ABN Amro Bank NV has been on the lookout for potential acquisitions in recent months and is keen to take over companies that would bolster its private banking business, according to CEO Robert Swaak.
The Dutch bank, which reported its third-quarter and nine-month financial results Nov. 10, is particularly interested in bolt-on deals that fit its business and geographical footprint, Swaak told analysts during a presentation.
The CEO said the bank has been exploring deals for some time now but did not provide further details.
ABN Amro has been shedding some businesses as it seeks to exit noncore activities, and Swaak said 85% of its noncore portfolio has now been wound down.
Q3 results
ABN Amro's third-quarter profit attributable to shareholders totaled €343 million, rising 14% year over year, despite a lower operating result. It booked a €12 million release of impairments in the quarter, against year-ago charges of €270 million.
Weighed down by lower rates, the bank's net interest income, or NII, declined year over year to €1.20 billion from €1.47 billion. Meanwhile, net fee and commission income continued to rise and hit €413 million in the quarter, up 15% from the year-ago €359 million.
The net interest income took into account a €174 million provision for compensating overcharged clients of revolving consumer credit with floating interest rates. The bank also booked a further €44 million provision over the matter, which was recognized as other expenses. In total ABN Amro took additional provisions of €217 million, which took the amount earmarked for the matter to €250 million.
In an effort to cushion the blow from negative rates, ABN Amro has, like some peers, been imposing negative charges on deposits. In July, it applied a charge against deposits of more than €150,000, with plans to further lower the threshold to €100,000 in January 2022.
The bank's third-quarter NII included a €27 million benefit from negative charging, according to CFO Lars Kramer, who said that the latest move added some €23 billion of deposit volumes being charged. Once the lowered threshold is implemented, around 50% of all deposits would be charged negative rates.
Buyback beckons
At the end of September, the bank's Basel III common equity Tier 1 ratio was 17.8%, down from 18.3% three months before. The decline primarily pertained to an increase in risk-weighted assets of €3.3 billion due to a net increase in loans and a model update, said Chief Risk Officer Tanja Cuppen.
When taking into account the current assumption on how the so-called Basel IV rules on capital would be implemented, the CET1 ratio at Sept. 30 was 16%. The bank's long-term target is to hold a Basel IV CET1 ratio of 13%, with a threshold for buybacks of 15%.
The bank is in "constructive" dialogue with regulators over a potential share buyback program after the release of its full-year 2021 results, and a reconsideration of the threshold is part of the dialogue, according to Swaak.
Asked about the willingness of the Dutch government, the bank's top shareholder, to participate in the potential buyback, Swaak said NL Financial Investments is among the stakeholders the bank is in talks with. The government, through the NLFI, owns more than 56% of ABN Amro.