Good Overall Performance First Quarter Results 2003 28 April 2003.
-
Upload
arnold-hamilton -
Category
Documents
-
view
215 -
download
2
Transcript of Good Overall Performance First Quarter Results 2003 28 April 2003.
Good Overall PerformanceFirst Quarter Results 2003
28 April 2003
0 2
Table of Content
Operating Performance 4
Asset Quality and Capital 13
Recent Developments 16
Outlook 19
Appendices 21
0 3
Good overall performance
Revenues stable (+0.6%), underpinned by diversity of income stream
Strict cost control kept expenses flat (-0.3%)
Continued strong operating result (+2.6%)
Overall provisions lower (-10.7%)
Net profit slightly up (+0.7%)
For the sixth consecutive quarter, improvement of efficiency ratio (68.3%)
Tier 1 ratio marginally lower at 7.40%
Operating Performance
0 5
Good overall performance
Revenues stable, underpinned by the diversity of income stream
Operating expenses remained flat
Operating result up against the backdrop of the strongest operating performance in history in Q4
Commissions 22.6%
Interest49.6%
Trading9.9%
Other 17.9%
Revenues Q1 2003% change
(EUR mln) Q1 03 Q4 02Q1 03/Q4 02
Q1 03/Q1 02
Revenues 4,517 4,489 0.6 (4.8)
Expenses 3,085 3,093 (0.3) (9.2)
Operating result 1,432 1,396 2.6 6.2
Efficiency ratio 68.3% 68.9%
0 6
Record operating performance in C&CC
Revenue growth achieved on the back of continued high mortgage production in the US and robust growth in Brazil
Sustained focus on cost control pays off across geographies
Efficiency ratio improves substantially
Netherlands32.2%
RoW8.3%
US46.3%
Brazil13.2%
Revenues Q1 2003% change
(EUR mln) Q1 03 Q4 02Q1 03/Q4 02
Q1 03/Q1 02
Revenues 2,732 2,600 5.1 0.9
Expenses 1,570 1,668 (5.9) (9.9)
Operating result 1,162 932 24.7 20.5
Efficiency ratio 57.5% 64.2%
0 7
Flat expenses in BU NL despite pension and refurbishment costs
Adjusted for the transfer of RWA, net interest revenue were stable despite a weakening economic environment
Staff costs trend down, offsetting higher pension and refurbishment costs
Overall FTE and branch closure objectives of the restructuring programme achieved
Revenues Q1 2003% change
(EUR mln) Q1 03 Q4 02Q1 03/Q4 02
Q1 03/Q1 02
Revenues 880 814 8.1 18.1
Expenses 643 634 1.4 5.9
Operating result 237 180 31.7 71.7
Efficiency ratio 73.1% 77.9%
Commissions 16.8%
Trading1.0%
Other 14.3%
Interest67.9%
0 8
Continued mortgage refinancing strength in BU US
Strong revenue growth led by sustained mortgage production
Modest, yet encouraging growth in the commercial banking activities
No increase in operating expenses despite growth in mortgage production
Operating result substantially up
Revenues Q1 2003% change
(EUR mln) Q1 03 Q4 02Q1 03/Q4 02
Q1 03/Q1 02
Revenues 1,265 1,132 11.7 7.3
Expenses 559 594 (5.9) (10.7)
Operating result 706 538 31.2 27.7
Efficiency ratio 44.2% 52.5%
Commissions 12.3%
Interest48.1%
Trading3.2%
Other 36.4%
0 9
Brazil resumes its growth path
Revenues driven by interest rate related gains and volume growth in retail banking
Expenses, in particular staff costs, substantially lower due to tight cost management
Significant improvement of the efficiency ratio
Commissions 11.4%
Interest74.2%
Other 7.5%
Trading6.9%
Revenues Q1 2003% change
(EUR mln) Q1 03 Q4 02Q1 03/Q4 02
Q1 03/Q1 02
Revenues 361 346 4.3 (32.6)
Expenses 227 257 (11.7) (36.1)
Operating result 134 89 50.6 (26.0)
Efficiency ratio 62.9% 74.3%
0 10
WCS performance affected by poor trading results
Improvement in market shares in key franchises
Client related revenues in FM and flow income remained resilient. However, not enough to offset decline in revenues due to lower market driven revenues and lower equity sales and trading results
Expenses further down, despite restructuring costs of EUR 38 mln
