ABN AMRO Bank N.V. Annual Report 2019 Introduction Table of contents Introduction Strategy and performance Strategy and performance 2 5 39 137 Risk, funding & capital Introduction Strategy and Risk, funding & Leadership & performance capital governance Risk, funding & capital About this report 2 Economic environment 6 Introduction to Risk, Introduction to Leadership Key figures and profile 3 Regulatory environment 9 funding & & governance 138 ABN AMRO shares 4 Strategy 11 capital management 40 Executive Board and Bank performance 15 Risk, funding & Executive Committee 138 Business performance 23 capital management 41 Supervisory Board 142 Responsibility statement 38 Risk, funding & Report of the capital review 72 Supervisory Board 146 Additional risk, funding General Meeting and Leadership & capital disclosures 129 shareholder structure 154 Codes and regulations 157 Leadership & governance Legal structure 159 Remuneration report 160 Governance 171 281 Annual Financial Statements 2019 Annual Financial Statements 2019 Other Consolidated Annual Financial Statements 2019 172 Independent Annual Financial Statements Notes to the Consolidated Annual Financial Statements 179 auditor’s report 282 Company Financial Statements of ABN AMRO Bank N.V. 263 Other information 290 Notes to the Company Financial Statements Cautionary statements 292 of ABN AMRO Bank N.V. 267 Enquiries 293 Other Other ABN AMRO Bank Annual Report 2019 Introduction About this report Introduction / About this report 2 Introduction About this report Introduction Value- creating Welcome to ABN AMRO’s 2019 Annual Report topics Strategy and performance Strategy and performance ABN AMRO takes a ‘core and more’ approach to Impact Annual reporting. The Integrated Annual Review (IAR) is Report Report the ‘core’ report that explains how, over time, Overview Integrated Non- of total Annual financial data & our bank creates value for its stakeholders. assets Review Engagement The IAR describes ABN AMRO’s business, strategy Human Pillar 3 Rights and performance - and its support for the long-term Update transition to a more sustainable economy. Abbreviations Risk, funding & capital Risk, funding & capital The IAR takes information from a number of other reports The financial information contained in this Annual Report that are published at the same time. This Annual Report is has been prepared in accordance with International one of the bank’s ‘more’ reports - its purpose is to provide Financial Reporting Standards (IFRS) as adopted by information about ABN AMRO’s financial and non-financial the European Union (EU IFRS). Some sections of the performance in compliance with regulatory requirements. Risk, funding & capital chapter of this Annual Report contain audited information and are part of the Consolidated Leadership structure Other ‘more’ reports, such as the Pillar 3 Report, Impact Annual Financial Statements. Audited information in these Report and Human Rights Update, regularly provide sections is labelled as ‘audited’ in the respective headings. further details on quantitative information in the areas of All capital metrics and risk exposures in this chapter are Leadership & governance risk and capital management, sustainability performance, reported under the Basel III (CRD IV/CRR) framework. disclosures on human rights, and background information. As from 2019, all capital figures and ratios, including comparatives, are shown on a fully-loaded basis (unless Presentation of information otherwise stated) . The Company Annual Financial The Annual Report 2019 consists of the Executive Board Statements comply with Title 9, Book 2 of the Dutch report (chapters Strategy and performance, Risk, funding Civil Code, and apply the EU IFRS valuation principles & capital management, Leadership & governance and which are also applied in the Consolidated Annual Governance Other information, as well as the sections Key figures Financial Statements. This report is presented in euros and profile and ABN AMRO shares), the Report of the (EUR), which is ABN AMRO Bank’s presentation currency, Supervisory Board and the Annual Financial Statements. rounded to the nearest million, and sets out the results for the entire ABN AMRO Bank organisation worldwide Information provided in the Annual Report is not an offer, (unless otherwise stated). All financial year-end averages in Annual Financial Statements 2019 investment advice or financial service. The information this report are based on month-end figures. Management in this Annual Report is not intended to encourage does not believe these month-end averages present trends Annual Financial Statements any person to buy or sell any product or service from that are materially different from those that would be ABN AMRO Bank, or