AMSTERDAM--ABN Amro, the Netherlands' largest domestic lender, on Wednesday posted fourth-quarter net profit of 333 million euros ($352 million), beating expectations due to strong economic growth in the Netherlands.
Analysts polled for Reuters had seen profit at 279 million euros, versus 272 million euros in the same period a year prior. "Profitability improved on the back of growth in the loan book - mortgages, small and medium enterprise (borrowers) and corporate loans, and significantly lower impairments," said CEO Kees van Dijkhuizen, who replaced Gerrit Zalm on Jan. 1.
Notably, loan impairments fell to 35 million euros from 124 million in the fourth quarter of 2015. Net interest income margin improved to 1.53 percent, from 1.47 percent.
Van Dijkhuizen noted that growth in the company's mortgage book was the first since 2010 and in the small and medium sector, the first since before the 2008 financial crisis.
The Dutch economy grew 2.1 percent in 2016 and is expected to accelerate in 2017, though the company noted risks from possible protectionist policies emanating from the new U.S. administration, and fallout from Britain leaving the European Union, as Britain is one of the Netherlands' largest trading partners. With 80 percent of ABN's business focused on the Netherlands, it is seeking to grow international lending, focusing on commodities, renewable energy, food supply chain and utility providers.
"We have started on-boarding new clients in these sectors," Van Dijkhuizen said. "This shows that our bank can achieve growth both in the Netherlands and abroad."
However, the change will not occur swiftly: ABN said that in the fourth quarter its lending was 79 percent domestic and 21 percent international.
