ABN AMRO Net Profit Up Sharply in 1998 First Half.THE NETHERLANDS--(BUSINESS WIRE)--August 20, 1998--ABN AMRO AMRO Regional Office for the Americas (WHO, Washington DC) AMRO American Robin (species) AMRO Amsterdam-Rotterdam Bank (now ABN AMRO) AMRO Association Maladie de Rendu-Osler (NYSE NYSE See: New York Stock Exchange : AAN AAN American Association of Neurology ), a leading international banking group, today announced its 1998 first half results. - Net profit up 20.0% to NLG NLG The ISO 4217 currency code for the Dutch Guilder. 2,445 million - Earnings per share 18.4% higher at NLG 1.67 - Net return on equity rises to 19.0% - Interim dividend increases to NLG 0.60 - Financial targets raised
1st half 1998 1st half 1997 in %
(In millions except per share data)
US$(a) NLG NLG
Pre-tax profit 1,781 3,630 3,123 16.2%
Net profit 1,199 2,445 2,038 20.0%
Net profit attributable
to ordinary shareholders 1,155 2,355 1,946 21.0%
Earnings per share 0.82 1.67 1.41 18.4%
Dividend per ordinary share (b)0.29 0.60 0.53 13.2%
(in billions)
June 30, 1998 Dec. 31, 1997
Total assets 491.2 1,001.3 836.4 19.7%
Shareholders' equity 13.6 27.7 25.8 7.3%
Group capital 27.0 54.9 53.0 3.7%
Risk-weighted assets 229.4 467.7 459.8 1.7%
Loans to private sector 1 187.5 382.2 359.2 6.4%
BIS-ratio 10.97% 10.65%
of which tier 1 capital 7.24% 6.96%
1) excluding repos (a) US dollar figures are provided for reader convenience at the June 30, 1998 exchange rate of $1=NLG 2.0385. (b) The dollar amount of the ADR ADR - Astra Digital Radio dividend will depend on exchange rates on date of payment. Major developments in the first half of 1998 Once again, ABN ABN Advance beneficiary notice, see there AMRO's results over the first half of the year show strong growth compared with the same period last year, with all divisions contributing to achieved growth. Total revenue rose by 19.7% to NLG 13,598 m, almost completely due to internal growth. Interest revenue showed solid growth (+12.5%). Revenue from securities and participating interests increased sharply by 58.8%, partly on the results of the sale of a number of minority interests. Net commissions also showed substantial growth (+22.6%), primarily driven by increased securities commissions. Favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market conditions, which particularly benefited securities and foreign exchange dealing, contributed to a significant increase in results from financial transactions (+29.5%). Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased by 20.9% to NLG 9,168 m as a result of a rise in staffing levels (+11.2%) in connection with a significant internal growth of the bank, higher salaries and performance-related bonuses. A number of specific items in the area of IT also contributed to the rise, such as projects in respect of the Euro and the year 2000 (a substantial portion of which was already included in provisions) and Global Transaction Services. The number of employees increased by 8,060 to 80,091 year-on-year, with most growth in the International Division due to a number of acquisitions including BZW BZW Beziehungsweise (German: Respectively) BZW BZFlag World (file format/extension) BZW Blizzard Warning BZW Barclays der Zoete Wedd Australia and substantial internal growth in the US, Brazil and elsewhere. The efficiency ratio rose slightly to 67.4% (66.8% in the same period of 1997), mainly as a result of the above-mentioned projects and new activities. The efficiency ratio over the whole of 1997 amounted to 69.1%. Total provisions for loan losses increased to NLG 892 m in the 1998 first half (NLG 492 m in 1997 first half, and NLG 713 m in 1997 second half), which includes NLG 365 m for the since the beginning of 1998 increased country risks in Indonesia, Thailand, Pakistan and Turkey among others (compared with a NLG 30 m release for country risks in the first half of 1997). The remaining NLG 527 m, largely unchanged from NLG 522 m in the 1997 first half, comprises provisions for specific bad debt risk which were increased for Asia and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and lowered in The Netherlands and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . After substantial precautionary pre·cau·tion·ar·y also pre·cau·tion·al adj. Of, relating to, or constituting a precaution: taking precautionary measures; gave precautionary advice. Adj. 1. provisions were added (around NLG 530 million extra) due to developments in Asia in late 