AMSTERDAM - ABN Amro Holding NV Thursday posted a six-month net profit of $1.48 billion, up 13% on the same period last year, and set new financial targets for 2001 for the whole group.
The results were at the lower end of analysts' expectations, which had ranged between $1.46 billion and $1.55 billion with a consensus of $1.51 billion.
The Dutch bank published new financial targets, which will come into effect Jan 1. Among the goals is an average return on equity of over 25% by Dutch accounting rules and an average earnings per share growth of 17%.
The banking company also aims to be in the top five in a list it has compiled of top international banks based on total return to shareholders, defined as share price appreciation plus dividend yield.
Among the companies on its list are Chase Manhattan Corp., Morgan Stanley Dean Witter & Co., Deutsche Bank, ING Group, and Barclays Bank PLC.
Current financial targets call for a return on equity of 18%, an earnings per share growth of 10%, and the bank said it expects to outperform these targets in 2000.
The new financial targets are part of a large restructuring project that ABN Amro announced in May. The bank will also reorganize its activities into three business units: wholesale clients, retail clients, and private clients and asset management.
The divisional setup will lead to a restructuring charge of up to $732.2 million in 2000 that the company expects to recoup in two years. The restructuring is projected to bring cost savings of $1.83 billion over the next four years and, after that, $549.2 million annually.
The expected cost savings are mainly the result of integrating investment banking and corporate banking into the wholesale clients division.
The restructuring plan is the first major move of ABN's new chairman Rijkman Groenink as he tries to increase shareholder value and introduce a tougher approach at the bank.
In order to increase value Groenink is changing the financial rewards for top management as delivery of the Total Return to Shareholders goal will drive a "substantial part of cash compensation for the management board."
"These new decision-making standards will have zero tolerance for value destruction," Groenink said.