ABN Amro Third-Quarter 2022 Earnings Beat; Increase Fair Value Estimate to EUR 17

Our investment case for narrow-moat ABN Amro relies on our belief that it stands to gain a lot from higher interest rates and that it has significant excess capital. While the third-quarter 2022 results validated our view around rate sensitivity, the position around excess capital is less clear-cut. ABN Amro increased its guidance for fiscal 2022 net interest income slightly to EUR 5.3 billion from EUR 5.2 billion. It confirmed that net interest margins have bottomed and are seeing deposit margins improving, which supports our investment case. ABN Amro reported a 15.2% common equity Tier 1 ratio at the end of September after setting aside EUR 250 million for a potential share buyback that it announced previously. It theoretically has a 13% common equity Tier 1 ratio target. Still, in practice, we do not believe ABN Amro's ultimate owner—the Dutch government or its regulators—will support a material return of capital in the near term. The Dutch central bank recently cautioned banks under its supervision to remain cautious around capitalization.