ABN Bank Highlights in 1985.
Our bank's net profit rose by Fl. 77 million in
1985 to reach Fl. 478 million, an increase of
19.2%. The gross result was Fl. 1,332 million
compared with Fl. 1,260 million in 1984.
An amount of Fl. 859 million of this result was
earned by our domestic network (1984: Fl. 771
million) and an amount of Fl. 473 million was
earned by our foreign network (1984: Fl. 489
million).
Interest margins on the domestic front were
depressed in 1985. The reduction in the margins
was compensated, however, by an increase in
funds lent. The results of our Securities business,
aided by a buoyant stock market, were very
gratifying, as were earnings on our foreign
exchange dealings. As regards the profits from
our foreign network, we should point out that, in
assessing the results, one must bear in mind that
in 1985 both the dollar and other currencies tied
to the dollar suffered a substantial decline in
value. The negative effect of this was partially
compensated, however, by a satisfactory
development in our activities in Europe and in
North America and by timely transactions to
hedge the results. Taxation increased by Fl. 14
million to Fl. 237 million, although the tax
burden was actually reduced in a number of
countries owing to more generous tax facilities.
We were able to reduce the amount added to the
Provison for General Contingencies from Fl. 625
million in 1984 to Fl. 600 million in 1985. The
improvement in the economic climate in the
Netherlands meant that a smaller amount was
needed for the specific bad and doubtful debt
provisions on domestic business. As regards our
foreign network, the specific provisions that had
to be formed were still too high. Partly as a result
of the decline in the value of the dollar, however,
we were able to reduce the amount of the
addition to the provisions in respect of loans to
countries with balance of payments problems.
In contrast to the practice of previous years, the
net currency translation differences on the funds
invested abroad are accounted for in
Shareholders' equity (Exchange differences
reserve) - together with the results on forward
exchange transactions entered into in
connection with these net differences - also
taking into account the effects of taxation. An
exception to the above is formed by the
translation differences on funds invested in
countries with exceptionally high rates of
inflation, which are taken directly to the profit
and loss account. In 1985 a net charge of Fl. 74
million was made against the Exchange
differences reserve. All changes are in
accordance with the revised model accounts
which have been drawn up by the
Nederlandsche Bank.
In 1986 we shall be concentrating above all on
ways of further improving our service to
customers. Where our business clients are
concerned, this will involve in particular our
providing support and information in the field of
capital market transactions to enable them to
exploit the new opportunities created by the
liberalization of the capital market in the
Netherlands. We shall also be devoting attention
to the continued improvement of the services we
provide to our personal customers, however. In
the years ahead, the interiors of all our branches
in the Netherlands are to be refitted and
advanced computer equipment is to be installed
with the objective, on the one hand, of speeding
up over-the-counter transactions and, on the
other hand, of enabling our staff to provide
customers with an information service that is
second to none. This redesign and re-equipment
of the branches involves an investment in the
order of Fl. 150 million between now and 1990.
We are well aware, however, that it is not only
the range of products we offer and the interior
design of our branches that are important to our
customers, but that it is particularly important
that our staff should possess a sound knowledge
of the bank's products and that they should go
out of their way to be of service. This aspect will
continue to receive our attention in 1986.
This year we shall again be opening several new
branches abroad. But just as important as the
opening of new branches is the further
expansion of the activities of our existing
branches. The close cooperation between the
various directorates forms a sound basis for such
expansion. The rapid changes that are taking
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