Manama, Bahrain: Bank ABC (Arab Banking Corporation B.S.C.) today announced that its consolidated Group net profit for the first half of 2015 was US$96 million, 30% lower compared to a profit of US$137 million reported in the first half of last year. Net profit for the second quarter was US$44 million, 33% lower than US$66 million reported for the same period last year.
We are encouraged by the underlying business performance of most of our units which continued to show improved performance year on year. Notably, despite the exceptional economic conditions in Brasil at present, our subsidiary managed remarkable results in local currency terms. Yet, we suffered from the steady strengthening of US dollar against most domestic currencies in which Bank ABC operates, reinforcing the trend experienced from the beginning of the year. In particular, the Brazilian Real weakened over 30% and the Algerian Dinar weakened by over 20% during the first half of 2015 compared with the same period in the previous year. This, combined with volatile trading conditions and the lack of exceptional items, which benefited the group last year, resulted in a total operating income of US$204 million for the second quarter, compared with US$242 million reported for the same period in 2014. Operating expenses were 4% lower at US$109 million compared to US$113 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 second quarter of US$13 million, were below the previous year’s US$19 million benefiting from weak FX as well as some recoveries, but also indicating robust asset quality. Tax charge for the period was US$24 million against a charge of US$28 million in 2014, benefiting from the tax treatment of currency movements in subsidiaries.
Bank ABC Group’s total assets stood at US$28.0 billion at the end of the half year compared to US$29.4 billion at 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 2.7% remains healthy (2.4% at year-end 2014).
Deposits decreased by US$0.9 billion during the quarter to reach US$18.7 billion, again impacted by currency translation. 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 June 2015 stood at US$3,844 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 20.2%, comprising predominantly Tier 1 at 17.9%. The total CAR, calculated in accordance with the Central Bank of Bahrain’s newly introduced Basel 3 equivalent rules, remains well above the regulatory minimum of 12.5%.
Bank ABC's Chairman, Mr. Saddek Omar El Kaber, commented that “ABC continues to steer through a very challenging environment in a number of key markets in which it operates, caused by FX and trading volatility. However, the Bank’s capital and liquidity position remain strong, with healthy asset quality. The Board and Management are confident that the investments currently underway to deepen the markets of ABC and its reach will eventually deliver increased sustainable shareholder value, while taking robust tactical actions to improve performance in the near term.”
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.