• Net Profit: EUR2.4 billion for 2024; Q4 net profit of EUR397 million.
• Mortgage Portfolio Growth: Increased by EUR1.1 billion in Q4 and over EUR5 billion for the year.
• Net Interest Income (NII): EUR6.5 billion for the full year.
• Fee Income: Increased by 7% for the year; Q4 fee income reached EUR500 million.
• Impairments: Net impairment release of EUR21 million for the year.
• CET1 Ratio: Improved to 14.5%.
• Final Dividend: EUR0.75 per share, total shareholder remuneration over EUR1.6 billion for 2024.
• Client Deposits: Increased by over EUR5 billion in Q4.
• Cost of Risk: Expected to be below 15-20 basis points for next year.
• Expected NII for 2025: EUR6.2 billion to EUR6.4 billion.
• Underlying Costs: Ended at just over EUR5.3 billion for 2024, expected to remain broadly flat next year.

• Warning! GuruFocus has detected 3 Warning Sign with ABMRF.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ABN AMRO Bank NV (ABMRF) reported a strong net profit of EUR2.4 billion for 2024, with a Q4 net profit of EUR397 million despite large incidentals.
• The mortgage portfolio showed consistent growth, increasing by EUR1.1 billion in Q4 and over EUR5 billion for the year.
• Net interest income improved, ending the year at EUR6.5 billion, exceeding guidance.
• The bank's CET1 ratio improved to 14.5%, indicating strong capital adequacy.
• ABN AMRO Bank NV (ABMRF) has been recognized for its sustainability efforts, returning to the Dow Jones Sustainability Index and being praised for its cyber resilience.

Negative Points

• The fourth quarter net profit was impacted by large incidentals and the annual Dutch Banking Tax.
• The corporate loan book declined in Q4 due to capital allocation decisions and seasonal declines.
• Interest income is expected to be lower in 2025 due to anticipated declines in interest rates.
• Fee income growth may not be sustainable as it is partly correlated with market performance, which was volatile in 2024.
• The bank faces downside risks to eurozone growth and inflation outlook due to potential US tariffs on Europe.

Q & A Highlights

Q: Can you specify your volume outlook given the strong mortgage market and expectations for more housing transactions? Also, could you clarify the legal provision of EUR95 million? A: We saw a strong rebound in mortgage volumes, with our production up 50% due to rising house prices, increased transactions, and better affordability. We expect this trend to continue into 2025. The legal provision is unrelated to the new acquisition and pertains to historical equity trading in Germany, reflecting an update on tax liabilities from transactions before 2008.

Q: How confident are you in achieving the cost guidance of EUR5.3 billion, given the recent hiring trends? A: We are confident in maintaining costs around EUR5.3 billion due to reaching an inflection point in FTE increases and completing major programs. We are focusing on operational efficiencies, digitalization, and reducing external contractors, which will help manage costs effectively.

Q: Why haven't you lowered deposit costs despite ECB rate reductions? A: We price deposits based on replicating yields, which remain above historical margins. The majority of deposits are with incumbent banks at similar levels. Our guidance reflects potential adjustments in savings rates, but depositors remain sticky, with shifts mainly from term to demand deposits.

Q: Could you elaborate on the capital optimization transactions and their future prospects? A: We are actively managing RWAs and capital allocation, with recent transactions like infrastructure loan sales showing positive impacts. We expect more benefits from capital optimization and risk transfer instruments, aiming to improve capital allocation and balance sheet velocity.

Q: What is the outlook for net interest income (NII) in 2025, considering potential changes in savings rates and volume growth? A: For 2025, we expect NII to be between EUR6.2 billion and EUR6.4 billion. This range considers potential volume growth and adjustments in savings rates. The replicating portfolio's impact and asset margins will also influence NII, with a focus on maintaining savings margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.