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ABC nine-month net profit drops

MANAMA, October 29, 2015

Arab Banking Corporation (ABC) has announced that its consolidated group net profit for the first nine months of 2015 was $144 million, 27 per cent lower compared to a profit of $197 million reported for the same period last year.

Net profit for the third quarter was $48 million, 20 per cent lower than the $60 million reported for the same period last year, said a statement from the bank.

The external headwinds arising from volatile trading conditions combined with strong US dollar against domestic currencies in which Bank ABC operates continued unabated during the third quarter.

Notably, the Brazilian Real weakened over 27 per cent and the Algerian Dinar weakened by over 19 per cent during the first nine months of 2015 compared with the same period in the previous year.

The group benefited last year from exceptional items that did not recur. However, the underlying businesses continue to show resilience in the face of challenging circumstances with sustained performances in local currency terms. This resulted in a total operating income of $142 million for the third quarter, compared with $208 million reported for the same period in 2014.

Operating expenses were 8 per cent lower at $99 million compared to $108 million last year, benefiting from currency movements while reflecting additional cost investment in strategic initiatives to support sustainable business growth. Net impairment provisions for the third quarter of $18 million, were higher than the previous year’s $13 million. However, the cumulative net provision charge of $40 million for the nine months period was at the same level as last year. Tax saving for the period was $38 million against a charge of $10 million in 2014, benefiting from the tax treatment of currency movements in subsidiaries.

Bank ABC Group’s total assets stood at $28.6 billion at the end of the first nine months of the year compared to $29.4 billion at the 2014 year-end, also affected primarily by the stronger US dollar. The underlying businesses broadly remained on a growth trajectory, as the asset volumes grew in domestic currency terms in most businesses. The ratio of non-performing loans (NPLs) to gross loans at 2.5 per cent remains healthy (2.4 per cent at year-end 2014).

Deposits proportionately decreased by $0.9 billion during the period to reach $18.7 billion, again impacted by currency translation but to some extent offset by growth in deposits. The group’s liquidity position continues to be at comfortable levels with the liquid assets to deposits ratio marginally increasing to 66 per cent compared to 65 per cent at year-end 2014.

Shareholders’ equity at 30 September 2015 stood at $3,724 million after the distribution of 5 per cent dividend to the shareholders and after foreign exchange movements on investments in subsidiaries.  

Bank ABC Group’s consolidated total capital adequacy ratio (CAR) continued to remain strong at 19.8 per cent, comprising predominantly Tier 1 at 17.5 per cent. The total CAR, calculated in accordance with the Central Bank of Bahrain’s Basel 3 equivalent rules introduced in 2015, remains well above the regulatory minimum of 12.5 per cent.

Bank ABC's chairman, Saddek Omar El Kaber, said: “The challenges posed by the external environment in a number of key markets have clearly affected the results during the year.  However, the bank’s capital and liquidity position continue to remain strong, with healthy asset quality.”

“A number of measures and initiatives are under way with associated cost investments to diversify and enhance earnings capability,” he added. – TradeArabia News Service




Tags: | ABC | profit | Net |

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