ABN AMRO Bank N : Quarterly Report 2023 Q2

Interim

Report &

Quarterly

Report

ABN AMRO Bank N.V.

Second quarter 2023

1

About this report

Introduction

This Quarterly Report presents ABN AMRO's results for the second quarter of 2023, the interim report for 2023 and the Condensed consolidated Interim Financial Statements for 2023. The report provides a quarterly business and financial review as well as risk, funding, liquidity and capital disclosures.

Presentation of information

The Condensed consolidated Interim Financial Statements in this report have been prepared in accordance with

IAS 34 Interim Financial Reporting as adopted by the European Union (EU) and have been reviewed by our external auditor. Some disclosures in the Risk, funding & capital section of this report are part of the Condensed consolidated Interim Financial Statements and are labelled as 'Reviewed' in the respective tables or headings.

This report is presented in euros (EUR), which is ABN AMRO's functional and presentation currency, rounded to the nearest million (unless otherwise stated). All annual averages in this report are based on month-end figures. Management does not believe these month-end averages present trends that are materially different from those that would be presented by daily averages. Certain figures in this report may not tally exactly due to rounding. Furthermore, certain percentages in this document have been calculated using rounded figures.

To download this report or to obtain more information, please visit us at abnamro.com/ir or contact us at [e-mail]. In addition to this report, ABN AMRO provides an analyst and investor call presentation, an investor presentation and a factsheet regarding the second-quarter 2023 results.

Introduction

Financial review

Results by segment

Risk, funding & capital

Interim Financial Statements 2023 Other

ABN AMRO Bank Interim Report & Quarterly Report second quarter 2023

Figures at a glance / Introduction / Executive Board Report

2

Figures at a glance

Introduction

Net profit/(loss)

(in millions)

Return on equity	Earnings per share
(in %)	(in EUR)

Financial

1,000
								870
800				743
600
475						523
400					354
200
0
	Q2 22	Q3 22		Q4 22	Q1 23	Q2 23

20
16				16.2
13.9
12			9.6
8.8
8		6.4
4
Q2 22	Q3 22	Q4 22	Q1 23	Q2 23

1.25
1.00					0.98
0.75		0.80
			0.56
0.50	0.50
	0.37
0.25
0	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23

review

Cost/income ratio	Cost of risk
(in %)	(in bps) Target is 25-30 bps through-the-cycle

Net interest margin

(in bps)

Results by segment

100
80	70.1		72.1
		65.6
		58.0
60				51.1
40
20
0	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23

30
20
10			6	4
		1
0
-10	-9				-10
-20	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23

200
160			150	163	159
120	121	119
80
40
0	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23

Risk, funding

CET1 ratio (Basel III)

(end-of-period, in %)

CET1 ratio (Basel IV)	Leverage ratio (CRR2)
(end-of-period, in %) Target is 13%	(end-of-period, in %)

& capital

25
20
15	15.5	15.2	15.2	15.0	14.9
10
5
0	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23

25
20
16	16	16	16	16
15
10
5
0
	Q2 22		Q3 22		Q4 22		Q1 23	Q2 23

7.5
6.0		4.9	5.2	5.0	5.0
	4.8
4.5
3.0
1.5
0	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23

Interim Financial

For more information about net profit, return on equity, earnings per share, cost/income ratio, cost of risk and net interest margin, please refer to the Financial review section. For more information about CET1 ratio (Basel III and Basel IV) and leverage ratio, please refer to the Capital management section.

Statements 2023 Other

ABN AMRO Bank Interim Report & Quarterly Report second quarter 2023

Message from the CEO / Introduction / Executive Board Report

3

Highlights of the quarter and

message from the CEO

Highlights of the quarter

1. Very strong result, with a net profit of EUR 870 million and an ROE of over 16%, reflecting high NII and impairment

releases. All client units contributed with improved net profit.

1. Continued strong NII, benefitting from the higher interest rate environment.

1. Expected costs for 2023 now around EUR 5.2 billion; we do not expect to reach our 2024 cost target as 2023 investments spill over, inflation is higher and AML costs will reduce more gradually.

1. Credit quality remains solid, with impairment releases of EUR 69 million.

1. Solid capital position; fully-loaded Basel III CET1 ratio of 14.9% and Basel IV CET1 ratio of around 16%. Interim dividend

has been set at EUR 0.62 per share.

1. Updated financial KPIs and capital framework to be presented at publication of Q4 results.

Introduction

Financial review

Message from the CEO

In the second quarter, we once again delivered a very strong financial result, driven by high net interest income (NII) and impairment releases, in an environment where macroeconomic and geopolitical uncertainty persisted. I am proud of the continued commitment we demonstrated to our clients in the past quarter. All client units contributed with improved net profit, and momentum in the corporate loan book and mortgage portfolio was positive. The Dutch economy cooled down somewhat, and uncertainty and persistently high inflation continued to put pressure on our clients. Despite this slowdown, the labour market remained tight and corporate and household balance sheets robust.

I am pleased the bank is resilient, with a stable risk profile and a strong balance sheet. We will present our updated financial KPIs and capital framework at publication of the Q4 results.

Net profit in the second quarter was EUR 870 million and the return on equity (ROE) was over 16%. NII, benefitting from the higher interest rate environment, stood at

EUR 1,622 million and fee income was stable. Costs were lower due to lower regulatory levies, while investments have been delayed in a tight labour market. We now expect full-year costs for 2023 to be around EUR 5.2 billion. While we remain focused on cost discipline, we no longer expect to reach our cost target of EUR 4.7 billion in 2024, as 2023 investments spill over, inflation is higher and AML costs will reduce more gradually. More effort than expected is required to ensure that our ongoing AML activities are at a sustainable and adequate level and meet regulatory requirements.