1997, a portion of the funds were specifically allocated as planned; at this time, nearly half of the total is still available for the second half of this year. After a partial release of NLG 92 m for Asia, the fund for general banking risks now amounts to NLG 2,434 m and continues to be a few basis points above the bank's envisaged level of 50 basis points of risk weighted assets. The provisions for loan losses and additions/withdrawals from the fund for general banking risks amount NLG 800 million on balance (1997 first half: NLG 650 million). The pre-tax profit increased by NLG 507 m or 16.2% to NLG 3,630 m, with NLG 114 m attributable to exchange rate effects. The overall effective tax rate decreased from 31.0% in the first half of 1997 to 28.6% in the same period in 1998, partly owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de the release of earlier tax provisions. ABN AMRO's announcement on July 8 that it would acquire Banco Real Banco Real is a Brazilian bank, owned by ABN AMRO. The consortium led by Royal Bank of Scotland is in the process of acquiring ABN AMRO, and will dismember it, with Spain's Banco Santander getting Banco Real. , Brazil's fourth largest privately held bank, represents an important step forward in its strategic objective of gaining a strong regional presence in areas which support its commercial and investment banking network. The planned acquisition means further expansion of ABN AMRO's worldwide network with a home market in Brazil and an increased presence in a number of other Latin American countries List of American countries Nations:
Balance sheet at June 30, 1998 compared with December 31, 1997 For the first time in the bank's history, consolidated total assets broke through the NLG 1,000 bn ceiling in the first half of 1998, rising 19.7% to NLG 1,001.3 bn. The increase was mainly the result of expanded loan volume. The effect of exchange rates was marginal: the US dollar increased from NLG 2.02 year-end 1997 to NLG 2.04 at the end of June 1998. Private sector loans increased by NLG 68.3 bn in the first six months of 1998 to NLG 496.6 bn. Of this increase, NLG 45.3 bn went towards short-term advances against securities, mainly abroad. The remaining increase amounted to NLG 23.0 bn, a large proportion of which (NLG 14.6 bn) was generated in the Netherlands Division. Total customer accounts rose by NLG 68.7 bn, or 17.3%, to NLG 465.4 bn in the first half of 1998. Group capital and regulatory capital Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. grew by NLG 1,883 m (7.3%) to NLG 27,728 m from year-end 1997. A relatively modest offsetting goodwill charge (NLG 252 m) was largely compensated by an increase in retained profit and revaluations in addition to the exercise of staff options and conversion of preference shares into ordinary shares. The net return on equity increased to 19.0%.
Group capital
(in NLG m and %)
June 30, 1998 Dec. 31, 1997 %
Shareholders' equity 27,728 25,845 7.3%
Minority interests 4,570 4,527 0.9%
Group equity 32,298 30,372 6.3%
Fund for general banking risks 2,434 2,483 -2.0%
Subordinated debt 20,187 20,101 0.4%
Group capital 54,919 52,956 3.7%
Number of outstanding
ordinary shares (millions) 1,423 1,406 1.3%
Shareholders' equity per
ordinary share (in NLG) 18.12 17.00 6.6%
Return on equity (in %) 19.0% 15.7%
Number of preference shares (millions) 363 363
Number of convertible
preference shares (millions) 1.9 2.1
Total regulatory capital and BIS ratios
(in NLG bn and %)
June 30, 1998 Dec. 31, 1997 %
Total regulatory capital 51.3 49.0 4.8%
of which tier 1 capital 33.9 32.0 5.8%
Risk-weighted assets 467.7 459.8 1.7%
BIS ratio 10.97% 10.65%
of which tier 1 capital 7.24% 6.96%
Risk-weighted assets Risk-Weighted Assets In terms of the minimum amount of capital that is required within banks and other institutions, based on a percentage of the assets, weighted by risk. Notes: The idea of risk-weighted assets is a move away from having a static requirement for capital. rose slightly (+1.7%), partly due to the introduction of risk models for calculating capital adequacy requirements related to market risks. In addition, as in 1997, ABN AMRO ABN AMRO Algemene Bank Nederland-Amsterdam Roterdam Bank (Dutch bank) carried out a number of securitisation programmes in the first half of 1998 (amounting to NLG 1.5 bn) to optimise optimise - To perform optimisation. its use of shareholders' equity. Therefore, the BIS ratios advanced from year-end 1997.
