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FINANCIALS: ABN Results Positive, Guidance Upgraded. Positive Spread Opportunity

FINANCIALS

ABN Amro (ABNANV: Baa1/BBB/A) 2Q24 results are a beat on better loan losses and guidance is being upgraded on both revenues and loan losses for FY24. We feel consensus will be upgraded here. Spreads had underperformed into these results, so we feel expectations were relatively low. We see this as a positive spread opportunity.

  • Credit stats: loan losses were a small release (4bp) so, net, there’s been no charge across 1H24 at all, largely driven by improved model inputs. Non-performers are stable on Mar-24 (at 1.9%) with slightly improved coverage. CET1 is flat q/q (at 13.8%), only 10bp lower than consensus. So, overall, credit stats are solid.
  • Revenues are 1% ahead, costs slightly better and that loan loss beat means pre-tax is 16% ahead of expectations.
  • Guidance is being upgraded here. FY24 loan losses are now seen as “well below” the through-cycle charge (of 15-20bp) – three months ago this was seen at the lower end of that range, not below it. Further, NII guidance is upgraded to “above EUR6.4bn” (from c.EUR6.3bn, where consensus lies). 

Conf call is 0800 (London time) at: https://channel.royalcast.com/abnamroinvestors/#!/abnamroinvestors/20240807_1

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