Interview with our Chief Financial Officer

2023 was a highly profitable year for ABN AMRO. Was that exclusively due to the favourable interest rate environment?

“Obviously, the higher interest rates played a big role. In just over a year, the interest rate environment improved materially, which had a significant positive impact on our net interest income generation. On top of that, we benefited from the strategic steps we have taken since 2020. The wind-down of our CB non-core activities, which is almost fully completed, has helped to de-risk the bank and improve the overall quality of our loan portfolio. Despite challenging market and geopolitical circumstances, we didn’t see any uptick in loan defaults last year and underlying credit quality indicators remained solid. In fact, we recorded EUR 158 million in impairment releases as our non-performing loan exposures further decreased and earlier provision overlays to cover possible losses were reduced including those related to geopolitical uncertainties.”

What did the year reveal about ABN AMRO and where it stands?

“2023 was a volatile year, which re-emphasised the resilience of our diversified business model and the strength of our capital and liquidity positions. Amid ongoing macroeconomic and geopolitical uncertainty, we continued to grow our key customer segments and create value for our clients. In Corporate Banking, we added new clients as we are increasingly being recognised for our expertise in helping businesses in Northwest Europe to accelerate their new energy, mobility and digital transitions. In mortgages, we benefited from our ability to reach clients across the market and keep our overall mortgage portfolio stable in a competitive market.

At the same time, our income from fees remained stable as market circumstances made it difficult to sustain the increasing trajectory. In Personal & Business Banking, for example, our package pricing strategy developed slower than initially anticipated and mortgage advisory fees were impacted by a lower number of transactions. Clearly over time, we have the ambition to make fees a more important part of our income by focussing on strategic initiatives in Affluent, SMEs and emphasis on growing the Assets under Management, reducing the dependency on net interest income.”

As you said, 2023 was a very profitable year for ABN AMRO. How are you putting your excess capital to use?

“The good financial performance and strong capital position has enabled us to return capital to our shareholders. In April 2023, we completed our second share buyback programme and continue to be committed to generating and returning capital through dividends and buybacks as evidenced with the third share buyback we announced at our Q4 results in February. We are also continuing to invest in growth. A good example of this was our acquisition of neo-broker BUX, which boosts our offering to young affluent and next generation clients in Europe.

Another highlight was the Dutch State’s decision to reduce its stake in ABN AMRO below 50%, which shows that our major shareholder is confident in how we are executing our strategy. It will clearly also increase the free float of our shares, and so provide more opportunities for other shareholders to build up positions in ABN AMRO.”

What’s your outlook for 2024?

“We are confident in the outlook for both the economy and the bank’s performance. The big question is: are we expecting a soft landing for the economy? On that note, the overall outlook is relatively good. The Dutch economy continues to perform relatively well and expanding again after three consecutive quarters of contraction. The expectation was that house prices would come under significant pressure; they are actually rising again. The forecast is that domestic spending will hold up in 2024, exports will bottom outand inflation will fall. At the same time, wage growth will remain relatively strong, and this will have a positive impact on private consumption supporting moderate GDP growth going forward.”

When publishing its second-quarter results in August, the bank said it would not achieve its cost target for 2024. How do you explain this?

“First of all, it’s a reality check. The inflationary environment in which we are operating today is nowhere near the environment we thought we would be operating in back in 2020. There is also the issue of investments spilling over. In a very tight labour market, we had to delay some of our major change programmes as we struggled to find people with the right skillset. As a result, 2023 costs were lower than previously expected.

While we remain committed to cost discipline, we expect higher costs in 2024 as we have scaled up resources for data capabilities, further digitalisation of processes and implementation of new regulation like Sustainable Finance. We will also continue to invest in simplifying our IT and application landscape, which should help, over time, to reduce maintenance costs while also freeing up capacity to improve the digital experience for clients.”

How do you view the ever-increasing regulatory pressure for banks?

“In my view, regulatory change and our strategy are mutually enhancing. Regulation is also a catalyst of change, it helps standardisation and data availability, it creates a level playing field and can push the industry to operate at higher levels of risk management. That’s also how I look at the Corporate Sustainability Reporting Directive, which increases the requirements for impact reporting as of our 2024 integrated annual report. We are very well positioned for CSRD as we have been reporting on how we create value for society since our first Impact Report in 2018. Still, the new reporting guidelines require us to capture even more non-financial data, which we will use to make better informed decisions as we aim to maximise positive impact for all our stakeholders in line with our strategy.”

You officially took over as the CFO in November last year. If you look at your predecessors, how will your role be different?

“The finance department is increasingly focusing on making visible how we create value for our stakeholders and use that for both steering and reporting in an integrated way. That also means that the skillsets of the people in finance are changing. When I look at myself, it was only three years ago that I transitioned into the finance organisation. Before that, I had worked in various departments, including corporate banking and financial markets for more than 15 years.

This background provides me with a broader perspective on the bank and its environment, which I hope will be helpful as we transition the finance organisation. In the end, our future success depends on our continued ability to develop value-added services for clients. By combining financial and non-financial data, my team plays an important role in providing insights and steering on broader value creation perspective thereby identifying areas where we can have the biggest impact for our stakeholders.”