March 4, 2011 / 8:09 AM / 9 years ago

UPDATE 2-ABN AMRO profit surges as readies for 2014 IPO

* 2010 underlying net 1.1 bln euros vs 142 mln in 2009

* Loan impairments fall 47 pct to 837 mln euros

* ABN backs state’s plan for 2014 IPO

(Rewrites throughout, adds CEO quotes, detail)

By Gilbert Kreijger

AMSTERDAM, March 4 (Reuters) - Dutch state-owned bank ABN AMRO [ABNNV.UL], which is being readied for a stock market listing in 2014, said operating profit surged sevenfold in 2010, thanks mainly to lower loan losses.

The Dutch state nationalised the local ABN AMRO and Fortis entities in 2008 after the dramatic failure of a three-pronged hostile takeover of ABN AMRO by Royal Bank of Scotland, Fortis and Banco Santander.

The finance ministry has said it would start preparing a listing of ABN AMRO in 2013, with a possible initial public offering the following year. Finance Minister Jan Kees de Jager also said the state would keep its options open, but that a sale to another bank was less likely than an IPO. [ID:nLDE70O1WK]

ABN AMRO’s chief executive, Gerrit Zalm, declined to comment on a possible deal with a strategic investor.

“The ministry has said ... an IPO is the most logical route and it would keep options open for alternatives,” Zalm told Reuters, and he declined to say whether there had been interest from potential buyers.

That hasn’t stopped speculation in the market about a possible strategic sale to a larger European bank.

“We regularly get questions from investment banks. But this is primarily a question for the shareholder. Every bank of course wants to do this IPO; it is quite prestigious,” ABN AMRO’s chief financial officer, Jan van Rutte, told reporters.

Zalm, himself a former finance minister, said in a statement he welcomed the listing plans and he expected integration costs to fall “sharply” after 1.5 billion euros in net costs related to the integration and separation from Fortis and RBS.

ABN AMRO’s 2010 underlying net profit, which excludes the integration and separation costs, was almost 1.1 billion euros, compared with 142 million euros in 2009, mostly due to a halving of loan impairments to 837 million euros, ABN said.

ABN AMRO said profit also rose as net interest income climbed 15 percent to 4.9 billion euros because of better interest rate margins on loans, especially mortgages, and saving deposits.

Overall, the bank reported a net loss of 414 million euros for 2010 because of separation and integration costs, compared with a net profit of 274 million euros in 2009.

Van Rutte, chief financial officer, said he expected another 400 million euros of integration costs this year and 200 million in 2012 but the expected total of 1.6 billion euros would not be exceeded.

The bank said operating expenses rose 2 percent to a total of 305 million euros due to “several large legal provisions and expenses relating to international activities conducted in the past” by its commercial, retail and private banking operations.

The bank declined to give details, but ABN AMRO is one of several banks facing claims following the conviction of U.S. swindler Bernard Madoff. [ID:nLDE6BA078]

The ABN AMRO group is now made up of ABN AMRO itself and Fortis Dutch retail banking activities, as well as commercial and merchant banking services for Dutch firms, and private banking units in 13 countries, with a growth focus on Asia.

The newly combined group, which will operate as ABN AMRO Bank, will be the Netherlands’ third-largest bank in terms of balance sheet total after ING ING.AS and Rabobank [RABO.UL]. For a take a look on the Dutch financial sector, click on [ID:nLDE71N277] (Reporting by Gilbert Kreijger; Editing by Sara Webb and Will Waterman)

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