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Investing.com -- JPMorgan has placed ABN AMRO on Positive Catalyst Watch ahead of its capital markets day (CMD) on November 25, expecting the Dutch bank to lay out a plan focused on profitable growth and more efficient use of capital.
Analyst Delphine Lee projects that ABN will step up its capital returns, centering its message on shareholder distribution.
ABN is expected to announce share buybacks of €1 billion per year, equivalent to roughly 93% total payout across fiscal 2025 (FY25) to FY28. Lee calculates that this payout level would be about 26% higher than current Bloomberg consensus expectations for 2026 and around 9% above expectations for 2027.
Despite the higher distribution, the bank is still expected to maintain a CET1 ratio close to 14% by the end of 2028.
With an implied total yield of around 10% annually over the period, Lee expects investors to respond positively to a clear commitment to returning more capital. ABN is also anticipated to target a return on tangible equity of 12% with a cost-to-income (C/I) ratio below 55% by 2028.
"However, how the bank achieves the 55% C/I will matter, and it might entail less cost reduction than hoped for by the market with more fee growth instead and net interest income (NII) supported by rising short term rates," Lee wrote.
"In any case, the new CEO will have to earn investor goodwill through delivery, in our view," she added.
Although ABN trades at around 8.3 times expected earnings and 0.8 times net asset value for a return on net asset value of just over 10% in 2027, JPMorgan keeps a Neutral stance on the stock, emphasizing that buyside expectations are already elevated going into the new business plan.
On a relative basis, JPMorgan prefers Barclays and Société Générale over ABN, which trade at around 6.5 times and 6 times expected 2027 earnings, respectively, and are also positioned to deliver around 12% return on tangible equity by 2028.
UniCredit and Intesa Sanpaolo are also highlighted, trading at around 7.7 times and 8.5 times expected earnings, with a stronger record of managing costs.