ABN Amro shares slip as weaker capital overshadows profit beat
Q1 CET1 ratio at 13.8%, down from 15% a year ago
Net profit 674 million euros, above analysts estimates
Shares down 3%
Too early to talk about further share buybacks, says CEO
Updates share moves in paragraph 2, adds quotes paragraphs 5, 6, 7 and 11
By Matteo Allievi and Dimitri Rhodes
May 15 (Reuters) -ABN Amro reported a weaker capital ratio in the first quarter due to an increase in risk-weighted assets on Wednesday, overshadowing a better than forecast net profit and sending the Dutch bank's shares lower.
Shares in ABN Amro ABNd.AS were down 3% at 1108 GMT, after falling as much as much as 6.5%, following results from the bank, which said the lower capital ratio was in part due to changes in how it calculates risk.
ABN Amro's CET1 ratio, a measure of capital strength for European banks that compares core capital against risk-weighted assets, fell to 13.8% as of March 31, from 15.0% a year ago, and was below analysts' estimates of 14.3%.
"The lower CET1 ratio at 13.8% leaves a lot less room for share buybacks," ING analysts said in a note.
ABN Amro, one of three dominant banks in the Netherlands along with ING INGA.AS and Rabobank, completed a 500 million euro share buyback programme which it had announced in February, but said that it was too early to consider any more for now.
"We will continue to expect to generate capital and our share buybacks will be determined at the full year results of 2024," CEO Robert Swaak told reporters.
ABN Amro posted a 29% rise in first-quarter net profit to 674 million euros ($729.34 million), compared to a year earlier, saying it continued to benefit from a high interest rate environment with strong net interest income.
That exceeded an average forecast of 521 million euros in a poll of analysts compiled by the bank.
"Demand for credit remains good and both our mortgage and corporate loan books grew," said Swaak.
Banks have been among the main beneficiaries of rising interest rates over the last three years. However, the European Central Bank is expected to soften its monetary policy in June, raising concerns about their profits.
"With lower interest rates, we would expect mortgage markets to continue to pick up ... so there's no reason for us to step away from our guidance," Swaak added.
ABN Amro's net interest income (NII), a key measure of earnings on loans minus deposit costs, fell 2% to 1.59 billion euros in the first quarter, compared to a year earlier, but was above analysts estimates of 1.56 billion euros.
The bank expects NII of around 6.3 billion euros this year, the same as in 2023, and costs of around 5.3 billion euros due to higher staff expenses.
It also forecast that Dutch house prices, which are almost back to record 2022 levels, will rise further, forcing potential buyers to bid above the asking price, although tight supply will limit the number of transactions.
($1 = 0.9241 euros)
Reporting by Matteo Allievi and Dimitri Rhodes; Editing by Alexander Smith
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