ABN AMRO presents outcome of strategy review and hosts virtual Investor Update
November 30 2020 - 1:00AM
ABN AMRO presents outcome of strategy review and hosts virtual
Investor Update
ABN AMRO presents outcome of strategy review and hosts
virtual Investor Update
Clear vision of the bank we want to be
- ‘A personal bank in the digital age’ serving clients where we
have scale in the Netherlands and Northwest Europe
- Our clients’ first choice partner in sustainability in climate
change, circular economy and social impact
- A future-proof bank, rigorously simplifying and centralising
the operating model, enabling us to focus on clients and work more
efficiently
- Committed to our moderate risk profile; culture and licence to
operate are clear priorities
Financial targets reflecting economic
outlook
- Safeguarding income by increasing market share in our focus
growth segments
- Costs no higher than EUR 4.7 billion in 2024, reflecting EUR
700 million savings
- Execution discipline and CIB non-core wind-down underpin
moderate risk profile; cost of risk reconfirmed at 25 to 30 basis
points through-the-cycle
- ROE target for 2024 of around 8%; ROE ambition of 10% remains,
subject to interest rate normalisation
- Basel IV CET1 target of 13%. Threshold for share buybacks above
15% (subject to regulatory approval), to be recalibrated when
uncertainties reduce
- Dividend pay-out ratio of 50% of reported net profit
Today, ABN AMRO is hosting a virtual Investor Day. Its theme: ‘A
personal bank in the digital age’.
Robert Swaak, CEO, comments: ‘Today we present the outcome of
the strategy review and our vision for the bank. Our strategic
pillars - customer experience, sustainability and future-proof bank
- remain our guiding principles in acting on our purpose ‘Banking
for better, for generations to come’. With our strong brand and
attractive market positions across all segments we have a strong
foundation. Our strategy review now gives us a distinct profile and
focus. The wind-down of the CIB non-core portfolio as announced in
August was a first step. Today we announce we will be a personal
bank in the digital age, serving clients where we have scale in the
Netherlands and Northwest Europe.
A personal bank in the digital age with a focus on
segments where we have scale We will focus on attractive
segments in the Netherlands and Northwest Europe where we can grow
profitably. In the Netherlands we will grow in the segments wealthy
clients, affluent clients and mid-to large corporates, where we
leverage our expertise. We will further develop our leading
positions in mortgages and SMEs with new propositions, aiming to
increase our market share in both segments to above 20%. In
Northwest Europe we will leverage our domestic expertise in the
energy, digital and mobility transition, aiming for a top 3 market
position in selected niches. We remain open to bolt-on acquisition
opportunities, especially in private banking.
We are a personal bank in the digital age, engraining the
customer experience. Our trusted relationships with clients,
together with our capabilities across all client segments, enable
us to support them at all important financial steps in their lives.
We offer both convenience and expertise. We deliver a convenient
daily banking experience increasingly digitally. At moments that
matter we support our clients with sector and sustainability
expertise.
Sustainability is core to our purpose Our
clients increasingly need expertise to support them in the
sustainability shift. We are their first choice partner in climate
change, the circular economy and social impact. We aim to increase
the volume of sustainable client loans and investments from around
one-fifth to one-third in 2024. We will lead by example and make
our office buildings more energy efficient. We will redevelop one
of our locations in Amsterdam into a Paris-proof workplace designed
to facilitate the trend of remote working. Alongside this we will
sell our head office building and lease back part of it. The
transaction is expected to result in a book gain.
Future-proof bank enables client focus and
efficiency We are building a future-proof bank by
rigorously simplifying and centralising our operating model,
enabling us to focus on clients and work more efficiently. Around
90% of high volume processes will be digitalised end-to-end by
2024. We will further streamline the product portfolio by around
60% by 2024. As clients make the shift to digital we will continue
to reduce the number of branches. Our financial coaches will
continue to be available to clients who need support to ensure they
maintain access to banking services.
We are fully committed to our moderate risk profile and our role
as a gatekeeper of the financial system. Our culture and licence to
operate remain clear priorities. We place great value on fostering
a culture within the bank in which everyone feels respected and
valued. Taking ownership, clear targets and accountability are key
to execution and our licence to operate.
Guidance and targets reflect current cautious economic
outlook Safeguarding income in low-rate environment The
low interest rate environment and wind-down of the CIB non-core
portfolio will continue to impact net interest income. We aim to
safeguard income by growing market share in focus segments by 2 to
5 percentage points by 2024. We expect fees to recover when
lockdowns lift and to grow strongly after that as we increasingly
charge for our convenience and expertise.
Continued cost focus We have a good track record of cost
control. We are targeting costs no higher than EUR 4.7 billion in
2024, reflecting EUR 700 million of further cost savings. Costs in
2021 at around EUR 5.3 billion are expected to be higher than in
2020 at around EUR 5.1 billion (excluding restructuring costs in
both years) due to an increase in regulatory levies, AML costs and
strategic investments. We expect a further reduction of staff of
around 15% by 2024, mostly from 2022 onwards. We will reduce the
impact on staff through natural attrition and reskilling in roles
where we expect shortages. We expect EUR 300 million of strategic
investments and a restructuring provision of around EUR 150 million
through 2023.
Cost of risk We reconfirm our through-the-cycle cost of
risk of 25 to 30 basis points. The non-core CIB activities were an
important cause of disappointing cost of risk in recent years. The
wind-down of the CIB non-core portfolio is well on track and will
improve the bank’s risk profile of the bank. Discipline in the
execution of the sharpened risk framework will contribute to lower
volatility in impairments.
Return on equity We target a return on equity (‘ROE’) of around
8% by 2024 when the cost of risk is expected to normalise,
cost-savings programmes are completed and growth initiatives are
delivering. Our ROE ambition remains 10% and this will require some
normalisation over time of current low interest rates.
Capital framework We have set out our capital framework despite
current uncertainties. We are committed to resuming payment of
dividends, sustainably, conditions permitting and taking into
account ECB recommendations. We will resume dividend pay-out at a
ratio of 50% of net profit, after deduction of AT1 coupon payments
and minority interests. We will adopt Basel IV as the primary
capital metric with a Basel IV CET1 target of 13%. When our Basel
IV CET1 ratio is above the threshold of 15% we will consider share
buybacks subject to conditions and regulatory approval, not before
FY2021. The threshold will be recalibrated as uncertainties reduce.
Pay-out of the accrued full-year 2019 dividend will be considered
prudently at full-year 2020, taking into account the status of the
ECB dividend recommendation as well as conditions and prospects at
that time.’
WebcastThe Investor Update reference documents
are available online. A one-hour management presentation, led
by Robert Swaak (CEO), followed by Q&As can be followed live
via webcast from 10.00 am to 12.00 noon CET on
https://www.abnamro.com/ir.
ABN AMRO
Press OfficeJeroen van MaarschalkerweerdHead of Media
Relations & PRpressrelations@nl.abnamro.com+31 20 6288900 |
ABN AMRO
Investor RelationsFerdinand Vaandrager Head of Investor
Relations investorrelations@nl.abnamro.com+31 20
6282282 |
This press release is published by ABN AMRO Bank N.V. and
contains inside information within the meaning of article 7 (1) to
(4) of Regulation (EU) No 596/2014 (Market Abuse Regulation]
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