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Bank ABC announces Q1 2022 results with a net profit of US$31 million attributable to the shareholders of the parent
2022-05-11
Manama, Bahrain: Bank ABC (Arab Banking Corporation B.S.C.) - Bahrain Bourse Trading Code “ABC” - today announces its results for the first quarter of 2022.

The Group has started the year on a robust footing, continuing from the progress achieved in 2021, a year of recovery from post-pandemic conditions. The integration of Group’s acquisition of BLOM Bank Egypt S.A.E (“BBE”) is progressing well, with the legal merger in advanced stages of regulatory approval. The Group has also concluded an issue of Additional Tier 1 capital, further strengthening its capital position, which was recognised in Standard and Poor’s  affirmation of Bank ABC’s investment grade rating of BBB-, while upgrading its outlook to ‘Stable’.

Key highlights of Q1 performance: 

  • Net profit attributable to the shareholders of the parent of $31 million with cost of risk returning to pre-pandemic levels, reflecting a better economic outlook and the resilience of the Group’s asset portfolio.
  • Total Operating Income grew both on a headline (36%) and underlying* (28%) basis reflecting higher volumes, consistent margins and benefiting from consolidation of BBE.
  • Operating expenses on a headline basis was higher than prior year, with integration of BBE and with the business returning to normal level of activity compared to previous year. The group remains focused on disciplined cost control while continuing investment into digital transformation to build its ‘bank of the future’.
  • Balance sheet remains strong with capital and liquidity ratios well above the regulatory requirements: the Group’s T1 Ratio is 16.6%, comprising predominantly 14.7% CET1, LCR 247% and NSFR 124%. 

Bank ABC's Group Chairman, Mr. Saddek Omar El Kaber remarked, “We are extremely pleased with the Group’s  solid profitability for the first quarter of 2022, achieved despite geo-political, industry and market challenges.  Bank ABC continues to achieve great progress on its transformation journey to build a “bank of the future”, while focusing firmly on its balance sheet strength, as evidenced by the Group’s AT1 issue and the change in outlook to ‘Stable’ by Standard and Poor’s”.

A more detailed summary of the Financial Results is explained below:  

Q1 2022 Business Performance 

  • Consolidated net profit attributable to the shareholders of the parent, for the first quarter of 2022 was US$31 million, 3% higher compared to US$30 million reported for the same period last year. 
  • Earnings per share for the period was US$0.01, unchanged from the corresponding period last year.
  • Total comprehensive income attributable to the shareholders of the parent was US$8 million, compared to a loss of US$16 million reported for the same period last year. This arose from a net impact of foreign exchange translation in foreign subsidiaries and change in fair value of debt instruments.
  • On a headline basis, Total Operating Income was US$247 million, 36% higher compared to US$182 million reported for the same period last year. On an underlying basis*, Total Operating Income was at US$253 million for the period, compared to US$197 million for the same period last year, benefitting from the consolidation of BBE.
  • Net interest income was US$177 million, 45% higher against US$122 million reported for the same period last year, supported by higher loan volumes, consistent margins and the addition from BBE.
  • Operating expenses were at US$159 million, 27% higher than US$125 million for the same period last year, from a combination of consolidation of BBE as well as the Group returning to a more normal level of activity. The Group continues to enforce appropriate cost discipline without compromising on investments into the Group’s digital transformation and strategic initiatives.
  • Headline Net Operating Profit before credit loss expense and taxation was US$88 million, 54% higher compared to US$57 million reported for the same period last year.  On an underlying basis*, the Group achieved a Net Operating Profit before credit loss expense and taxation of US$94 million for the quarter, 31% higher compared to US$72 million in Q1 2021, also with the addition of BBE.
  • Impairment charges (ECL) for the period were US$25 million compared to US$20 million reported for the same period last year, broadly in line with our historic credit loss experience. 
  • Tax charge US$20 million, compared to US$1 million for the first quarter of 2021, the variance largely arising from the tax treatment of currency hedges in Banco ABC Brasil (BAB) which have an offsetting impact in Total Operating Income. On an underlying basis*, tax charge for the period was at US$17 million compared to US$16 million for the same period last year.  

Balance Sheet 

  • Equity attributable to the shareholders of the parent and perpetual instrument holders at the end of the period was US$4,221 million, compared to the US$3,872 million at the 2021 year-end, 9% higher, benefiting from the Additional Tier 1 capital issued during the quarter and after absorbing dividends paid for 2021.
  • Total assets stood at US$34.8 billion at the end of the period, broadly in line with the US$34.9 billion at the 2021 year-end.
  • Loans and Advances were 2% higher for the quarter at US$17.0 billion compared with levels of US$16.8 billion at 2021 year-end reflecting the Group’s selective underwriting and a strengthening in BRL FX rate.
  • Deposits were at US$24.9 billion, compared to the levels of US$25.8 billion at 2021 year-end.
  • Liquidity ratios are strong with LCR and NSFR at 247% and 124% respectively with comfortable buffer and liquid assets to deposits ratio at 51%.
  • Capital Ratios strong: CET1 at 14.7%, Tier 1 at 16.6% and total Capital Adequacy Ratio (CAR) at 17.6%. 

Bank ABC is a leading player in the region’s banking industry and provides innovative wholesale financial products and services that include corporate banking, trade finance, project and structured finance, syndications, treasury products and Islamic banking. It also provides retail banking services through its network of retail banks in Jordan, Egypt, Tunisia and Algeria and through ila Bank in Bahrain. 

The full set of the financial statements and the press release are available on Bahrain Bourse’ and Bank ABC websites.

*’On an underlying’ basis referred above calculated after adjusting for normalisation of tax treatment of currency hedges in Banco ABC Brasil which have an offsetting effect between Income and tax, FX depreciation and other one-off exceptional items.  Further details are explained in the Investor Presentation available on Bank ABC’s website 

 

  
Mr. Saddek Omar El Kaber​

 

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