL C&CC NL total portfolio C&CC NL commercial portfolio by client Commercial 29% SME 46% Corporate Clients 54% Consumer 71% C&CC SME portfolio 1% 8% 6% 4% 2% 56.8% 57.9% 59.8% 61.4% 63.2% 41.8% 41.% 39.5% 38.1% 36.4% Provisions in 24 expected to be similar as in 23, with a peak in the first half % 3. Sep. 2 Dec. 2 Mar. 3 Jun. 3 Sep. 3 UCR 1,2,3 UCR >=4 Not rated Average UCR 15

16 Capital Management is on track to deliver targeted Tier 1 ratio (EUR bln) % change 3 9 3/ 3 9 3/ Total assets Shareholders equity Group capital Risk-weighted assets (2.2) (.6) (8.4) Tier 1 ratio Total capital ratio 7.79% 11.42% 7.63% 11.1% 7.% 1.87% Tier 1 ratio improvement led by high retained earnings The gearing ratio decreased for the sixth consecutive quarter to 29.9% We expect to deliver Tier 1 ratio and core Tier 1 ratio close to 8.% and 5.7% respectively by year end 16

17 Outlook

18 ABN AMRO expects a 25% increase in net profit for FY 23 We are confident about the performance for the remainder of the year. We will substantially exceed our previous 23 outlook, barring any unforeseen adverse circumstances. We now expect the full year net profit to be above EUR 3 billion 18

19 Appendices Third Quarter Results 23

20 Appendices: table of contents Key figures: profit and loss account 21 Currency Variations 22 Profit and Loss Account BU NA and BU Brazil 28 Details on WCS Performance 31 Asset Quality and Provisioning 34 Asset Quality and Provisioning in C&CC 37 Asset Quality and Provisioning in WCS 49 2

21 Key figures: profit and loss account % change (EUR mln) Q3 23 Q3 3/Q2 3 Q3 3/Q3 2 ytd3/ytd2 Total Revenue 4, Operating expenses 3, (4.9) Operating result 1, Provisioning for loan losses 33 (.7) (1.4) (27.5) Operating profit before taxes 1, Net profit Net profit excl. extraord. result EPS excl. extraord. res

22 Currency Variations

23 Impact of currency variations on group performance Sept YTD 3/ Sept YTD 2 Reported change (%) Currency impact (EUR mln) Organic growth (%) Revenues 1. (1,525) 12.1 Expenses (4.9) 1,1 5.4 Operating result 15.2 (524) 28.1 Pre-tax profit 37.5 (36) 5.8 Note: Reported change is the arithmetic sum of currency impact and organic growth. In this case, revenues were negatively impacted by EUR 1,525 mln and costs were positively influenced by EUR 1,1 23

24 Impact of currency variations on group performance Q3 3 / Q3 2 Reported change (%) Currency impact (EUR mln) Organic growth (%) Revenues 11.7 (183) 15.9 Expenses Operating result 23.7 (58) 28.2 Pre-tax profit 38.5 (42) 42.9 Note: Reported change is the arithmetic sum of currency impact and organic growth. In this case, revenues were negatively impacted by EUR 183 mln and costs were positively impacted by EUR 125 mln 24

25 Impact of currency variations on group performance Q3 3 / Q2 3 Reported change (%) Currency impact (EUR mln) Organic growth (%) Revenues Expenses Operating result Pre-tax profit Note: Reported change is the arithmetic sum of currency impact and organic growth. In this case, revenues were positively impacted by EUR 18 mln and costs increased by EUR 12 mln 25

26 Impact of currency variations on BU NA performance Q3 3 / Q2 3 Reported change (%) Currency impact (EUR mln) Organic growth (%) Revenues (.9) 2 (2.6) Expenses Operating result (1.8) 1 (12.5) Pre-tax profit (12.2) 9 (13.9) Note: Reported change is the arithmetic sum of currency impact and organic growth. Revenues were positively impacted by EUR 2 mln and expenses increased by EUR 9 mln 26

27 Impact of currency variations on BU Brazil performance Q3 3 / Q2 3 Reported change (%) Currency impact (EUR mln) Organic growth (%) Revenues Expenses Operating result Pre-tax profit Note: Reported change is the arithmetic sum of currency impact and organic growth. Revenues were positively impacted by EUR 1 mln and costs were increased by EUR 1 mln 27

