Dutch bank's profit beats expectations

ABN Amro, the biggest bank in the Netherlands, reported a forecast-beating 2004 net profit yesterday on the back of halved loan loss reserves.

The bank, which employs 140 people at a wholesale banking operation in Dublin's IFSC, said it was looking to expand in some regions, including the US midwest and Asia.

The positive numbers and confident plans did little for the bank's shares, however, as investors expressed disappointment at the absence of a real 2005 forecast.

ABN Amro cautioned instead that the wider economic outlook remained mixed.

Analysts also pointed out that the figures were propped up by large extraordinary gains, while interest income was lower than many had expected.

"The figures looked pretty good from most angles, but the one disappointing issue looks to be interest income," said Mr Cor Kluis, analyst at Rabo Securities in Amsterdam.

Subtracting €1.05 billion in income from the sale of Bank of Asia and car-leasing unit LeasePlan, revenues were flat at €18.74 billion, in line with forecasts.

Excluding one-off items, net profit rose by 17 per cent to €3.71 billion, beating analysts' expectations for €3.68 billion.

The full-year figures were helped to a large extent by lower loan loss provisions, which nearly halved to €653 million thanks to improving business conditions and fewer bankruptcies.

In the fourth quarter, net profit was €948 million, excluding extraordinary items, beating analysts' estimates of €789 million.

ABN Amro chairman Mr Rijkman Groenink said the bank maintained its goal of reaching the top five of its peer group in terms of total returns to investors, despite having missed the target so far. He also forecast better results this year for its key US division versus 2004.

ABN Amro said it would offer more detail on its 2005 expectations and give a new long-term goal for return on equity when it released figures under the new IFRS accounting rules at the end of March.

The bank is looking for small and medium-sized acquisitions in the US midwest, where it has a strong regional presence through LaSalle Bank and Standard Federal Bank. - (Reuters)