Manama, Bahrain: Bank ABC (Arab Banking Corporation B.S.C.) today announced that its consolidated Group net profit, attributable to the shareholders of the parent, for the first nine months of 2016 was US$150 million, 4% higher compared to a profit of US$144 million reported for the same period last year. Net profit for the third quarter was US$49 million, slightly higher than US$48 million reported for the same period last year.
The total operating income for the period grew to US$658 million, compared with US$514 million reported for the same period last year, driven by core income growth but also benefiting from currency movements, in particular the Brazilian Real strengthening against US dollar.
Operating expenses were largely controlled at US$325 million compared to US$312 reported last year, with the increase primarily due to the impact of currency movements and strategic investment into new capital efficient business lines such as debt capital markets, treasury sales, in addition to the preliminary costs of conversion of our Singapore representative office to a branch status, the licence for which has just been approved.
Although, impairment charges for the period were US$60 million, higher than the US$40 million reported in the previous year, these are in line with our expectations. The Group responded well to the challenging external operating environment in Brazil.
The tax charge was at US$87 million, against a reported tax saving of US$26 million in 2015. Again, the variance largely arises from the tax treatment of Brazilian Real currency hedges, offsetting some of the income uplift noted above.
Bank ABC Group’s total assets stood at US$31 billion at the end of the first nine months of 2016, compared to US$28 billion at the 2015 year-end, the growth in part attributed to translation impact of our Brazilian subsidiary balance sheet. The ratio of non-performing loans to gross loans slightly increased to 3.7%, compared to 3.4% at 2015 year-end. The year on year increase reflected the changing market dynamics, but levels are better than those experienced by many other regional players, reflecting the Group’s diversified asset base spread over multiple geographic locations and its sound credit practices.
Deposits increased by US$2.4 billion during the period to reach US$20.8 billion. The Group’s liquidity position continues to be at comfortable levels, with the liquid assets to deposits ratio at 68%, slightly higher than the 66% at the year-end 2015.
Equity attributable to shareholders of the parent increased to US$3,906 million (US$ 3,773 million at 31 December 2015), reflecting profits for the nine months, foreign exchange movements on investments in subsidiaries and fair value changes on marketable securities.
Bank ABC Group’s consolidated capital adequacy ratios (CAR) reflected the emphasis on growing profitability while maintaining a strong balance sheet, bolstered by predominantly Tier 1 capital. Total CAR at 30 September 2016 was 18.9%, comprising Tier 1 at 17.3%, maintaining Tier 1 at the same position as at 31 December 2015 (Total CAR, 19.4%, Tier 1 CAR 17.3%).
Bank ABC's Group Chairman, Mr. Saddek Omar El Kaber, commented that “I am pleased with the Group’s core business performance. The Group continues to focus on maintaining a strong balance sheet, with high capital and liquidity levels, while prioritising asset quality and improving return. We will progress the implementation of ongoing strategy initiatives to enhance our performance, expand our network and to target an improved return on equity over time. In particular, the recent award of a full branch banking license in Singapore augurs well for further diversification of our network, and in seeking to capture a share of the significant trade flows from Asia into our core markets in MENA.”
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.