First quarter results are not indicative of full year run rate
Other 2.9%Trading
24.9%Interest37.5%
Commissions 34.7%
Revenues Q1 2003% change
(EUR mln) Q1 03 Q4 02Q1 03/Q4 02
Q1 03/Q1 02
Revenues 1,145 1,270 (9.8) (17.3)
Expenses 1,031 1,051 (1.9) (18.4)
Operating result 114 219 (47.9) (5.8)
Efficiency ratio 90.0% 82.8%
0 11
PCAM affected by restructuring costs and difficult markets
PC revenues slightly up due to rise in net interest revenue and other revenue as result of higher transaction volumes. Increase in operating expenses primarily driven by restructuring costs in France
AM revenues primarily affected by reduced level of AuM. Continued tight cost control results in fall of operating expenses
Commissions 62.9%
Interest29.1%
Other 4.9%
Trading3.1%
Revenues Q1 2003
0 12
Restructuring in France across all SBU’s
ABN AMRO started formal discussions with the Workers Council to implement a restructuring plan across all SBU’s in France in January
Early March, the Workers Council provided its advise. Discussions on the details of the social plan are expected to be finalised soon
The social impact is estimated to exceed 400 FTE’s, most of whom are expected to leave under a voluntary departure scheme
Total restructuring costs amount to EUR 75 mln in Q1
Asset Quality and Capital
0 14
0.0%
0.5%
1.0%
1.5%
2.0%
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03
C&CC WCS ABN AMRO
Overall provisions lower
Provisioning substantially lower despite increase in Brazil, The Netherlands and WCS
Overall quality of the portfolio is satisfactory
Asset quality of C&CC portfolio remains stable
Weighted average UCR for WCS continues to be investment grade despite higher provisions in integrated energy sector
Annualised provisions / RWA (%)
0 15
Tier 1 ratio marginally lower
Tier 1 ratio essentially unchanged primarily due to goodwill charge. Total capital ratio affected by increase of stake in Banca Antonveneta
Risk-weighted assets up in line with guidance, mainly due to increase in WCS following sharp decrease in 2002
The gearing ratio decreased for the fourth consecutive quarter to 33.0%
(EUR bln) 31 12 02 31 03 0231 03 03/ 31 12 02
% change31 03 03/31 03 02
Total assetsShareholders’ equityGroup capitalRisk-weighted assets
Tier 1 ratioTotal capital ratio
556.011.0830.4
229.6
7.48%11.54%
623.612.0734.0
270.7
7.13%10.95%
7.44.31.31.5
(4.2)4.2
(9.4)(13.9)
31 03 03
597.111.5630.8
233.0
7.40%11.03%
Recent Developments
0 17
Banco Sudameris acquisition strengthens Brazilian franchise
Acquisition of a 94.57% stake from Banca Intesa to strengthen the position in the south-eastern region of Brazil
Total consideration will be fully locally funded:– BRL 527 mln in cash
– BRL 1,766 mln in shares of Banco ABN AMRO Real (“AAR”)
Banca Intesa will have the right to swap the AAR shares in shares of ABN AMRO Holding N.V. in up to three installments, starting three years from closing
ABN AMRO will have the right to call Intesa’s shares at anytime, up to five years from closing
0 18
Impact on Tier 1 is negligible
Value of the call equals value of the put and amounts to the book value of AAR multiplied by 1.8
Total goodwill, excluding integration costs, is expected to be in the region of BRL 1,100 mln
Operating synergies are expected in excess of BRL 300 mln per annum as of 2005
Tier 1 impact is negligible
The proposed transaction will not have any dilutive impact on the earnings per share
Outlook
0 20
No outlook for 2003
“The general direction and the impact of the geo-political developments on the global economy are not clear. Although we are confident about our operational performance, it is difficult to be optimistic about the general state of the global economy. We will therefore continue to refrain from giving an outlook for the year at this point in time.”
