Morningstar DBRS Confirms ABN AMRO Bank's Long-Term Issuer Rating at A (high), Trend Remains Stable

DBRS Ratings GmbH (Morningstar DBRS) confirmed the Long-Term and Short-Term Issuer Ratings of ABN AMRO Bank N.V. (ABN AMRO or the Bank) at A (high)/R-1 (middle). The trends on all ratings remain Stable. The Bank's support assessment is SA3, because timely systemic support is not expected, and the Bank's Intrinsic Assessment (IA) is A (high). See the full list of ratings at the end of this press release.

KEY CREDIT RATING CONSIDERATIONS
The confirmation of ABN AMRO's credit ratings reflect the Bank's strong retail and commercial banking franchise in the Netherlands, combined with a solid franchise in private and commercial banking in Northwest Europe, particularly France and Germany, and a global clearing business. The credit ratings also consider the Bank's sound earnings generation capacity, which has improved following the de-risking undertaken in recent years. In Morningstar DBRS's view, the recurrent earnings generation provide ABN AMRO the flexibility to absorb a potential deterioration in the cost of risk which could materialise in the current environment, marked by geopolitical uncertainty and trade tensions. However, Morningstar DBRS considers profitability has already peaked and expects pressure on margins going forward against a backdrop of lower interest rates, albeit offset by fee income generation capacity and volume growth.

The credit ratings also reflect that ABN AMRO has maintained solid asset quality thanks to its diversified and conservative risk profile, providing room to navigate the current challenging geopolitical environment. In addition, ABN AMRO's credit ratings incorporate the Bank's solid funding and liquidity profile, which is underpinned by a stable customer deposit base and good access to market funding. Moreover, the credit ratings continue to be underpinned by sound capital ratios which provide ample buffer over regulatory requirements.

ABN AMRO BANK N.V.'s IA of A (high) has been assigned at the midpoint of the Intrinsic Assessment Range, as Morningstar DBRS views the Bank's credit fundamentals and performance as commensurate with those of similarly rated peers.

CREDIT RATING DRIVERS
An upgrade of the credit ratings would result from a substantial improvement in profitability and further improvement in risk metrics.

A downgrade of the credit ratings would occur from a sustained deterioration in asset quality or a material weakening of profitability metrics and capital.

CREDIT RATING RATIONALE
Franchise Combined Building Block Assessment: Strong
ABN AMRO is a leading Dutch bank with total assets of EUR 408.1 billion at end-Q1 2025. The Bank mainly operates in its domestic market (74% Exposure at default), where it benefits from a strong retail and commercial banking franchise, reporting a 19% market share in new mortgage lending in 2024. As of May 2025, the Dutch State, through NL Financial Investments (NLFI), owned around 33.3% of ABN AMRO's shares, after gradually reducing its stake since 2023 it owned since the merger of the state-owned portions of the former ABN AMRO Bank N.V. and Fortis Bank (Nederland) N.V. in 2010. Morningstar DBRS expects the Dutch State will continue to reduce its stake and ultimately exit its investment in ABN AMRO. As such, Morningstar DBRS does not factor any support into ABN AMRO's credit ratings from the current ownership structure. The Bank is in the process of acquiring Hauck Aufhäuser Lampe (HAL), a leading German private bank, with the closing of the transaction expected in Q2 2025. This should have a negative impact of around 45 bps on the CET1 and will enable the Bank to achieve a leading position in the private banking business in Germany while supporting fee and commission income going forward. Since April 2025, Marguerite Bérard became the new CEO for the Bank following the resignation of Robert Swaak.

Earnings Combined Building Block Assessment: Good
Morningstar DBRS views that ABN AMRO's earnings capacity is sound, supported by its strong core franchise in the Netherlands and supplemented by its international operations. Profitability has been gradually improving in the past three years as the Bank benefited from the higher-interest-rate environment, cost containment, and a manageable cost of risk. However, profitability remains somewhat lower compared to domestic and European peers. In 2024, ABN AMRO reported a net profit of EUR 2.4 billion, down 11% from EUR 2.7 billion a year earlier, impacted by one-off items in 2024 related to restructuring costs and legal provisions. Excluding this impact, results were driven by higher revenues, boosted by a strong increase in net interest income (NII) on the back of higher rates, releases of provisions which offset higher operating expenses. As a result, the Bank reported a return on equity (ROE) of 10.1% compared with 12.2% in 2023, still above its 9%-10% target for 2026. However, in Q1 2025 the Bank reported EUR 619 million net profit, from EUR 674 million in Q1 2024 with an ROE at 9.9%

Risk Combined Building Block Assessment: Strong/Good
Morningstar DBRS views ABN AMRO's risk profile as good, mainly reflecting the benign Dutch operating environment, strong risk management, and the de-risking that took place in the Bank's CIB loan portfolio. This provides a solid starting point for any potential deterioration the Bank might face given that risks to asset quality have increased, against a background of ongoing rising trade tensions and heightened geopolitical risks. The Bank's asset quality metrics have been gradually improving since end-2020 and stabilised at 2.1% at end-March 2025 (2.1% at end-2024; 1.9% at end-2023). Stage 2 loans slightly declined to 8.0% in Q1 2025 from 8.8% at end-2024. Going forward, Morningstar DBRS expects some moderate deterioration in asset quality reflecting a more uncertain economic environment.