to be used as a basis for an presented by daily averages. Certain figures in this report investment decision. A decision to invest in products may not tally exactly due to rounding. In addition, certain and services of ABN AMRO Bank N.V. can and should percentages in this document have been calculated using be based on the information in this Annual Report in rounded figures. conjunction with information included in a definitive prospectus and the Key Investor Information (if and To download this report or obtain more information, to the extent required). please visit us at abnamro.com/ir or contact us at [email protected]. The definitions and abbreviations used in this report can be found on the Other ABN AMRO website via abnamro.com/annualreport. Other ABN AMRO Bank Annual Report 2019 Key figures and profile Introduction / Key figures and profile 3 Key figures and profile Introduction ABN AMRO is a modern, full-service bank with a ABN AMRO’s ambition is to accelerate the transition to transparent and client-driven business model, serving an inclusive, circular and sustainable society. We do this clients in the retail, private banking and corporate banking by offering products and services that contribute to a better sectors. Our primary focus is on Northwest Europe. future. We offer clients an extensive and comprehensive Strategy and performance Outside the Netherlands, ABN AMRO has offices in range of products and services across a variety of channels, 13 countries. including our Mobile Banking app and Internet Banking. Key figures Target 2019 2018 Financial results Return on average equity 10-13% 10.0% 11.4% Cost/income ratio 56-58% 61.2% 58.8% CET1 17.5-18.5% 18.1% 18.4% Dividend payout ratio1 50% 62% 62% Risk, funding & capital Non-financial results2 Best NPS of Net Promoter Score Dutch peers - Retail Banking -10 -9 - Commercial Banking 1 -2 - Private Banking 9 -1 - Corporate & Institutional Banking 29 45 Employee engagement ≥ 80% 80% 80% Trust monitor AFM/NvB Leading among large Dutch banks 3.2 3.3 Dow Jones Sustainability Index ranking Within 5% of sector top 10% of sector top 5% of sector 3 banks banks banks Leadership & governance Gender diversity (% women)4 - total 44% 44% - subtop 35% women 27% 27% - top 30% women 28% 28% FTEs5 Employee FTEs Total employee FTEs 17,977 18,830 - of which the Netherlands 14,800 15,557 - of which Rest of Europe 2,169 2,267 - of which USA 438 429 - of which Asia 429 440 Annual Financial Statements 2019 - of which Rest of the World 141 138 Non-employee FTEs Total non-employee FTEs 4,749 4,608 1 Net sustainable profit excludes exceptional items that significantly distort profitability. In the first quarter of 2020, ABN AMRO proposed a dividend payout of 62% of the full-year 2019 net sustainable profit (after deduction of AT1 coupon payments and minority interests). The net sustainable profit for 2019 was identical to the net profit for 2019. 2 For definitions and measurement methods of the non-financial indicators, please refer to the strategy chapter. 3 Please note that, under DJSI, scores are not directly comparable because of regular recalibration and changes to methodology (2019: 79; 2018: 86). 4 In the Netherlands. 5 As per 31 December. Other ABN AMRO Bank Annual Report 2019 ABN AMRO shares Introduction / ABN AMRO shares 4 Introduction ABN AMRO shares Introduction Key developments For more information about STAK AAB or NLFI, please go Between 31 December 2018 and 31 December 2019, to the ‘About ABN AMRO’ section of abnamro.com or visit ABN AMRO’s share price (depositary receipts) declined stakaab.org or nlfi.nl. The depositary receipts are traded Strategy and performance by 21% while the STOXX Europe 600 Bank index rose 8%. under ISIN code NL0011540547, Reuters ticker ‘ABNd.AS’ Strategy and performance Total dividend proposed for 2019 is EUR 1.28 per share, and Bloomberg ticker ‘ABN:NA’. representing a dividend payout of 62%. This consists of an interim dividend of EUR 0.60 paid in September 2019 Other than STAK AAB or NLFI, ABN AMRO is aware and a proposed final dividend of EUR 0.68 per share, subject of one current or potential shareholder or owner of to approval at the upcoming Annual General Meeting. depositary receipts with an interest of 3% or more as at 31 December 2019: Blackrock, Inc. Listing information and substantial holdings A total of 470.9 million shares, or 50.1% of the total, Share price development are held by STAK AAB (‘Stichting Administratiekantoor (in %) Risk, funding & capital Continuïteit ABN AMRO Bank’). STAK AAB has issued 140% depositary receipts representing such shares, which are Risk, funding & capital listed on Euronext Amsterdam. NLFI holds 59.7 million 120% (6.4%) of these depositary receipts and has waived, in its capacity of