AppendicesFirst Quarter Results 2003
0 22
Appendices: table of contents
Details on WCS Operating Performance 23
Currency Variations 27
Cross Border and Sovereign Risk 31
Asset Quality and Provisioning 35
Asset Quality and Provisioning in WCS 38
Asset Quality and Provisioning in C&CC 45
Details on WCS Operating Performance
0 24
Client Performance
Overall client revenues for WCS are EUR 987 mln, representing 86% of WCS revenues
The revenue contribution of our Priority and Key clients represents 57% of total client revenues
WCS Revenues(EUR 1,145 mln in Q1 2003)
Revenues by Client(EUR 987 mln in Q1 2003)
Priority & Key Revenues by Client(EUR 563 mln in Q1 2003)
Other 14%
Client segments
86%
Integrated Energy
17%
Country Coverage
18%
TMTH15%
FIPS43%
Consumer7%Integrated
Energy15%Country
Coverage20%
TMTH12%
FIPS45%
Consumer8%
0 25
Product Performance
Most important revenue contributor is Financial Markets
Priority and Key clients contributing 49% of total product revenue
Revenues by Product(EUR 1,145 mln in Q1 2003)
Priority & Key Revenues by Product(EUR 563 mln in Q1 2003)
Other1%
Working Capital26%
Equities & CF
16%
Financial Markets
57%Financial Markets
59%Equities &
CF17%
Working Capital20%
Other4%
0 26
RWA Reductions by Product
Most important capital user is FM
Increase in Working Capital reflects the switch of business from FM
4Q02 (EUR 67.2 bln)
1Q03(EUR 71.0 bln)
Other7%
Working Capital
7%
Equity and CF4%
Financial Markets
82%
Financial Markets
79%
Equity and CF5%
Working Capital10%
Other 6%
Currency Variations
0 28
Impact of currency variations on Group performance
Revenues
Expenses
Operating result
Pre-tax profit
(53)
(61)
(8)
29
Reported change (%)
Currency impact(Eur mln)
Organic growth (%)
1.8
1.7
2.0
4.1
0.6
(0.3)
2.6
6.9
Q1 03 / Q4 02
Note: Reported change is the arithmetic sum of currency impact and organic growth. In this case, revenues were
negatively impacted by EUR 53 mln and costs were reduced by EUR 61 mln
0 29
Reported change (%)
Currency impact(Eur mln)
Organic growth (%)
Q1 03 / Q4 02
Impact of currency variations on BU US performance
Revenues
Expenses
Operating result
Pre-tax profit
(87)
40
(47)
(41)
19.4
0.8
40.0
65.4
11.7
(5.9)
31.2
55.1
Note: Reported change is the arithmetic sum of currency impact and organic growth. Revenues were negatively impacted by EUR 87 mln and costs were increased by EUR 40 mln
0 30
Impact of currency variations on BU Brazil performance
Revenues
Expenses
Operating result
Pre-tax profit
(13)
8
(5)
(4)
8.1
(8.6)
56.2
62.7
4.3
(11.7)
50.6
55.9
Note: Reported change is the arithmetic sum of currency impact and organic growth. Revenues were negatively impacted by EUR 13 mln and costs were increased by EUR 8 mln
Reported change (%)
Currency impact(Eur mln)
Organic growth (%)
Q1 03 / Q4 02
Cross Border and Sovereign Risk
0 32
Brazilian cross border risk is largely mitigated
Latin America: Brazil, Mexico and Chile are the largest contributors
Extensive use of risk mitigants is sought and achieved when dealing with Brazilian counterparts
Mitigated exposure includes trade deals, transactions covered by credit default swaps and political risk insurance