28 Profit and Loss Account BU NA and BU Brazil

29 P&L BU NA in local currency (USD mln) Q3 3 Q2 3 Revenues 1,29 1,324 Expenses Operating result Provisioning Pre-tax profit

30 P&L BU Brazil in local currency (BRL mln) Q3 3 Q2 3 Revenues 1,49 1,47 Expenses Operating result Provisioning Pre-tax profit

31 Details on WCS Performance

32 WCS client performance WCS Revenues (EUR 3,82 mln YTD 23) Revenues by Client (EUR 3,164 mln YTD 23) Priority & Key Revenues by Client (EUR 1,713 mln YTD 23) Other 17% Client segments 83% Country Coverage 18% TMTH 15% Consumer Consumer TMTH 8% Integrated 7% Integrated 19% Energy Energy 14% 17% FIPS 45% Country Coverage 18% FIPS 39% Overall client revenues for WCS are EUR 3,164 mln, representing 83% of WCS revenues The revenue contribution of our Priority and Key clients represents almost 54% of total client revenues 32

33 WCS product performance Revenues by Product EUR 1,36 mln in Q3 23 Revenues by Product EUR 1,297 mln in Q2 23 Equities & CF 14% Working Capital 24% Other 9% Financial Markets 53% Equities & CF 19% Working Capital 24% Other 2% Financial Markets 55% Most important revenue contributor is Financial Markets 33

34 Asset Quality and Provisioning

35 Private loans September 22 December 22 September 23 Other 6% PCAM 2% WCS 22% C&CC 7% Other 6% PCAM 3% WCS 21% C&CC 7% Other 6% PCAM 3% WCS 2% C&CC 71% NL 62% US 31% Brazil 3% Other 4% Private loans (EUR bn - by outstanding) Sep-2 Dec-2 Sep-3 Wholesale C&CC Private Other 35

36 Overview of total loan loss provisioning per SBU Loan loss provisioning per SBU (EUR mln) Annualised provisioning / average RWA SBU Q32 Yr 2 Q1 3 Q2 3 Q3 3 Q3 2 YTD 2 Q1 3 Q2 3 Q3 3 C&CC %.58%.5%.61%.55% WCS %.87%.88%.48%.33% PCAM %.21%.15%.18%.11% Total 338 1, %.66%.59%.53%.52% Total ABN mainly includes Corporate Centre and Auto Lease Holland Q3 23 loan loss provisioning by SBUs Other 15% 2.% 1.5% WCS 18% 1.%.5% C&CC 67%.% Q1 1 Q2 1 Q3 1 Q4 1 Q1 2 Q2 2 Q3 2 Q4 2 Q1 3 Q2 3 Q2 3 C&CC WCS ABN AMRO 36

37 Asset Quality and Provisioning in C&CC

38 Overview of the C&CC consumer and commercial franchise C&CC Total Private Loans (EUR bln) (Numbers may not add up due to rounding) Sep. 3 Netherlands N. America Brazil Rest of World Dec 2 Mar 2 Commercial Consumer Total Private Loans Consumer 6% Commercial 4% Brazil 3% Rest of World 4% North America 31% Netherlands 62% 38

39 C&CC loan loss provisions - slight decrease despite market conditions Loan loss provisioning per SBU (EUR mln) Quarterly annualised provisioning / Avg. RWA BU Q3 2 Yr 2 Q1 3 Q2 3 Q3 3 YTD 3 Q3 2 Yr 2 Q1 3 Q2 3 Q3 3 YTD 3 Netherlands %.25%.4%.45%.53%.44% USA %.71%.56%.5%.5%.52% Brazil % 2.72% 2.75% 5.33% 3.97% 4.15% Other %.34%.5% -.3% -.6% -.3% Total C&CC %.58%.5%.61%.57%.55% Total ABN 338 1, %.67%.59%.53%.53%.55% Q3 23 loan loss provision by geography Brazil 3% Other 2% USA 36% Netherlands 32% 6% 5% 4% 3% 2% 1% % -1% Q1 1 Q2 1 Q3 1 Q4 1 Q1 2 Q2 2 Q3 2 Q4 2 Q1 3 Q2 3 Q3 3 Netherlands USA Brazil Rest of World C&CC 39