Funding and Liquidity Combined Building Block Assessment: Strong
Morningstar DBRS views ABN AMRO's funding profile as solid, supported by a sound customer deposit base and diversified funding sources. Customer deposits, which accounted for 70% of total non-equity funding at end-Q1 2025, increased by 1.8% compared with end-2024. However, around 50% of total deposits are insured, which is lower than its peers, and reflects a relatively large share of deposits from corporates and private banking, which could be less sticky than retail deposits. The Bank reported a sound loan-to-deposit ratio (LTD) of 96% at end-March 2025. Wholesale market funding accounted for 30% of the Bank's total funding at end-March 2025. ABN AMRO benefits from a diversified funding mix and an extended maturity profile without significant refinancing concentration risk, and the Bank has maintained good access to capital markets in various currencies in 2024 and 2025. Another factor supporting the credit ratings is the Bank's solid liquidity position. At end-March 2025, the Bank's liquidity buffer stood at EUR 118.1 billion, equivalent to 3.9 times the short-term wholesale maturities. In addition, the 12-month rolling average liquidity coverage ratio (LCR) of 140% and net stable funding ratio (NSFR) of 136% were well above the minimum regulatory ratios.

Capitalisation Combined Building Block Assessment: Strong/Good
In Morningstar DBRS's view, ABN AMRO's capitalisation is adequate, supported by a good internal capital generation capacity and continued access to capital markets. The Bank reported a CET1 of 14.7% at end-March 2025 slightly up from 14.5% at end-2024, mainly driven by internal capital generation albeit slightly offset by an increase in risk-weighted assets (RWAs) related to the update of the operational risk model in Q1 2025. The Bank has maintained shareholder return with a dividend pay-out of 50%, in line with the 2026 targets. The total capital ratio stood at 20.8% at end-March 2025. As a result, the Bank maintained adequate buffers despite increased Supervisory Review and Evaluation Process (SREP) requirements, which now include a CET1 ratio of 11.26%, which comprises a minimum Pillar 1 Capital Requirement of 4.5%, a Pillar 2 Capital Requirement of 1.27%, a Capital Conservation Buffer of 2.5%, a Other Systemically Important Financial Institutions Buffer of 1.25%, and a Countercyclical Capital Buffer of 1.74%. The SREP requirement for the total capital ratio is 15.7%. Morningstar DBRS also notes that ABN AMRO amply meets its Minimum Requirement for own funds and Eligible Liabilities (MREL).

Further details on the Scorecard Indicators and Building Block Assessments can be found at https://dbrs.morningstar.com/research/455773

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS

There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (16 May 2025) https://dbrs.morningstar.com/research/454196

Notes:
All figures are in euros unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (23 May 2025) https://dbrs.morningstar.com/research/454637. In addition Morningstar DBRS uses the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (16 May 2025) https://dbrs.morningstar.com/research/454196 in its consideration of ESG factors.

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

The sources of information used for these credit ratings include Morningstar Inc. and company documents. Other sources include ABN AMRO Q1 2025 and 2024 Reports, ABN AMRO Q1 2025 and 2024 Press Releases, ABN AMRO 2024 Pillar 3 Report, ABN AMRO Q1 2025 and 2024 Presentations, ABN AMRO Q1 2024 and 2023 Roadshow Presentations and ABN AMRO Q1 2025 and 2024 Factsheets. Morningstar DBRS considers the information available to it for the purposes of providing these credit ratings to be of satisfactory quality.

With respect to FCA and ESMA regulations in the United Kingdom and European Union, respectively, these are unsolicited credit ratings. These credit ratings were not initiated at the request of the issuer.

With Rated Entity or Related Third Party Participation: YES
With Access to Internal Documents: NO
With Access to Management: NO

Morningstar DBRS does not audit the information it receives in connection with the credit rating process, and it does not and cannot independently verify that information in every instance.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS's trends and credit ratings are under regular surveillance.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

The sensitivity analysis of the relevant key credit rating assumptions can be found at: https://dbrs.morningstar.com/research/455774

These credit ratings are endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Arnaud Journois, Senior Vice President
Rating Committee Chair: Nicola De Caro, Senior Vice President, Sector Lead
Initial Rating Date: 21 May 2009
Last Rating Date: 10 June 2024

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