ABN Amro Earnings: Strong NII Results and Improved Guidance; CEO to Step Down in 2025

Narrow-moat ABN Amro reported roughly stable year-over-year and quarter-over-quarter earnings for the second quarter, comfortably ahead of the company-compiled consensus. Releases from loan-loss provisions were the main driver of the earnings beat, which we don’t think the company can maintain. ABN raised its net interest income guidance for fiscal 2024 slightly to EUR 6.4 billion from EUR 6.3 billion, with its cost guidance unchanged at EUR 5.3 billion. ABN remains one of the European banks with the greatest gearing to the interest-rate cycle. Still, fee income has steadily grown, and recent acquisitions support further revenue diversification, placing it in a better position for future lower interest rates. Although CEO Robert Swaak's recently announced departure was unexpected, we do not expect a change in strategy. We updated our model to incorporate new NII guidance, labor agreement changes, and restructuring provisions. Still, the net impact was negligible, and we kept our fair value estimate unchanged at EUR 21/share.