Results by division1
Netherlands Division
(in millions of NLG and %)
1st half 1998 1st half 1997 %
Net interest revenue 2,753 2,593 6.2%
Net commissions 948 851 11.4%
Results from financial transactions 77 71 8.5%
Other revenue 193 42 359.5%
Total revenue 3,971 3,557 11.6%
Operating expenses 2,565 2,360 8.7%
Provisions for loan losses 81 164 -50,6%
Pre-tax profit 1,325 1,033 28.3%
Number of employees (FTE) 25,113 24,093
Number of branches and offices 954 998
(in billions of NLG and %) June 30, 1998 Dec 31, 1997
Total assets 196.3 183.6 6.9%
Risk-weighted assets 149.2 144.0 3.6%
Pre-tax profit increased 28.3% to NLG 1,325 m. The provision for loan losses fell by 50.6% as a direct result of the excellent quality of the loan portfolio. Net interest revenue advanced by 6.2%, mainly on increased volume due in particular to growth in mortgage loans. Net commissions also rose, primarily in the securities business. The growth in other revenue was almost all due to proceeds from the sale of a number of minority interests. In the Netherlands Division, operating expenses were up 8.7%. This increase mainly resulted from higher staff costs, partly resulting from the wage rise under the collective labour agreement and 1,020 new employees. International Division (in millions of NLG and %) 1st half 1998 1st half 1997 % Net interest revenue 4,295 3,714 15.6% Net commissions 1,614 1,224 31.9% Results from financial transactions 666 395 68.6% Other revenue 327 139 135.3% Total revenue 6,902 5,472 26.1% operating expenses 4,592 3,597 27.7% Provision for loan losses 444 325 36.6% Pre-tax profit 1,866 1,550 20.4% (in millions of NLG and %) 1st half 1998 1st half 1997 % Pre-tax profit per region Europe 373 274 36.1% North America 1,136 817 39.0% South and Central America 148 259 -42.9% Asia/Pacific 169 172 -1,7% Middle East and Africa 40 28 42.9% Number of employees (FTE) 39,154 34,387 Number of branches and offices 879 824 (in billions of NLG and %) June 30, 1998 Dec. 31, 1997 Total assets 470.3 388.0 21.2% Risk-weighted assets 252.3 240.7 4.8% The International Division reported continuing substantial growth in activities in the first half of this year with pre-tax profit up by NLG 316 m or 20.4% to NLG 1,866 m. There was solid growth in net interest revenue, up 15.6%. Private sector loans (including repos) increased substantially (+19.4% to NLG 258.6 m), largely due to a sharp increase in the short-term advances against securities. The division also benefited from the favourable investment climate, resulting in a sharp rise in commissions (+31.9%). Results from financial transactions also saw strong growth of 68.6%. Increasing volatility in a number of foreign exchange currency markets led to a significant rise in currency trading results, primarily in a number of emerging markets. The 135.3% rise in other revenue was mainly due to sharply higher revenues from the mortgage business in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. (consisting of origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real , securitisation and servicing activities). Operating expenses increased by 27.7% to NLG 4,592 m, mainly due to expansion of the staffing capacity (+4,767 FTEs), higher bonuses and higher IT costs for projects related to introduction of the Euro The introduction of the euro took place principally between 31 December 1998, when the exchange rates between the euro and legacy currencies in the Eurozone became fixed, and early 2002, when euro notes and coins were introduced and the legacy currencies withdrawn. , the year 2000 and Global Transaction Services. The provision for loan losses rose by 36.6% as a result of higher provisions in Asia and Latin America, but lower provisions in North America. Results in Europe once again improved sharply. The private banking activities, particularly in Switzerland, profited from the buoyant Buoyant The term used to describe a commodities market where the prices generally rise with ease when there are considerable signals of strength. Notes: These types of markets can be very volatile as the prices are rapid to rise and fall with investor sentiment. mood on the European stock exchanges This is a list of European stock exchanges. There are two major pan-European stock exchanges:
adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. , increasing by 39.0% to NLG 1,136 m. Both LaSalle, EAB EAB Emerald Ash Borer (insect) EAB Environmental Appeals Board (EPA) EAB Educational Activities Board (IEEE) EAB Environmental Advisory Board EAB Egyptian American Bank and Standard Federal (acquired in 1997) reported continuing solid growth, partly due to the region's favorable economic climate in addition to the improved quality of the loan portfolio and higher exchange rates. In South and Central America Central America, narrow, southernmost region (c.202,200 sq mi/523,698 sq km) of North America, linked to South America at Colombia. It separates the Caribbean from the Pacific. the operating results remained essentially unchanged from the high levels of last year. Pre-tax profits fell, however, to NLG 148 m (from NLG 259 m) as a result of provisions made in Brazil to cover increased bad debt exposure in the consumer finance portfolio following sharp interest rate rises early this year. In the Asia/Pacific region, operating results increased sharply, partly due to an influx of new customers. This contributed to a significant reduction in the country risk for South Korea, the Philippines, Malaysia, Thailand and Indonesia (in Indonesia it even fell by 57%). After deducting the risk from risk-free transactions, co-financing with international organizations (IFC/World Bank) and short-term trade finance, a relatively small amount for country risks remains for which appropriate provisions were made. The total amount in Asian bad debt provisions is relatively limited, partly due to the significant proportion of multinationals in our Asian portfolio. After the above mentioned provisions, pre-tax profits in Asia fell only slightly (by 1.7%). In the Middle East and Africa pre-tax profits rose 42.9% to NLG 40 m, partly on favorable results in Saudi Arabia Saudi Arabia (sä  `dē ərā`bēə, sou`–, sô–), officially Kingdom of Saudi Arabia, kingdom (2005 est. pop. .
Investment Banking Division
(in millions of NLG and %)
1st half 1998 1st half 1997 %
Net interest revenue 302 222 36.0%
Net commissions 998 825 21.0%
Results from financial transactions 817 739 10.6%
Other revenue 165 146 13.0%
Total revenue 2,282 1,932 18.1%
operating expenses 1,698 1,349 25.9%
Provision for loan losses 29 -100.0%
Pre-tax profit 584 554 5.4%
Number of employees (FTE) 6,973 5,960
Number of branches and offices 56 59
(in billions of NLG and %)
June 30, 1998 Dec. 31, 1997
Total assets 321.2 252.5 27.2%
Risk-weighted assets 53.7 63.4 -15.3%
The Investment Banking Division saw pre-tax profits rise by 5.4% to NLG 584 m. The composition of profits shifted significantly in favour of client-oriented activities. The results from the equity business showed substantial growth, particularly outside The Netherlands, due to the very buoyant European market. Results were satisfactory in the areas of Corporate Finance and Investment Capital, while treasury activities performed extremely well. Activities in the fixed income area lagged behind expectations, however. The positive development of commission income is mainly due to considerably higher brokerage fee revenue and a sharp rise in asset management fees. In the first half of 1998, ABN AMRO Asset Management reported a 17% increase in its worldwide assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. to NLG 182 bn. Results from financial transactions also advanced favourably, primarily due to excellent results in securities trading securities trading, financial activity involving transactions of property such as stocks, bonds, commodities, and currency (see securities). Although the trading of stocks and bonds dates back several centuries in many Western nations, the development of the . The higher increase in operating expenses is the result of the increased number of employees, higher performance-related bonuses and IT expenses as a result of new activities. Dividend The 1998 interim dividend has been fixed at half of the dividend for the 1997 financial year (NLG 1.20) i.e., NLG 0.60 per ordinary share of NLG 1.25 nominal value Nominal Value The stated value of an issued security that remains fixed, as opposed to its market value, which fluctuates. Notes: When referring to fixed-income securities, the nominal value is also the face value. (NLG 0.53 in 1997). The interim dividend is payable wholly in cash or, at the shareholder's option, wholly in ordinary shares charged to the share premium account in a ratio which is still to be determined. The ratio of the value of the stock dividend to that of the cash dividend will be determined on September 7, 1998, after the close of trading on the Amsterdam Exchanges Amsterdam Exchange (AEX) Exchange that comprises the AEX-Effectenbeurs, the AEX-Optiebeurs (formerly the European Options Exchange or EOE) and the AEX-Agrarische Termijnmarkt. , on the basis of the average quotation of the day. The