ABN Amro swings to Q1 loss, sees higher provisions on pandemic hit

Dutch bank ABN Amro on Wednesday reported a first-quarter loss of 395 million euros ($428 million), hit by provisions of 1.1 billion euros including for loans gone bad due to the fallout from the coronavirus crisis. The first-quarter loss compared with a net profit of 478 million euros in the year-ago period.

The bank said its operating profit for the latest quarter came in at 624 million euros, down 17% from 754 million euros last year. "Impairments were very high (1.1 billion euros) due to two exceptional client files and significant upfront collective provisioning for sectors immediately affected by COVID-19 and oil prices," said Chief Executive Officer Robert Swaak, who assumed the top job last month.

"The operational performance in the first quarter was strong but impairments were very high," Swaak said, adding that impairments related to the pandemic stood at 511 million euros. In addition, the bank took 460 million euros in provisions for a loss at ABN Amro Clearing after a hedge fund client failed, and for a suspected fraud case in Singapore.

"Based on our latest assumptions, we expect the cost of risk (provisions for bad loans) for the full year 2020 to be around 2.5 billion euros," Swaak said. The bank's net profit for full year 2019 was 2.05 billion euros and included 657 million euros in loan provisions. ABN had warned in March that it would suffer a loss for the quarter and scrapped paying dividends until Oct. 1 at the earliest.

ABN shares closed lower at 6.67 euros on Tuesday, down 59% so far in 2020. Since its bailout by the Dutch state in 2008, ABN has refocused on the Dutch market, cutting thousands of jobs in the process. The bank was re-privatised in a 2015 initial public offering at 17.75 euros per share. The Dutch state still owns a 56% stake. ($1 = 0.9219 euros)