The private banking arm of ABN Amro has reported a profit drop of 31% in Q1 2020. Results were also dismal at the group level as the bank swung to a loss after higher loan loss provisions due to the Covid-19 crisis.

The private banking unit posted a net profit of €28m ($30.5m) for the three-month period ended 31 March 2020, versus €40m a year ago.

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The division’s operating income in Q1 2020 was €289m, down 6% from €307m last year.

Net interest income dipped 12% to €153m from €174m over the period.

Net fee and commission income rose 3% year-on-year to €129m. The rise was said to be due to improved performance in Germany.

The unit’s operating expenses dropped 4% to €233m from €244, driven by fall in personnel expenses partly due to lower FTE levels owing to divestments.

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Low market performance hit client assets, which dropped by €27.9bn from the final quarter of 2019.

The private banking arm’s cost/income ratio at the end of March 2020 was 80.8%, versus 79.6% in the previous year.

Group metrics

At a group level, the Dutch lender registered a net loss of €395m in Q1 2020, versus a profit of 478m a year ago.

This was due to a rise in impairment charges to €1.11bn from €102m.

Operating income at the group decreased 8% year-on-year to €1.92bn.

ABN Amro CEO Robert Swaak said: “Impairments were very high (€1.1bn) due to two exceptional client files and significant upfront collective provisioning for sectors immediately impacted by Covid-19 and oil prices.

“As a result, we reported a net loss of €395m over the first quarter. Net interest income held up in the current environment, fees were higher and costs were lower, benefiting from continued cost management. The resulting ROE was a disappointing -8.7% and the cost/income ratio was 67.6%. Our capital position remains strong, with a Basel III CET1 ratio of 17.3% and a Basel IV CET1 ratio of around 14%, comfortably above the regulatory minimum requirements.”