Total cross border exposure Excl. mitigated exposure
(EUR bln) Q1 03 Q4 02 Q1 03 Q4 02
Latin America 7.0 7.4 3.1 3.4
Brazil 3.6 3.7 0.8 0.9
0 33
Significant reduction of the Government Bond Position
Brazilian Government Bond Position Booked Portfolios (Mar 2003)
Investment26.5%
Commercial59.9%
Trading13.6%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Jun 02 Sep 02 Dec 02 Mar 03
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Floating or inf lation linked note Fixed rate noteCurrency linked note Real vs EURO (Jun2002=100%)
40% reduction since Jun 02vs
23% devaluation since Jun 02
Re
al
vs
Eu
ro I
nd
ex
re
du
cti
on
%
Bo
nd
Po
sit
ion
s i
n E
uro
mln
0 34
84%
86%
88%
90%
92%
94%
96%
98%
100%
102%
Dec 01 Sep-02 Dec-02 Mar-03
68%
70%
72%
74%
76%
78%
Cross Border Reduction % Mitigated Exposure
Index reduction % % of total exposure
Cross Border Exposure - Brazil Mitigated Exposure Breakdown - Mar 2003)
Pre Export Finance
30%
Political Risk
Insurance7%
Co-Finance with
Multilaterals3%
Others8%
Trade Finance
52%
Increased mitigation of already reduced exposure
Asset Quality and Provisioning
0 36
WCS23%
C&CC70%
Other5%
PCAM2%
Private loans (EUR bn - by outstanding)
Private loans
0
50
100
150
200
Mar-02 Jun-02 Sep-02 Dec-02 Mar-03
Wholesale C&CC Private Other
March 2003March 2002 December 2002
PCAM3%
Other6%
C&CC70%
WCS21%
PCAM3%
Other6%
WCS21%
NL63%
Other3%
C&CC70%
Brazil2%
US32%
0 37
Overview of total loan loss provisioning per SBU
Total ABN mainly includes Corporate Centre and Auto Lease Holland
0.0%
0.5%
1.0%
1.5%
2.0%
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03
C&CC WCS ABN AMRO
1Q 2003 loan loss provisioning by SBUs
Loan loss provisioning per SBU (EUR mln) Annualised provisioning / average RWA
SBU YTD 01 YTD 02 1Q 02 4Q 02 1Q 03 YTD 01 YTD 02 1Q 02 4Q 02 1Q 03
C&CC 802 881 255 209 181 0.49% 0.58% 0.64% 0.56% 0.50%
WCS 543 742 111 145 156 0.57% 0.87% 0.47% 0.76% 0.88%
PCAM 13 13 1 11 3 0.21% 0.21% 0.06% 0.69% 0.15%
Total ABN 1,426 1,695 390 384 343 0.51% 0.66% 0.57% 0.63% 0.59%
Other2%
C&CC53%
WCS45%
Asset Quality and Provisioning in WCS
0 39
Commercial banks exposure includes commercial lines, money market and OBSI facilities.
Breakdown of Wholesale portfolio per client sector
Wholesale - Corporate portfolioWholesale - Total portfolio
Telecom, Media,
Technology, Health
8%
Other FI21%
Country Coverage
14%
Commercial Banks35%
Public Sector6%
Consumer6%
Integrated Energy
10%
Integrated Energy
26%Consumer16%
Country Coverage
37%
Telecom, Media,
Technology, Health21%
0 40
Asia Pacific Advanced
6.5%
North America29.3%
Latin America3.3%
Eastern Europe0.4%
Africa0.5%
Europe 53.3%
Middle East0.9%
Asia5.8%
Geographic exposure calculated based on the country lending office of each counterparty
Wholesale Client base is predominantly OECD
0 41
As a % of total limits of Wholesale Corporate portfolio which excludes FIPS
Wholesale corporate portfolio is well diversified
Tobacco0.9%
Leisure0.7%(Non) durables
6.0%
Food5.9%
Services3.7%
Manufacturing (general)8.0%
Real estate1.4%
Agri/raw materials1.3%
Construction4.5%
