Manama, Bahrain: ABC Islamic Bank today announced a net profit of $1.8 million for the first quarter of 2010 compared to $5.6 million for the first quarter of last year.

Total income for the first quarter was $3.9 million, compared to $6.9 million generated in the first quarter of last year. The lower income was mainly due to three factors: de-risking of the balance sheet, lower fees from new transactions closed and some one-off revenue items realized during the same period last year. Operating expenses were kept nearly flat at $1.4 million, compared to $1.3 million for the same period last year. Conservative higher provisions on impaired assets from the previous year also contributed to a lower net profit figure of $1.8 million for the first quarter.

Shareholders’ equity at the end of the quarter improved to $182.9 million, compared to $176.5 million at year-end 2009, the increase coming from improvement in fair values of available-for-sale investments as well as profit for the period. The capital adequacy ratio, calculated on the basis of Basel II Capital adequacy regime stood at 22.2% whereas Tier 1, capitalization was also a healthy 22%.

ABC Islamic Bank’s total assets declined to $1.27 billion at the end of the first quarter from $1.32 billion at year-end 2009 mainly due to a decline in Murabaha receivables.

Commenting on the results, Mr. Naveed Khan, Managing Director, said, “ABC Islamic maintained a positive operating result in the first quarter of 2010 despite de-risking of the balance sheet and conservative provisioning on impaired assets from the previous year. This has been in line with Group and parent policy. However the bank is well poised for future growth as its capitalization ratio has a healthy cushion for selective growth.”