Manama, Bahrain: Bank ABC (Arab Banking Corporation B.S.C.) today announced that its consolidated Group net profit for the first nine months of 2015 was US$144 million, 27% lower compared to a profit of US$197 million reported for the same period last year. Net profit for the third quarter was US$48 million, 20% lower than the US$60 million reported for the same period last year.
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% and the Algerian Dinar weakened by over 19% during the first nine months of 2015 compared with the same period in the previous year. The Group also 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 US$142 million for the third quarter, compared with US$208 million reported for the same period in 2014. Operating expenses were 8% lower at US$99 million compared to US$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 US$18 million, were higher than the previous year’s US$13 million. However, the cumulative net provision charge of US$40 million for the nine months period was at the same level as last year. Tax saving for the period was US$38 million against a charge of US$10 million in 2014, benefiting from the tax treatment of currency movements in subsidiaries.
Bank ABC Group’s total assets stood at US$28.6 billion at the end of the first nine months of the year compared to US$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 NPLs (non-performing loans) to gross loans at 2.5% remains healthy (2.4% at year-end 2014).
Deposits proportionately decreased by US$0.9 billion during the period to reach US$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% compared to 65% at year-end 2014.
Shareholders’ equity at 30 September 2015 stood at US$3,724 million after the distribution of 5% 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%, comprising predominantly Tier 1 at 17.5%. 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%.
Bank ABC's Chairman, Mr. Saddek Omar El Kaber, commented that “Bank ABC's Chairman, Mr. Saddek Omar El Kaber, commented that “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.”
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.