ABN reports solid 2003 profit growth

4 February 2004

AMSTERDAM — Dutch bank ABN Amro reported on Wednesday net profit of EUR 3.16 billion, 31 percent more than the EUR 2.41 billion profit of 2002 and said it expected a better result for 2004.

Company chief Rijkman Groenink had said in January 2003 that ABN expected a 25 percent rise in profit. The better-than-expected result last year is due to a strong performance by its business banking division in comparison with the year before.

The bank also reported a 25 percent fall in provisions for bad debts to EUR 1.27 billion and was able to lend more money to large companies. It also profited from the share issue from Dutch retailer Ahold, which admitted large accounting irregularities at the start of last year.

But concerns around Parmalat negatively impacted the bank, which loaned money to the scandal-hit Italian dairy company. Due in part to the Parmalat affair, ABN Amro raised its bad debt reserve in the fourth quarter, but the year-end result showed the aforementioned fall.

The Dutch branch of ABN Amro was confronted with more bankruptcies in the second half of 2003 due to the nine-month recession, but this is expected to improve in the second half of this year, an NOS news report said.

The business banking arm went through a large restructuring phase in 2002 when it went into the red, but the division recovered last year to record net profit of EUR 387 million. In 2002, the business banking division recorded a loss of EUR 294 million.

Groenink said ABN’s performance in 2003 was “very satisfactory and a significant step towards our longer term goals”. The bank’s operating result topped EUR 6 billion for the first time in history, driven by higher revenues and stringent cost control.

The bank chief expects continued profit growth this year, but less than that was recorded last year. Groenink also anticipates healthy economic growth in the US and Brazil, but the European and Dutch economies will recover less quickly.

Subject: Dutch news