40 Overview of the portfolio of BU NL C&CC NL total portfolio Commercial 29% Consumer 71% C&CC NL commercial portfolio by client C&CC NL commercial portfolio by UCR Not rated.3% SME 46% Corporate Clients 54% UCR>4 52.1% UCR 1,2 and % 4

41 Overview of the commercial portfolio of BU NL C&CC NL total portfolio 1 Consumer 71% Commercial 29% C&CC NL commercial portfolio by product % +.4% Corporate Clients SME non program lending Sep.2 Dec. 2 Sep % Total Commercial C&CC NL commercial portfolio by Industry 2 Public Utilities.% Public.6% Transport & Communication 6.4% Stil to / not classified 3.7% Retail Trade 5.6% Real Estate 4.6% Other Services 2.5% Mining 1.% Metal Industry 9.3% Manufacturing 2.1% Agriculture & Fishery 11.6% Wholesale Trade 13.5% 1 Incl. Bouwfonds 2 excl. Bouwfonds Banks and Non-Banking Financial Institutions 14.3% Business Services 7.4% Chemical Industry 3.% Construction 3.5% Education Food Industry 1.1% 2.4% Health & Social Services 5.6% Hotels and Restaurants 1.7% 41

42 BU NL commercial portfolio asset quality 1% 6.% 6.2%.5%.6%.3% 8% 47.1% 47.1% 5.6% 52.1% 52.1% 6% 4% 2% 46.9% 46.7% 48.9% 47.3% 47.6% % Sep-2 Dec-2 Mar-3 Jun-3 Sep-3 UCR 1,2,3 UCR>=4 Not Rated 42

43 Overview of the portfolio of BU NA C&CC - Asset quality 8% UCR % 6% 4% 2% % Sept.2 Dec.2 Mar.3 Jun.3 Sept.3 UCR 1, 2, and 3 UCR >= 4 Business mix as per Sep 23 Individual 1% Other 4% Resid. Mortgage 46% Commercial 49% 43

44 Overview of BU NA commercial portfolio C&CC BU NA total portfolio C&CC BU NA commercial portfolio by Industry Consumer 44% C&CC BU NA commercial portfolio + 3.5% Total USA Commercial Commercial 56% 3Q2 4Q2 3Q3 Travel / Lodging / Entertainment 2% Transportation / Storage 4% Textile / Shoes / Clothing 2% Retailing / Wholesaling (general) 5% Regulated Utility 1% Regulated Financial 2% Real Estate / Development 3% Publishing / Broadcasting / Movies 1% Automotive Waste Disposal 3% 1% Professional Services 5% Paper / Pulp / Lumber 1% Non regulated Financials 2% Chemicals / Fertilizers 2% Computer / Office Equipment 1% Miscellaneous 7% Construction / Contracting 6% Other % Electrical Equipment / Appliance 1% Energy 1% Food / Beverage / Tobacco 4% Government / Agency 1% Grocery Stores / Restaurants 2% Health Care 4% Individuals (unqualified) 3% Industry / Commercial Machinery 2% Insurance 1% Metal processing / Fabrication 5% 44

45 BU NA commercial portfolio asset quality 1% 8% 6.1% 59.9% 59.2% 58.5% 6.1% 6% 4% 2% 39.9% 4.2% 4.8% 41.5% 39.9% % Sep-2 Dec-2 Mar-3 Jun-3 Sep-3 UCR 1,2,3 UCR>=4 Not Rated 45

46 Overview of the portfolios of BU Brazil C&CC - Asset quality UCR % 7% 6% 5% 4% 3% 2% 1% % Sep. 2 Dec. 2 Mar. 3 Jun. 3 Sep. 3 UCR 1/2/3 UCR >=4 Not rated Business mix (*) UCR breakdown Middle Corp 19% Car Financ. 41% UCR>=4 33% Not rated 6% Retail 4% UCR 1, 2, 3 61% * Note: Includes only loans booked onshore 46

