The private banking arm of ABN Amro has reported a plunge in profit in Q2 2020 as the group registered a loss due to impairments related to the Covid-19 pandemic.

Private Banking highlights

The unit posted a profit of €19m in the three-month-period ended 30 June 2020, a 72% slump compared to €66m in the prior year.

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Operating income decreased 7% to €301m from €323m. Compared to Q2 2019, net interest income fell 4% to €167m.

Net fee and commission income dipped 5% to €119m, driven by lower asset management fees following Covid-19 induced market dislocation and resultant AUM decline.

Lower FTE levels due to the sale of operations in the Channel Islands resulted in a reduction in personnel expenses. However, other expenses increased due to €34m impairment for goodwill and intangibles in Belgium.

As a result, operating expenses at the unit increased 8% to €247m from €228m, due to higher other expenses.

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The division’s cost income ratio at the end of June 2020 stood at 82%, compared with 70.6% a year earlier.

Group performance

The banking group posted a net loss of €5m in Q2 2020, versus a profit of €693m in the same quarter of 2019.

Operating income dropped 15% to €1.98bn from €2.32bn over the period. Net interest income decreased 10% to €1.51bn from €1.68bn while net fee and commission income decreased 9% year-on-year to €375m.

Operating expenses of €1.2bn were 8% lower than the previous year.

Departure from trade and commodity financing

Additionally, ABN Amro said that it will quit trade and commodity financing and end offering corporate finance outside Europe.

The move is said to result in 800 redundancies.

The bank’s Natural Resources and Transportation & Logistics segment will now only focus on European clients.

ABN Amro CEO Robert Swaak said: “We will serve clients in segments where we can achieve scale, so we will focus on the Netherlands and Northwest Europe, where we will invest and grow.”