Asahi shares mark weekly slide after cyberattack halts production
Investing.com -- ABN Amro Bank (BVMF:ABAM34) was upgraded to “buy” from “sell” by Goldman Sachs, which raised its 12-month price target to €32.50 from €24.70, citing stronger profit growth, efficiency gains and higher capital distribution, sending shares up higher over 2% on Friday.
The upgrade comes as the Dutch lender’s shares closed at €27.06 on Oct. 1, leaving about 20% upside potential.
The brokerage projects return on tangible equity (ROTE) to rise from 9.2% in 2025 to 11.5% in 2027 and 12.5% in 2028.
Goldman Sachs said improvements in net interest income (NII), lower costs and more efficient capital management will close the profitability gap with European peers such as ING.
Net interest income is expected to expand from €6.4 billion in 2025 to €7.4 billion in 2028, with forecasts running 4% to 6% above consensus.
The growth is driven by hedging gains from a steeper yield curve and reinvestment into longer-dated maturities.
The brokerage noted that a 25-basis point reduction in savings rates would add about €250 million annually, equivalent to 8% of 2026 net profit.
Shareholder returns are set to accelerate. Goldman Sachs estimates €8.5 billion will be returned between 2025 and 2027, including €3.5 billion in dividends and €5 billion in share buybacks, representing 37% of the bank’s €22.5 billion market capitalization.
The dividend payout ratio is projected to remain near 50%, while buybacks will be executed twice a year. Capital return yields of 13% in 2026 and 14% in 2027 place ABN Amro at the top of the European banking sector.
Goldman Sachs said capital efficiency is a key lever for higher returns. ABN Amro’s common equity tier 1 (CET1) ratio was 14.8% in the second quarter of 2025, with a 13.5% target for 2026.
Lowering the CET1 to 13% could add up to 110 basis points to ROTE. The brokerage is also reducing risk density in its corporate loan book, cutting average risk weights from 116% in 2024 to 103% in mid-2025. Achieving a 90% level could free up €1.4 billion in capital and lift returns further.
Cost management remains another area for improvement. ABN Amro’s cost-to-income ratio was 62% in 2024 compared with ING’s 54%.
Higher spending on IT (12% of revenue) and external consultants (9% of revenue) accounted for most of the difference.
Goldman Sachs projects that reducing IT costs and halving external staff could bring the ratio down to 57% by 2028, adding as much as 140 basis points to ROTE.
Earnings forecasts have been revised higher. Goldman Sachs now expects earnings per share to increase from €2.54 in 2025 to €3.56 in 2027.
Dividend per share is projected to grow from €1.26 in 2025 to €1.87 in 2027. Net income is forecast at €2.1 billion in 2025, €2.3 billion in 2026 and €2.6 billion in 2027.
Key risks identified include weaker economic conditions in the Netherlands, slower progress on cost reduction, adverse shifts in risk-weighted assets, lower interest rates, or rising savings rates.