47 Overview of the portfolio of BU Brazil commercial portfolio C&CC BU Brazil Loan Portfolio C&CC BU Brazil Commercial Portfolio by Industry Consumer Portfolio 35% Commercial Portfolio 65% C&CC BU Brazil Commercial Portfolio -5.3% Car Finance Corp. 39.3% -16.% SME Middle Corp. Total Commercial Sep.2 Dec. 2 Sep % Oil & Gas 2.1% Miscellaneous 2.1% Metal & Mining 6.8% Health Services 5.% Food & Beverages & Tobacco 4.1% Others 1.1% Electrical Machinery 1.8% Education 5.3% Paper & Pulp.9% Packaging.9% Consumer Goods 4.3% Petrochemicals.9% Public.4% Agribusiness 19.2% Construction & Engineering 1.5% Automotive 1.7% Banking & Finance Companies 2.8% Capital Goods & Machinery 5.6% Chemicals 6.1% Computer & Related Activities.4% 47

48 BU Brazil commercial portfolio asset quality 1% 11.% 12.% 12.% 13.% 13.% 8% 6% 59.% 66.% 65.% 66.% 65.% 4% 2% 3.% 22.% 23.% 21.% 22.% % Sep-2 Dec-2 Mar-3 Jun-3 Sep-3 UCR 1,2,3 UCR>=4 Not Rated 48

49 Asset Quality and Provisioning in WCS

50 Wholesale corporate portfolio is predominantly OECD North America 26.5 % Europe 56.3% Eastern Europe.5% Middle East.7% Asia 5.3% Latin America 3.4% Africa.4% Asia Pacific Advanced 6.9% Geographic exposure calculated based on the country lending office of each counterparty OECD: Organisation for Economic Co-operation and Development 5

51 Breakdown of Wholesale portfolio per client sector Wholesale - Total portfolio Wholesale - Corporate portfolio Public Sector 7% Telecom, Media, Technology, Health 9% Integrated Energy 1% Consumer 6% Automotive & Industrial 14% Country Coverage 36% Telecom, Media, Technology, Health 23% Commercial Banks 33% Other FI 21% Consumer 15% Integrated Energy 26% Commercial banks exposure includes commercial lines, money market and OBSI facilities 51

52 Wholesale corporate portfolio is well diversified Tobacco 1.% (Non) durables 5.7% Leisure.6% Retail 1.5% Telecom 7.3% Media 5.% Food 6.% Services 3.% Manufacturing (general) 7.6% Real estate 2.3% Agri/raw materials 1.2% Construction 4.3% Transport services 7.1% Technology 6.4% Health/pharma 3.9% Oil & gas 9.5% Utilities 8.1% Chemicals 5.2% Metals & mining 3.4% Manuf other transport means 1.7% Automotive (oem + supply) 9.2% As a % of total limits of Wholesale Corporate portfolio which excludes FIPS 52

53 Continued reduction of exposure Sector breakdown of wholesale portfolio - Total limits -16.2% -17.5% -19.% -14.2% -13.9% TMTH Integrated Energy Automotive & Industrial Consumer Total Sept.2 Dec.2 Sept.3 53

54 Average UCR of wholesale client sectors Average UCRs - Historical performance Average UCRs Avg UCRs Jun. 2 Sep. 2 Dec. 2 Mar. 3 Jun. 3 Sep TMTH Integrated Energy Automotive & Industrial Consumer WCS Portfolio Jun. 2 Sep. 2 Dec. 2 Mar. 3 Jun. 3 Sep. 3 TMTH Automotive & Industrials WCS Portfolio Int. Energy Consumer 54

55 Asset quality of wholesale client sectors Wholesale corporate portfolio Automotive & industrial Integrated Energy (36.5% of WCS corp. portfolio) (26.2% of WCS corp. portfolio) UCR >=4 19% UCR >=4 19% UCR >=4 19% UCR 1, 2, 3 81% TMTH UCR 1, 2, 3 81% Consumer UCR 1, 2, 3 81% 1% 8% 6% 2.1% 2.3% 18.7% (22.6% of WCS corp. portfolio) UCR >=4 2% (14.8% of WCS corp. portfolio) UCR >=4 15% 4% 8% 8% 81% 2% % Sep. 2 Dec. 2 Sep. 2 UCR 1, 2, 3 UCR >=4 UCR 1, 2, 3 8% UCR 1, 2, 3 85% 55