Transport services6.8%
Manuf other transport means1.7%
Automotive (oem + supply)9.5%
Metals & mining3.2%
Chemicals5.0%
Utilities9.3%
Oil & gas8.7%
Health/pharma3.8%
Retail1.5%
Technology6.4%
Media4.2%
Telecom7.6%
0 42
Stabilization of exposure after significant reduction
Sector breakdown of wholesale portfolio - Total limits
-28.9%-30.2%
-22.8%
-24.6%
-26.9%
TMTH Integrated Energy Country Coverage Consumer Total
Mar.02 Dec.02 Mar.03
0 43
Average UCR of Wholesale Client sectors
2.7
2.8
2.9
3.0
3.1
3.2
Q4 01 Q1 02 Q2 02 Q3 02 Q4 02
TMTH Integrated Energy
Country Coverage Consumer
WCS Corporate Portfolio
Average UCRs - Historical performance Average UCRs
Dedicated Task Force has substantially brought down the integrated energy exposure
0 44
Asset quality of Wholesale Client sectors
Country Coverage Integrated Energy
Consumer
Wholesale corporate portfolio
(33% of WCS corp. portfolio) (26% of WCS corp. portfolio)
(15% of WCS corp. portfolio)
TMTH
(22% of WCS corp. portfolio)
UCR1,2,379%
UCR>=421%
UCR>=422%
UCR1,2,378%
UCR1,2,378%
UCR>=422%
UCR>=419%
UCR1,2,381%
UCR1,2,384%
UCR>=416%
80% 80% 79%
20.0% 20.0% 21.0%
0%
20%
40%
60%
80%
100%
Q4 01 Q3 02 Q4 02
UCR1,2,3 UCR>=4
Asset Quality and Provisioning in C&CC
0 46
Overview of the C&CC consumer and commercial franchise
Numbers may not add up due to rounding.
C&CC Total Private Loans (EUR bln)
Mar 03 Netherlands N. America Brazil Rest of World Dec 02 Mar 02
Commercial 70.3 30.1 34.8 1.4 4.0 70.0 77.8Consumer 102.0 77.8 19.6 2.6 2.0 102.5 103.0Total Private Loans 172.3 107.9 54.4 4.0 6.0 172.5 180.8
Brazil2%
Rest of World3%
North America
32%Netherlands
63%
Commercial41%
Consumer59%
0 47
C&CC loan loss provisions - stable performance despite market conditions
Brazil22%
Other8%
USA54%
Netherlands16%
1Q 2003 loan loss provision by Geography
Loan loss provisioning per SBU (EUR mln) Annualised provisioning / average RWA
SBU YTD 01 YTD 02 1Q 02 4Q 02 1Q 03 YTD 01 YTD 02 1Q 02 4Q 02 1Q 03
Netherlands 108 137 54 28 51 0.20% 0.25% 0.39% 0.21% 0.40%
USA 442 477 121 139 87 0.60% 0.77% 0.67% 0.89% 0.56%
Brazil 193 193 59 30 42 2.32% 3.22% 2.48% 2.00% 2.75%
Other 59 74 21 12 1 0.27% 0.34% 0.39% 0.22% 0.05%
Total C&CC 802 881 255 209 181 0.51% 0.58% 0.64% 0.56% 0.50%
Total ABN 1,426 1,695 390 384 343 0.52% 0.66% 0.58% 0.63% 0.59%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03Netherlands USA BrazilOther Total C&CC
0 48
Overview of the commercial portfolio of BU NL
Commercial28%
Consumer72%
Corporate Clients52%
SME48% UCR 1, 2 and
349%
UCR >= 450%
Not rated1%
C&CC NL commercial portfolio by product C&CC NL commercial portfolio by UCR
C&CC NL total portfolio
0 49
Overview of the portfolio of BU US
C&CC - Asset quality
Business mix
0%
20%
40%
60%
80%
Mar-02 Jun-02 Sep-02 Dec-02 Mar-03
UC
R P
erce
nta
ge
UCR 1, 2, and 3 UCR >= 4
Individual1%
Other4%
Resid. Mortgage
44%
Commercial51%
0 50
Overview of the portfolios of BU Brazil
0%
10%
20%
30%
40%
50%
60%
70%
Mar.02 Dec.02 Mar.03
UCR 1/2/3 UCR >=4 Not rated
UC
R %
UCR 1/2/362%
UCR >=432%
Not rated6%
Middle Corp19%
Retail36%
Car Financ.
45%
C&CC - Asset quality
Business mix UCR breakdown