Strong Dutch economy puts ABN Amro on track for higher dividend

Dutch lender ABN Amro aims to increase dividend payouts to more than half of its net profits after strong economic growth in its domestic market pushed up earnings in the third quarter. A higher dividend would benefit the Dutch government which remains the bank's largest shareholder after a bailout a decade ago. ABN Amro returned to the stock market in 2015 but the state retains 56 percent of the shares and hasn't sold any in over a year.
Net profit in the latest quarter was 725 million euros ($830 million), compared with 673 million euros a year earlier and 589 million euros expected by analysts in a Reuters poll. This put ABN on track to meet its earlier promise of increasing shareholder payouts, while keeping its capital buffers well above minimally required levels.
ABN Amro has set aside 60 percent of its net profit over the first nine months of the year for dividends, as it aims to increase the payout to shareholders from the 50 percent ratio reached last year, it said on Wednesday. "This 60 percent is an indication of the direction of our thinking", Chief Financial Officer Clifford Abrahams told reporters.
"The actual level over 2018 might be a bit higher or lower", he added. ABN will take regulatory requirements for 2019 and its fourth quarter results into account before setting the definitive level in February. ABN Amro has refocused on the Dutch market in recent years, cutting thousands of jobs in the process.
With around 80 percent of its business in its home market, it has benefited from a booming Dutch economy, which has been one of the top performers in the euro zone over the past two years. Strong economic growth helped push down impairments 20 percent on a quarterly basis between July and September, to 106 million euros, indicating a clear improvement from the first few months of 2018.
"Our impairments position is normalizing, although some issues remain in sectors such as offshore shipping," said Abrahams. In the first quarter, ABN reported unexpectedly high impairments as shipping, oil services, jewellery and some other sectors continued to struggle, despite the economy's strong recovery and rising oil prices. "ABN beats again and puts behind the Q1 impairments issue", KBC Securities analyst Jason Kalamboussis said in a note, maintaining his buy rating for the bank's share.