Record Operating Performance

1
Record Operating Performance

• Fourth Quarter Results 2002

13 February 2003
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Table of Content

• Chairmans Introduction 3
• Operating Performance 4
• Asset Quality and Capital 13
• Strategic Update 20

Note Appendices to this document are provided
in a separate book
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ABN AMRO at a glance

• Net profit 1998 - 2002

• Return on equity/earnings per share

Strong balance sheet
Operating result 2002 per SBU
Total assets EUR 556.0 bn Group capital EUR
30.1 bn Risk-weighted assets EUR 229.6 bn BIS
tier 1 ratio 7.48 BIS total capital ratio 11.54
NB Balance sheet items as at 31/12/2002
4
Record high operating performance in 2002

• Revenues slightly down (-2.9)
• Strict cost control drove expenses down (-6.9)
• Record high operating result (EUR 5.5 bln up
  7.8)
• Provisioning up in line with the outlook (EUR 1.7
  bln)
• Net profit excl. extraordinary result up (2.1)
• Substantial improvement in efficiency ratio
  (70.1)
• Tier 1 at 7.48 exceeding target for the year
• Dividend unchanged at EUR 0.90

5
One of the best performing European Financial
stocks
Noteprices as at market closure 13 May 2003
6
What is the ABN AMRO proposition?

• High proportion of annuity and flow products in
  total revenues
• Execution risk largely eliminated
• Prudent risk management and good asset quality
• Sustainable organic capital generating
  capabilities
• Genuinely client-led business model
• Attractive dividend yield backed by sustainable
  strong operating performance

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Operating Performance
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Record operating performance in 2002

• Revenues FY 2002

• Overall revenue lower primarily due to a lower
  level of commission income
• Operating expenses driven largely by a
  substantial decline in WCS and CCC
• Operating result up reflecting the best operating
  result in history

9
Efficiency ratio falls for the fifth consecutive
quarter

• Revenues Q4 2002

• Operating result increases substantially
• Efficiency ratio has reached a new low
• Net profit excluding extraordinary result
  strongly up

10
CCC posts another quarter of strong performance
Revenues Q4 2002

• Robust organic revenue growth fuelled by
  continued high mortgage origination, spread and
  volume gains in the Netherlands and Brazil
• Expenses up in line with the high level of
  mortgage activity
• Further improvement of the efficiency ratio

11
With the restructuring largely behind, BU NL
focuses on growth
Revenues Q4 2002

• Revenue growth achieved in the context of pricing
  pressure
• Stable staff costs over the quarter as FTE
  departures occurred in December
• Substantial improvement of the efficiency ratio
• Restructuring (FTE reduction and branch closure)
  almost finalised, client satisfaction up

12
Mortgages helped BU US to deliver strong revenue
growth
Revenues Q4 2002

• Revenues driven by gains on the mortgages
  business
• Expenses up due to year-end advertising costs and
  one-off items (write-off on existing leasehold
  improvement)
• Efficiency ratio up but remains competitive

13
Volatility restrains BU Brazil
Revenues Q4 2002

• Revenues were impacted by the interest rate
  increases
• Expenses stable despite increase in labour costs
  and branch openings
• Efficiency ratio affected by decrease in revenues

14
PCAM maintains revenue growth despite difficult
market conditions
Revenues Q4 2002

• PC revenues are largely stable while expenses are
  substantially up. Expenses were largely driven
  by reclassification of direct expenses
• AM delivers a substantially better performance
  driven by revenue growth

15
WCS restructuring continues to deliver
Revenues Q4 2002

• Revenues relatively stable despite a sharp fall
  in RWA
• Expenses further down as restructuring is rolled
  out
• Operating result increases for the third
  consecutive quarter

16
Asset Quality and Capital
17
Provisioning is in line with the outlook

• Provisioning slightly up in Q4
• Overall quality of the portfolio remains
  satisfactory
• WCS corporate portfolio continues to be
  investment grade
• Quality of the CCC portfolio is stable
• Lower level of annualised provisions/RWA than the
  peer group average

Annualised provisions / RWA ()
18
Tier 1 ratio exceeds target
change
31 12 02/ 31 12 01
31 12 02/ 30 09 02
(EUR bln)
30 09 02
31 12 01
31 12 02
556.1 10.78 30.1 229.6 7.48 11.54

• Tier 1 ratio increase led by fall of RWA and by
  high retained earnings
• Tier 1 ratio gains 45 basis points despite
  pension (EUR 804 mln) and currency related (EUR
  2.6 bln) charges in 2002
• Simultaneous decline in proportion of hybrid
  instruments

19
Pensions are accounted for under US GAAP

• Accounting policy migrated to US GAAP on 1
  January 2002. US GAAP allows the spreading of
  potential increases of the annual pension costs
• Accrued Benefit Cost is fully accounted for in
  the liabilities under provisions
• Annual pension costs have to increase as and when
  unrecognised net actuarial gains / (losses) are
  greater than 10 of the Projected Benefit
  Obligation
• Any such increase would then be spread over the
  average remaining service term - 11 years at
  present
• Value of Plan Assets should always be equal to or
  greater than Accumulate Benefit Obligation. Any
  shortfall in the Value of Plan Assets has to be
  funded by a Tier 1 haircut after capitalised
  prior service costs and provisions have been
  deducted

20
Pensions had a negative impact on Tier 1 in 2002

• In 2002, pensions had a total negative impact on
  Tier 1 of EUR 804 mln (net of taxes)

Q4 02 provision (EUR mln) coverage of accumulated
benefit obligation
Q1 02 provision (EUR mln) migration to US GAAP
Under US GAAP, value of Plan Assets should be at
all time equal to or greater than accumulated
benefit obligation.
Treatment of pensions is more conservative under
US GAAP. Migration required this one-off
provision.
NoteQ402 provision is related to the Netherland
Plan Assets only
21
High profit retention reflects strong coverage
ratios

• Due to sustainability of our income stream and
  high stock dividend (55 - 60), retained earnings
  will continue to accrue rapidly
• Coverage ratios improved in the course of 2002
• We remain committed to achieving our Tier 1
  target of 7.50 by end of 2003

Note Ratios calculated on the basis of a 60
stock dividend
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Strategic Update
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Our strategy remains unchanged

• Focus on Retail and Asset Gathering businesses -
  to deliver above average returns through cycles
• WCS continues to play a supportive role with
  respect to the Retail and Asset Gathering focus
  as a principal provider of product capabilities
  and intellectual capital
• With the cost restructuring plan largely behind
  us, the focus has shifted to revenue and capital
  generation

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Focus shifts to revenue growth

• Increase capital allocation to Retail and Asset
  Gathering activities
• Increase BU NL penetration of the high-value
  added client and product segments
• Increase market share of BU US in the retail mass
  affluent segment
• Expand BU Brazil client base
• Push product capabilities through distribution
  networks in Italy
• Support new business initiatives in WCS
• In particular in Financial Markets and Working
  Capital
• Selective and MFV-based acquisitions to
  supplement the existing operations

25
A re-branding has been initiated to reinforce
common identity

• Re-branding process has been initiated to ensure
  the projection of the same corporate values and
  business principles to our clients and to
  underline the synergies between the SBUs

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Re-branding
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No outlook for 2003

• Despite the momentum in our businesses, we
  believe that given the geo-political
  uncertainties at this point and the potential
  impact of these uncertainties on the global
  economy, a net profit outlook based on economic
  assumptions only is not very realistic. We,
  therefore, refrain from giving an outlook for the
  year at this point in time.

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