Off with their clogs

13 February 2003

The Dutch bank has turned in a respectable performance compared to its peers. Although revenues fell, costs fell by more. But the outlook is murky, and not just because of war. Credit risk is surely rising in the US and Holland, despite the bank s reassurances.

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ABN Amro said profits rose by 2.1% in 2002 as costs fell faster than revenues but Holland's biggest bank refrained from giving an outlook for this year citing the ‘unguessable' impact of war in the Middle East.

Net income rose before extraordinary items inched up to E2.39bn, in line with forecasts. For the coming year, based on a nowar scenario and a stable economy, profits should be higher, the bank said.

ABN launched a hefty costcutting drive almost two years ago, slashing 10,000 jobs, earlier than its European competitors. That helped shrink the bank's costs by 7% during the year, more than making up for a 3% decline in revenues. Net income at its retail division, boosted by US mortgage lending, rose by 21% in the year.

Provisions for bad loans increased by 19% over year, and by almost 14% in the fourth quarter from the quarter before. The bank's Tier 1 ratio rose to 7.5% from 7.0% as the bank shed assets. The bank also took a E804m charge against equity to cover its pension deficit.

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