Arab Bank H1 profit up 13pc to $327m
Amman, August 1, 2011
First-half net profit at Jordan's Arab Bank rose by 13 percent to $327 million compared with the same period a year ago as its diversified presence helped it mitigate the impact of regional unrest, the bank said on Monday.
The statement said customer deposits grew to $30.9 billion while loans rose to $21.8 billion in a portfolio that 'continued to be sound despite the tensions in the region'.
The bank, which gave no comparable figures, said the Arab spring uprisings would continue to affect the pace of business activity in some markets in the region but a diversified portfolio helped reduce risks.
Chairman Abdel Hamid Shoman said the results, the first recovery in profit since it was hit, along with other large Middle Eastern banks by the financial crisis in 2009, reflected its 'sound financial position and conservative risk posture'.
'We are monitoring the situation in the region but remain optimistic on the long-term potential for growth of Arab Bank in the region,' Shoman said.
One of the Middle East's major financial institutions, the bank has a presence in 30 countries.
Bankers have said the perception that Arab Bank, whose geographic diversification has helped it weather turmoil in the past, has been a safe haven during the global financial crisis, helped push deposits.
Nemeh Sabbagh, the bank's CEO, said the bank saw a healthy 8.3 and 8.4 percent growth in net earnings and commission income in the first six months of 2011.
'This came largely from growth in our core banking business,' Sabbagh said without elaborating.
Arab Bank put aside $178 million in provisions for non-performing loans in 2010 compared with $207 million in 2009.
Most Jordanian banks have set aside higher provisions to cover possible defaults and non-performing loans by businesses and real-estate firms reeling from the impact of the global downturn on the aid-dependent economy.
Bankers said that while the credit provisions weighed on profit, Arab Bank was cushioned by a healthy capital base and $8.3 billion of shareholders' equity. Total capital adequacy ratio reached 14.95 percent at the end of June 2011, well above regulatory standards.
Shoman said the 'strong liquidity position of the bank will allow it to further grow its core business activities'.
He said the bank no longer needed to set aside provisions for troubled Saudi Arabian groups Saad and Al Gosaibi. Bankers said at least half of the provisions last year were set aside for the bank's exposure to the troubled Saudi firms.
Nearly 20 percent of the bank is owned by the family of Lebanon's former prime minister, Rafik al-Hariri, who was assassinated in 2005, and a similar stake is held by Jordan's social pension fund. The rest is mainly held by long-term investors.
Arab Bank owns 40 percent of Saudi Arabia's Arab National Bank ANB. Assets of Arab Bank Group, which includes Arab Bank Switzerland, based in Zurich, rose to $51.1 billion at the end of 2010 from $50.5 billion in 2009. - Reuters
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