ABN Amro beats analyst expectations in the second quarter with net profits of $799 million

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Dutch bank ABN Amro reported a net profit of $799 million in its second quarter earnings, beating Reuters' analysts expectations of $642 million.

ABN AMRO beat analysts' expectations and reported Wednesday a profit of 688 million euros ($799.5 million) for the second quarter of the year.

Though from a year ago, the bank's profits saw a 28 percent contraction, they were still above Reuters' analysts expectations of about 552.5 million euros ($642 million).

The Dutch bank argued that impairments were below the previous quarter, but they were still "elevated as challenges remain in certain sectors."

Speaking to CNBC on Wednesday, Clifford Abrahams, chief financial officer of ABN AMRO, mentioned heath care in the Netherlands and global offshore energy sectors as the areas contributing to higher impairments.

"Overall our asset quality is good and we are benefiting from a benign economy particularly here in the Netherlands. So we expect impairments for the full year to remain below our through-the-cycle average of 25 to 30 basis points," Abrahams pointed out.

Here are some of the key highlights for the second quarter:

  • Operating income reached 2.29 billion euros, down 8 percent from a year ago
  • Operating expenses stood at 1.26 billion euros, down also 8 percent from a year ago.
  • Fully-loaded CET1 ratio at 18.3 percent, from 17.6 percent a year ago.

Compared to other European banks, the level of capital at ABN AMRO is particularly high at about 18.3 percent. Abrahams told CNBC that this is a protective measure against upcoming banking regulations.

"ABN AMRO will be quite significantly impacted by Basel IV. We think it will impact our capital ratios by 4 to 5 percent so at 18.3 percent, we are well placed within our current target range," he said.

Basel IV refers to an international banking regulation that requires institutions to have stronger capital positions and thus be better prepared for potential financial shocks.

Corporate banking reduction

In an attempt to boost profitability in corporate banking, ABN announced Wednesday several changes to this side of the business.

The lender will reduce the capital allocated to trade, commodity finance and cyclical sectors. This means that risk-weighted assets will be cut by 5 billion euros by the end of 2020.Staff will also be reduced by about 250 jobs.

"The corporate bank has a strong client franchise particularly here in the Netherlands, but as you say our results have been disappointing over the last few years. We also have new banking regulations coming in, Basel IV, which is going to increase capital requirements, so we have updated this morning our response to that," Abrahams told CNBC's "Squawk Box Europe."

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