ABN AMRO Bank N.V.
Research by MICKE
Author: micke
- 14.62 -4.07% (20/12/2024)
- 16.00 +4.99% (16/09/2024)
- MONITOR (HOLD)
A profitable bank that has high dividend, and share buy backs. The main drag on valuation is that most banks have low P/E due to market fear of macro. ABN has 50% dividend policy ~10% dividend, and since CET1 ratio is already above target I expect additional share buy backs. RoE target is 10%, which is lower than current level. 2023Q4 indicates that this is a good reference for 2024, i.e. EPS24=0.6*4=2.4, which would give PE24=6,7 which is good and will generate good return on capital without much risk in my opinion. I don't expect much increase in the share price since the Dutch state wants to sell off its large stake. Taking in to account the drop for sv. Handelsbanken on a soft report and ABN potentially has higher costs in 2024Q1 than 2023Q4, not sure about what rating to give, analysts are quite negative.
Valuation (1)
NLFI is shareholder of ABN AMRO Bank N.V. and de Volksbank N.V. The shares in these corporations were transferred to NLFI by the Dutch State. NLFI as a majority shareholder is currently executing a trading program with the intention to bring its stake down to approximately 40%. NLFI will participate in the buyback pro-rata on the basis of a 40% interest via off-market transactions, thereby avoiding an increase in its relative stake in the company. (2024 program)
14/02/2024 by MICKE｜01
Business (2)
Analyst estimations as shown in the graph from yahoo (https://finance.yahoo.com/quote/ABN.AS?p=ABN.AS&.tsrc=fin-srch) seem to have been too low the last 4 quarters and they are lowering it for 2023Q4. I don't understand why the estimates are so low. At the Q4 presentation (2024-02-14) ABN will give some guidance for the future, and I think they will announce better earnings than analysts predict and probably also share buy backs in 2024. This should give some positive effect on the share price.
2024-01-16 example of analyst ratings:
ABN Amro Bank NV : JP Morgan cuts target price to EUR 13.6 from EUR 15.8
ABN Amro Bank NV : JP Morgan cuts to underweight from neutral18/01/2024 by MICKE｜01If the rates stay "higher for longer" as many predict, also my prediction, profits will remain high for years. The high profits PE=5, or 20% on your investment, will be shifted out to share holders via dividends and share buy backs.
17/11/2023 by MICKE｜01
People (1)
On the 2023Q3 conference the CEO gave very good answers, the CFO answers could in some cases have been improved. In gereneral they seem like a good management team.
17/11/2023 by MICKE｜12
Financial (4)
Results OVERVIEW
ABN has delivered a solid performance in the past years. In the current economic climate the conditions are positive for a continued solid performance.
Period
NII
OPEX
Net income
ROE
Comment
2023-Q4
1.504
1.381
545
9.5%
Expected representative for 2024
2023-Q3
1.533
1.228
759
13.6%
Lower NIM and asset sales gains
2023-Q2
1.604
1.137
870
16.0%
€67M impairment release
2023-Q1
1.620
1.406
523
9.6%
Seasonal high regulatory fees
2022-Q4
1.504
1.343
354
8.7%
2022-Q3
1.314
1.254
743
13.9%
2022-Q2
1.232
1.321
475
8.8%
2022-Q1
1.266
1.508
295
5.4%
€62M extra impairment
28/03/2024 by ALPHA｜03ABN AMRO Bank posts net profit of EUR 545 million in Q4 2023
14/02/2024 by MICKE｜01RoE target 10%, currently higher. Share buy back when CET1>15%.P/B=0.5.
17/11/2023 by MICKE｜01The NII has probably peeked and has been in a declining phase due to customers moving deposits to higher yielding accounts. (On the 2023Q3 investor call CFO said that going forward they expect NII to be flat, or a bit up.
(graph from 2023Q3 report)
17/11/2023 by MICKE｜01