Manama, Bahrain: Arab Banking Corporation today announced that its consolidated Group result for the first quarter of 2009 has sprung back to a profit of US$32 million, which, in view of the continuing deterioration of the global and regional economies, compares favourably with the net loss of US$28 million recorded for the previous quarter.
Total operating income for the first quarter amounted to US$139 million, in line with the total of US$140 million generated over the fourth quarter of 2008. Fee, commission and other income benefitted mainly from improved trade finance earnings, whilst interest income declined slightly because of the lower interest rate environment and reduced asset volumes. At the same time, operating expenses declined to US$79 million, 6% less than in the previous quarter. Operating profit before impairment provisions totalled US$60 million, US$4 million less than in the previous quarter. Impairment provisions totalled US$15 million, relating mainly to portfolio exposures outside the GCC countries.
Shareholders’ equity at 31 March 2009 stood at US$1,939 million, compared with the total of US$1,793 million in December 2008, the increase during the quarter coming mainly from improvement in fair values of non-trading securities as well as the profit for the period. ABC’s capital base remains strong with a capital adequacy ratio, based on the Basel II capital adequacy regime, of 17.5%, predominantly Tier 1, which totalled 14.0%. ABC’s liquidity remains comfortable despite the adverse impacts of both the credit crunch and the continuing economic downturn, with the liquid assets to deposits ratio at 69%, compared with 68% at the 2008 year end. ABC's founding shareholders: Central Bank of Libya, Kuwait Investment Authority and Abu Dhabi Investment Authority, who together hold 86.8% of ABC's shares, continue to demonstrate their support for the Group.
In the light of the current adverse market conditions, ABC continues to adopt a cautious approach especially in the wholesale banking business which resulted in total assets declining to $26.8 billion at the end of the first quarter compared to $28.5 billion at year-end 2008. ABC's loan portfolio declined by US$678 million - predominantly in wholesale business, and the securities portfolio declined by US$337 million - mainly because of exits and run-offs, whilst placements with banks and financial institutions fell by US$538 million - in line with the shrinking inter-bank market.
Mr. Hassan Juma, President & Chief Executive of ABC, said, “We have weathered the difficulties we faced in 2008 and have sprung into profit again despite the continuing adverse economic climate. This has yet again demonstrated the stability of the Group’s core earnings stream from our trade, project, corporate and Islamic finance activities across the GCC and internationally, together with our growing retail banking network across North Africa and the Levant.
“At the same time, we are progressing well in making the changes to our business focus, culture and organization that our new vision requires – aiming to become a leading Universal Bank in MENA that delivers superior shareholder returns, provides distinctive service and products to its customers and is able to attract, develop and retain top talent.”