Interest rate shopping customers are driving the ABN AMRO share price deeper

The Dutch banking giant is losing almost 10 percent on the stock market now that interest income is lower. Customers are looking for savings products that give them a higher return.

ABN AMRO

the third largest bank in the Netherlands, which is almost half state-owned, reported a better-than-expected net profit of 759 million euros for the third quarter on Wednesday morning.

But investors see no reason to celebrate. They are particularly concerned that the bank’s interest income will come under further pressure.

ABN AMRO booked 1.5 billion euros in net interest income between the beginning of July and the end of September. That is the difference between what a bank receives in interest through loans and what it pays to customers on its savings products. ABN AMRO’s net interest income is 20 percent higher than in the third quarter of 2022, but lower than in the second quarter of this year and investors had expected more.

ABN AMRO attributes this lower net interest income to the fact that it pays a higher interest on its savings products and that customers are actively looking for alternative investments that earn them more money. In total, customers withdrew deposits worth 3.6 billion euros from the bank, according to the quarterly report.

Now that the European Central Bank has pressed the pause button on its interest rate policy, investors fear that banks’ interest income will rise more slowly. Last week, ING reported slightly lower net interest income for the third quarter, but the bank was able to partly reassure investors by announcing a share buyback program. A similar message was not received from ABN AMRO on Wednesday.

KBC will publish its third quarter results on Thursday. The bank and insurer had already slightly lowered its forecast for interest income last summer.