Manama, Bahrain: Arab Banking Corporation today announced that its consolidated Group net profit for the first nine months of 2011 was US$157 million, 40% higher than last year. Net profit for the third quarter was US$41 million compared to US$68 million in the second quarter, due to net impairment provision charge of US$20 million compared to net recovery of US$8 million during the previous quarter.
Total operating income for the third quarter amounted to US$200 million, marginally below US$207 million in the previous quarter, whilst operating expenses decreased to US$97 million compared to US$102 million, in part due to the impact of exchange rates. Cost/income ratio improved to 48.5% from 49.3%. Operating profit before impairment provisions reached US$103 million. Net impairment provision charge of US$20 million was taken during the quarter.
Shareholders’ equity at 30 September 2011 stood at US$3,564 million, compared to US$3,599 million at the end of the second quarter, the decrease occurring mainly due to exchange translation on foreign subsidiaries following the sharp rise of the US dollar in September. ABC’s capital base remains very strong with a capital adequacy ratio of 23.9%, predominantly Tier 1, which totalled 19.1%. ABC’s liquidity remains comfortable with the liquid assets to deposits ratio at 69%, compared with 73% at the end of the previous quarter.
Mr. Hassan Juma, President & Chief Executive of ABC, said, “These highly creditable results have been delivered despite the very challenging business environment that has prevailed throughout the year. ABC has continued to prudently reduce its exposure to market risk, maintain a very liquid position and to implement strict credit and liquidity guidelines but yet still has delivered strong year on year revenue growth for the nine months ended 30th September. Brazil has continued to be a major engine of revenue growth and I am particularly pleased that revenues from subsidiaries in MENA are up year on year despite the well-known difficulties in two of our markets. Expenses remain well controlled and our cost/income ratio continues to improve.”
Mr. Mohammed Layas, Chairman of ABC, commended these results. Looking ahead to when our markets return to normal, Mr. Layas stressed that “ABC is well placed in terms of capital, liquidity, geographic presence and products to take advantage of the trade and business flows that will arise from the recovery. Our geographic diversification remains a major strength as is the strong support of our major shareholders. We look forward to continued sustainable growth as our transformation into a leading Universal Bank continues.”