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ABN Amro shares decrease as share buyback underwhelms

ABN Amro shares decrease as share buyback underwhelms

February 10, 2022: -On Wednesday, ABN Amro shares decreased 4% even though the Dutch bank reported higher-than-expected net profit for the fourth quarter and announced a 500-million-euro share buyback.

Net profit increased to 552 million euros in the final three months of 2021 from 54 million euros a year earlier, which beats the average analysts’ expectation of 451 million euros.

“ABN reported strong beats on net profit and capital the share buyback of 500 million euros is less than our expectations of 800 million and the market’s at 900 million to 1 billion,” Citigroup analysts said in a note.

“500 million euros will permit to have multiple share buybacks over time,” Chief Executive Robert Swaak told reporters. “It allows us to become predictable in the way we return our capital.”

ABN shares traded down 3.9% at 14.65 euros at 0855 GMT in Amsterdam. They are up nearly 75% from a year before but remain slightly below their pre-pandemic level.

Although ABN Amro was re-privatized in 2015, the Dutch state which acquired the bank in the 2008 financial crisis still owns 56% of the shares and hasn’t sold any since September 2017.

Finance minister Sigrid Kaag has said she would explore ways to reduce the government’s stake in the coming years without further details.

ABN’s net profit was helped by the easing of COVID-19 lockdown measures in the Netherlands, improving the financial health of ABN Amro’s clients in the previous months of the previous year. At the same time, interest income decreased less than expected.

Persistently low interest rates drove net interest income down 1% from a year before the fourth quarter, which takes the drop for the whole year to 11%.

A 245 million euro net gain also pushed up profit on the sale and leaseback of ABN’s headquarters in the south of Amsterdam.

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