value of the stock dividend will be virtually equal to that of the cash dividend. The new ordinary shares will qualify for the final dividend for the 1998 financial year and the full dividend for subsequent financial years. Ordinary shares will be quoted ex dividend from Friday August 21, 1998. Shareholders may submit instructions as to whether they opt for dividend payment in cash or in stock from August 21, 1998 through September 7, 1998. The 1998 interim dividend will become payable from September 11, 1998. Raised financial targets When ABN and Amro merged in 1990, financial targets were established for the new bank, which have over time almost all been well surpassed. The Managing Board has decided to step up its targets (see below) which expresses its confidence in the bank's future development and profit potential. - Net profit: average increase of at least 12.5% per year (previously: 10%) - Earnings per share: average increase of at least 10% per year (previously: 7.5%) - Net return on equity : 18% (previously: 13%), based on Dutch GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). - Efficiency ratio: improvement in the efficiency ratio (previously: 62.5%), by managing it per line of business Prospects for the second half of 1998 The Managing Board expects a continued increase in net profit in the second half of 1998 compared with the same period in 1997, assuming the situation in Asia does not significantly deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. and that there is no serious negative impact from the most recent economic measures taken by the Russian Government. Appendices ap·pen·di·ces n. A plural of appendix. 1. - Consolidated profit and loss account for the first half of 1998 2. - Consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. at June 30, 1998 3. - Geographical analysis of total assets - Geographical analysis of private sector loans - Geographical analysis of total customer accounts 4. - Pre-tax profit by division - Number of employees This press release is also available on the following internet pages: - http://www.abnamro.nl/newsnet/ (Dutch language Dutch language, member of the West Germanic group of the Germanic subfamily of the Indo-European family of languages (see Germanic languages). Also called Netherlandish, it is spoken by about 15 million inhabitants of the Netherlands, where it is the national ) - http://www.abnamro.com/newsnet/ (English language English language, member of the West Germanic group of the Germanic subfamily of the Indo-European family of languages (see Germanic languages). Spoken by about 470 million people throughout the world, English is the official language of about 45 nations. ) Based in The Netherlands, ABN AMRO is a leading international bank group with over $410 billion in assets, active in 72 countries with 74,000 employees worldwide. ABN AMRO is the sixth largest bank in Europe and the largest foreign bank in the US, with The LaSalle Group and Standard Federal in the MidWest and European American A European American (Euro-American) is a person who resides in the United States and is either the descendant of European immigrants or from Europe him/herself.[1] Overall, as the largest group, European Americans have the lowest poverty rate [2] Bank in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of accounting for some $100 billion in assets. ABN AMRO shares trade in the US on the NYSE in ADR form, and are listed on the principal stock exchanges in Europe. The ordinary shares may be accessed on the Reuter Equities 2000 Service under the symbol AAH aah interj. Used to express pleasure, satisfaction, surprise, or great joy. intr.v. aahed, aah·ing, aahs To exclaim in pleasure, satisfaction, surprise, or great joy: .AS and on Quotron under the symbol AABN AABN Assault Amphibian Battalion (USMC) AABN Association for the Advancement of Being Nice (Israel) .EU. Additional information is available on ABN AMRO's home page: http://www.abnamro.com. FOR TABULAR tab·u·lar adj. 1. Having a plane surface; flat. 2. Organized as a table or list. 3. Calculated by means of a table. tabular resembling a table. INFORMATION, PLEASE CALL TAYLOR RAFFERTY ASSOCIATES AT 212-889-4350 CONTACT: Frans Bedaux ABN AMRO, Investor Relations Investor relations The process by which the corporation communicates with its investors. 011-31-20-628-4182 - or - Jules Prast ABN AMRO, Media Relations 011-31-20-629-5523 -or - Jeff Zelkowitz Suzanne Miller (Media) Taylor Rafferty Associates 212-889-4350 |
|
||||||||||||||
Bahamas 
Printer friendly
Cite/link
Email
Feedback
Reader Opinion