Bank ABC Islamic posted a net profit for the year 2020 of $28.6 million compared to $37.3 million recorded for the previous year, 23.4% lower than previous year, mainly on account of higher loan provisioning.
Total operating income was $44.9 million compared to $46.7 million reported for last year, 3.7% lower than previous year, the bank said in a statement.
Operating expenses were $6.4 million compared to $8.5 million for last year. Allowances for credit losses for the year were $9.5 million compared to $0.5 million reported during last year. The exceptional increase in ECL during the year was primarily on account of a fraud case in GCC.
"2020 was a year like no other. Bank ABC Islamic started the year with an optimistic outlook following its exceptional performance in 2019, achieving double digit growth in both total operating income as well as net profit. Before the end of first quarter 2020, the Covid 19 pandemic broke out, triggering unprecedented challenges that required us to swiftly adapt to the new environment," the bank said.
The bank remained resilient during the year and responded well to the pandemic across all fronts.
"Our operational resilience helped in keeping our staff safe at office and providing secure and seamless access to those working from home, as we continued to serve our clients without comprising on our service standards. The pandemic, combined with low profit rate environment and depressed oil price, resulted in overall slowdown of business momentum. On top of this, a regional fraud case resulted in significantly higher loan provisions as compared to the previous year," it said.
However, these challenges were unable to over shadow the resilience of our business, and we achieved total operating income of $44.9 million in 2020 compared to $46.7 million in 2019, it said.
The bank's core customer business and balance sheet showed a strong 11.3% growth on a year-on-year basis. Moreover, its financial health remained solid, with a capital adequacy ratio of 34.7% as compared to regulatory requirement of 12.5%.
"Our activity in the market remined unabated; we successfully led nine Sukuk mandates and three syndicated deals," it said.
An important milestone during the year was receiving regulatory approvals and laying down the ground work to set up an Islamic banking widow in Algeria, called ‘alburaq’. The first ‘alburaq’ branch has recently started its operations in 2021.
The achievements of Bank ABC Islamic have been recognised by the external rating agency, IIRA (Islamic International Rating Agency), which reaffirmed the bank's 2019 rating of A-/A-2 on the International scale and A=(bh)/A-1(bh) on the National scale with a stable outlook.
Q4 financial results:
Net profit for the fourth quarter was $6.3 million compared to $8.5 million reported in the fourth quarter of 2019; total operating income was $9.7 million compared to $12.1 million reported for the same period last year; operating expenses were $1.4 million, compared to $2.8 million for the same period of last year; allowances for credit losses were $1.9 million compared to $0.7 million reported in last year.
ABC Islamic Bank’s total assets stood at $2.314 billion at the end of 2020, compared to $2.079 billion at the 2019 year-end, showing a growth of 11.3% on year-on-year basis.
Shareholders’ equity at December 31, 2020 stood at $293 million, compared to $365 million at 2019 year-end. The decrease is mainly due to the $100 million dividend payment to the shareholders made during the year.
The bank’s capital base remains very strong with a capital adequacy ratio of 34.7%, predominantly Tier 1, which totalled 33.7%.
Hammad Hassan, Managing Director of Bank ABC Islamic, said: “In the backdrop of the pandemic, and a very difficult operating environment, realising $44.9 million in total operating income compared to $46.7 million in 2019, and balance sheet growth of 11.3% is a major achievement and is a testament to the hard work of and exemplary performance of our staff. Net profitability of the bank was adversely impacted due to a regional fraud case that led us to take a large provision. During the year, in line with CBB’s directives, we supported our clients who needed forbearance during these tough times. We remain committed to building our customer franchise and look at 2021 with optimism and hope for business environment to return to normalcy during later part of the year.” - TradeArabia News Service