ABN Amro rise in net profit for the year March 2007

ABN Amro Bank today reported a 59 per cent rise in net profit of its India branches for the year ended March 2007 on the back of a robust growth in interest and fee-based incomes. The net profit for the year was Rs 385.35 crore compared to Rs 241.68 crore a year earlier.

The ABN Amro India branches’ net interest income rose 72 per cent to Rs 12,357 crore in the year ended March 2007, from Rs 7,169 crore a year earlier with the net interest margin at over 4 per cent.

While, other income grew 22.95 per cent to Rs 753.08 crore in 2006-07 from Rs 612.48 crore a year earlier, the commission and fee-based income grew faster at 32.34 per cent to Rs 567.33 crore from Rs 428.70 crore over the same period. The bank’s asset base grew 36 per cent to Rs 32,077.67 crore in 2006-07 from Rs 23,539.99 crore a year earlier.

The bank’s advances rose over 21.99 per cent to Rs 18,387.55 crore at the end of March 2007 from Rs 15,073.22 crore a year earlier. Deposits moved up by 34.85 per cent, outstripping advances growth, to Rs 15,998.30 crore from Rs 11,863.77 crore a year back.

“Advances growth has been in external commercial borrowings (ECBs),” said Subir Biswas, senior vice-president, chief financial officer, subcontinent.

The retail advances totalled Rs 7,300 crore at the end of March 2007. The retail segment accounted for 58 per cent of the total revenue and 30 per cent of net profit of the bank.

“The revenue drivers in retail segment have been unsecured business and distribution business for mutual funds and insurance and forex,” said Sobti.

The bank’s unsecured portfolio, including credit cards and personal loans, has grown 25 per cent to Rs 6418 crore from Rs 5129 crore.

The bank’s advances to real estate grew 46 per cent to Rs 3,501 crore at the end of March 2007 from Rs 2,394 crore a year earlier. Of which, residential mortgages grew 26 per cent to Rs 2,274 crore and advances to the commercial real estate nearly doubled to Rs 1,072 crore from Rs 546 crore a year earlier.

The revenues from the bank’s treasury operations grew three-fold to Rs 450 crore at the end of March 2007 from Rs 147 crore a year earlier. Operating profit from treasury operations grew from Rs 130 crore to Rs 313 crore.

“The revenue mix has shifted. Two-three years ago the revenue mix was 70:30 in favour of retail. Now the non-retail business has also grown healthily in segments like SMEs, local corporates and mid-market. The global market business especially derivatives and forex have shown healthy growth,” said Sobti.

The bank had in 2006-07 offered advisory services on the Tata Corus deal and Suzlon’s acquisition of RE Power. “The corporate pipeline is healthy. Not only in terms of large deals but various small deals, which is indicative of the merger and acquisition traffic between India and Europe, a lot of which is in mid-markets like Belgium, UK, Germany, Netherlands. The deal size is $200-300 million,” said Sobti. .

The capital adequacy ratio (CAR) improved to 11.34 per cent from 10.44 per cent a year earlier. The bank’s total capital and retained earnings now stands at Rs 1,973.93 crore.

“We have brought in close to Rs 725 crore both tier I and tier II, of which Rs 199 crore was by way of hybrid capital. As result the capital adequacy ratio has improved by 100 basis points,” said Romesh Sobti, executive vice-president & country executive, India.

The bank’s provisions and contingencies grew 86 per cent to Rs 633.30 crore from Rs 340.24 crore. “Of this Rs 77 crore was on account of higher standard asset provisions as stipulated by RBI. Also the bank’s net NPA figure is at 0.12 per cent,” said Sobti.

The bank has 1.5 million retail customers including close to 1 million credit card customers. The retail brokerage business has been adding 3000 new clients every month.

The bank met its priority sector lending targets of 34 per cent of its advances for 2006-07. The micro finance portfolio stands at Rs 162 crore, with 4 lakh borrowers.