ABN Amro shares fell almost 6% today, as the Dutch bank said it remained cautious despite reporting a much better than expected third-quarter profit helped by relatively low coronavirus-related impairments.
The bank, which is largely state owned, today reported a net profit of €301m for the third quarter, down 46% year-on-year but almost three times higher than analysts had expected.
Loan impairments jumped to €270m from €112m a year earlier but that was significantly less than the €500ms analysts pencilled in for the period.
"The reason it's been so relatively positive is because of the government support," chief financial Officer Clifford Abrahams told Reuters.
"That can't go on forever. Our expectation is that there will be further impairments when that government support phases out. In our core markets that's likely to be next year," he said.
ABN lowered its forecast for the write-offs in 2020 to around €2.5 billion from €3 billion.
It also said net interest income was set to decline further to around €1.4 billion in the last three months of 2020, following a 10% drop to €1.47 billion in the third quarter.
"The guidance on net interest income and impairments for 2021 read below consensus, but we see room to surprise on costs for 2021", ING analyst Albert Ploegh wrote in a note.
ABN Amro shares have lost half their value since the start of the year.
ABN's core capital adequacy ratio was roughly stable at 17.2% at the end of September, but chief executive Robert Swaak said this did not mean dividend payments could automatically be resumed next year.
"The payout of the accrued full-year 2019 dividend will be considered prudently at full-year 2020, taking into account the status of the ECB dividend recommendation as well as conditions and prospects at that time," he said.
The European Central Bank has recommended banks refrain from paying dividends until at least January 2021.
Net profit in the third quarter was helped by a book gain on the sale of ABN's office building in Paris, which was partly offset by costs for winding down its corporate bank activities.