ABN Amro is hopeful it will see a recovery in the second half of the year, provided the rollout of vaccination boosts the economy and offsets the impact of low interest rates on profit margins, it said.
ABN reported a net profit of €54m for the fourth quarter of 2020, 83% lower than a year earlier, but higher than the average analysts' estimate of €35m.
Its net profit was helped by impairments on bad loans. At €220m, they were almost a third lower than a year earlier, as the Covid-19 crisis had less impact than feared.
Net interest income, however, fell 15% to €1.35 billion during the quarter, slightly worse than analysts' expectations and at the lower end of the bank's own forecast.
Interest income is expected to improve, provided the economy starts to recover, the bank's chief financial officer Clifford Abrahams said.
"We'll see continuing pressure from negative rates on deposit margins," Abrahams told reporters. "We expect some declines after Q1, but then stabilisation and in due course growth as the economy picks up."
The vaccination rollout throughout Europe will eventually enable economies to re-open, increasing demand for loans, the bank's chief executive Robert Swaak said.
"The vaccination programme will facilitate a significant lifting of restrictions, rapidly leading to a strong economic rebound in the second half of the year," he said.
Swaak said the bank was well positioned to pay out the postponed 2019 dividend, once the European Central Bank (ECB) lifts its pandemic restrictions on shareholder rewards.
But a €45m full-year loss means there will be no 2020 dividend.
ABN also said it intended to appoint Lars Kramer as its new CFO, as soon as the ECB approves his nomination.