Credit quality remained solid in Q2 with impairment releases of EUR 69 million, reflecting the ending of the Covid management overlay and net releases in individual client files. The impact of the economic slowdown on our

loan portfolio so far remains limited and we expect the cost of risk for 2023 to remain well below the through-the-cycle cost of risk of around 20 basis points. Buffers remain in place against uncertainties in the economic outlook. Risk-weighted assets increased by EUR 2.7 billion, mainly due to model updates as part of our ongoing review

of models. Our capital position remains strong, with

a fully-loaded Basel III CET1 ratio of 14.9% and a Basel IV CET1 ratio of around 16%. In line with our dividend policy, the interim dividend has been set at EUR 0.62 per share, which amounts to EUR 537 million.

Banks play an important role in society, contributing to the real economy and creating trust. We support all our clients

• private clients, entrepreneurs and companies - in their daily banking and with expertise when it matters. Society is facing climate change, the war in Ukraine and macroeconomic uncertainty, while technology is evolving very fast. In this rapidly changing environment our stakeholders value secure banking, sustainable investment and finance, and a solid business model, all of which are key elements in our strategy of being a personal bank in the digital age. Our purpose 'Banking for better, for generations to come' inspires us to support our clients with fair banking and contribute to society while we remain focused on the execution of our strategy and continue to transform into
  a future-proof bank.

Creating trust is ultimately about people. Our staff are key to delivering on our strategy and earning the trust of our clients. I would like to thank them for their commitment. And I would like to thank our clients, our shareholders and all other stakeholders for their continued support.

Robert Swaak

CEO of ABN AMRO Bank N.V.

ABN AMRO Bank Interim Report & Quarterly Report second quarter 2023

Results by segment

Risk, funding & capital

Interim Financial Statements 2023 Other

Strategic KPIs / Introduction / Executive Board Report

4

Strategic KPIs

Introduction

We are focused on executing our strategy of becoming a personal bank in the digital age, the outcome of our comprehensive strategy review announced in November 2020. Our strategic pillars - customer experience, sustainability and future-proof bank - are our guiding principles in acting on our purpose 'Banking for better, for generations to come'.

Customer experience

We focus on attractive segments in the Netherlands and Northwest Europe where we can grow profitably and further develop our leading positions in mortgages and SMEs by offering new propositions.

ABN AMRO's market share in new mortgage production decreased to 14% in the first half of 2023, reflecting strong competition and our focus on sustainable margins. In June our market share was higher than in previous months.

Our market share for SMEs remained at 16% in a competitive market.

As we increasingly become a personal bank in the digital age, the digital experience remains the most valued element of our service for clients, while they clearly also appreciate our expertise through personal contact. Our relational NPS scores for both mortgages and SMEs are still influenced by the general sentiment and branch closures. Our NPS for mortgages is slightly lower compared with last year, while our NPS for SMEs is also lower as we continue to invest in our new client service model. Contact with our employees and their expertise is the most important reason for clients to recommend the bank.

It takes some time before operational improvements affect NPS scores.

We are piloting with a private ChatGPT, the new wave of artificial intelligence, whose impact is only just beginning to take shape. In the pilot, we are using a private ChatGPT system to summarise client conversations.

When an adviser types in a client question, ChatGPT shows a summary of all product pages, allowing them to focus fully on the conversation. We expect that ChatGPT will allow our staff to spend more time with our clients.

Sustainability

We aim to increase the asset volume of sustainable client loans (including mortgages and corporate loans) and ESG & impact investments from around one-fifth to over one-third in 2024. We are making good progress, with a score of 33% at the end of June. Following the publication of our climate strategy last December, we will evaluate the

bank-wide targets on sustainability and further include climate.

The Sustainability Acceleration Standard (SAS) KPI increased from 31% to 33%. Sustainable loans at Corporate Banking increased from 19% to 23%, mainly for Commercial Real Estate clients. The percentage for residential mortgages continued to steadily improve. At Wealth Management we now bring impact investing within reach of a larger group of clients through the Impact Funds Mandate, making the full breadth of the ESG investment spectrum available to all clients.

We are making steady progress on the execution of our climate strategy. We are piloting a client engagement tool on the transition and we facilitate trainings, while we are also working on targets for the next wave of sectors. For companies with a financing need of up to EUR 25 million we provide standardised products such as the transition loan, encouraging companies to make sustainability improvements.

We aim to lead by example and make our office buildings more energy-efficient. We have signed a construction contract to redevelop one of our locations in Amsterdam into a Paris-proof campus, designed to facilitate the trend of hybird working. In the same area of Amsterdam, through our Social Point programme, we are supporting local social initiatives with expertise and resources. The programme is now being scaled-up to five other major cities.

To live up to our purpose and achieve our strategic goals, we need to have the right talent on board and continuously invest in diversity and inclusion. A key factor is fostering an inclusive climate for both our people and our clients - an environment that reflects the diversity of our society. This is important for employee engagement and a pleasant working environment and makes for a better risk culture and decision-making. The percentage of women in the sub-top remained at 31%.

Future-proof bank

We are building a future-proof bank. In the digital age, our personal touch is often digitally enabled, combined with expertise as our main differentiator. Clients expect easy digital delivery through apps, fully digital services and seamless self-service. As we are transforming into

a personal bank in the digital age, we are staying close to our clients in a different way, including through our mobile banking app which now also enables direct contact by phone or video call.

Financial review

Results by segment

Risk, funding & capital

Interim Financial Statements 2023 Other

ABN AMRO Bank Interim Report & Quarterly Report second quarter 2023