Jefferies has started coverage of two major Dutch banks, assigning differing recommendations based on each lender's valuation, earnings prospects and business composition.
In its initiation note dated Tuesday, the brokerage gave ABN Amro a "hold" rating with a price target of 15. Jefferies said ABN Amro's shares are trading near what it views as fair value, a conclusion driven by the bank's capital position and the outlook for its earnings.
Jefferies highlighted ABN Amro's concentrated exposure to the Dutch mortgage market and its cost base as factors that informed the more cautious rating. The note stated that the bank's dividend yield is supported by existing capital buffers, but that there is limited upside under the brokerage's current assumptions.
By contrast, Jefferies started coverage of ING with a "buy" recommendation and a 18.50 price target. The brokerage cited stronger earnings momentum at ING and a more diversified business model as the primary reasons for the more favorable assessment.
ING's international footprint and its digital banking platform were singled out as contributors to revenue generation. Jefferies also observed that ING's return on tangible equity and its capacity to distribute capital compare favourably with European peers, lending support to the positive stance.
Across both names, Jefferies said the banks are positioned to return capital to shareholders and that their capital ratios remain above regulatory minima. The analysts emphasised that trends in net interest income and the ability to control costs will be important variables to monitor for the Dutch banking sector going forward.
Key takeaways from the initiation note include Jefferies' view that ABN Amro currently offers limited upside relative to its capital and earnings profile, while ING's broader revenue mix and digital advantages underpin stronger earnings prospects. Both banks, the brokerage added, maintain capital buffers that support shareholder distributions, though macro-driven revenue and cost developments will shape future performance.