ABN Amro Scraps Dividend After First Annual Loss in a Decade

ABN Amro Bank NV scrapped its dividend for 2020 and posted its first annual loss in a decade as the pandemic weighed on lending income and the lender restructured its investment bank.

An unexpected profit of about 54 million euros ($65 million) in the fourth quarter wasn’t enough to save the Dutch lender from its first negative result since 2010. The bank last year was hit by losses at its clearing business and the meltdown of Singapore oil trading giant Hin Leong Trading Ltd., where it is one of the failed company’s biggest creditors.

ABN Chief Executive Officer Robert Swaak, who took over in April, is retreating from large parts of the investment banking business as he focuses on cost cutting and digitization. Even before the pandemic threw markets and economies into turmoil, the bank was facing higher costs to bolster client vetting amid an ongoing money-laundering probe in the Netherlands.

ABN Amro Scraps Dividend After First Annual Loss in a Decade

ABN Amro fell as much as 2.4% in early Amsterdam trading and was down 1.9% to 8.39 euros as of 9:15 a.m. Shares of the bank, majority-owned by the Dutch state, have dropped by about 50% in the last 12 months, giving the company a market value of 7.9 billion euros.

In August, he announced plans to cut a third of the lender’s business with corporate clients, dropping company finance outside of Europe and exiting trade and commodity financing altogether in a restructuring that will see the bank cut about 2,800 jobs. The company, which plans to reduce costs by about 700 million euros by 2024 to 4.7 billion euros, has a policy of paying out at least 50% of profit in dividends.

“Based on the ECB’s revised recommendation and the loss recorded in 2020, regrettably no dividend will be proposed,” for last year, Swaak said in the statement. “We’re committed to resuming payment of dividends, sustainably, taking into account the ECB’s recommendation.”

The surprise profit last quarter compared with estimates for a loss of 4.07 million euros and came as ABN Amro joined other European lenders in signaling that the worst of the crisis is over, with impairments set to decline this year amid the resilience of the Dutch economy and housing market.

ABN Amro Scraps Dividend After First Annual Loss in a Decade

In a separate statement, ABN Amro said its supervisory board plans to appoint Lars Kramer as a member of the company’s executive board and chief financial officer. Until his appointment becomes effective, and after current CFO Clifford Abrahams steps down on Feb. 28, Annemieke Roest will act as acting finance chief.

Other financial highlights:

  • Net interest income EU1.35b vs EU1.39b estimate
  • Net fee and commission income EU387m vs EU365m estimate
  • Common equity Tier 1 ratio 17.7% vs. estimate 17.3%

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