ABN-Amro: Capital Weaker, NPLs Stable, Guidance Solid.

ABN-Amro (ABNANV: Baa1/BBB/A) results are marginally disappointing for credit investors – weaker capital but offset with stable NPLs. We remain relatively sanguine on the Dutch outlook, however, with solid loan loss guidance for FY24. However, that capital news has put a real dent in equity investors’ days. The peak of the equity’s relatively performance last quarter was at the buyback announcement and a 10% run-up into these results had expectations high, we feel.

• Key credit stats: CET1 is 40bp under consensus (at 13.8%, down from 14.3% at Dec-23) due to some model developments in credit risk RWAs, alongside some seasonality. Loan losses are a tiny 1bp of lending and NPLs are flat on Dec-23 (at 1.9%).
• Revenues are 3% ahead of consensus, costs better than expected and that tiny loss provision means pre-tax profit is 32% (!) ahead of expectations.
• Guidance: NII at EUR6.3bn for FY24 is slightly ahead of current consensus but driven by Treasury income with customer spreads declining on both sides of the balance sheet. Loan losses are guided to be at the bottom-end of management’s range this year. The capital miss has dented buyback expectations for equity holders which, we think, is driving today’s equity move.