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Arab Banking Corporation announces US$122 million net profit and increases capital to US$3.11 billion

Manama, Bahrain: Arab Banking Corporation announced today that the Group’s net profit for 2009 totalled US$122 million. The results demonstrate ABC’s robust recovery and the positive impact of the ongoing transformation of its business focus, culture and organization.

The Group also announced that at an Extraordinary General Meeting held today, shareholders approved a paid-up capital increase from US$2.0 billion to US$3.11 billion by way of a priority rights offering.

Net profit for the fourth quarter was US$42 million, a quarter on quarter increase of 62%. The fourth quarter performance benefited from lower impairment provisions compared to the third quarter, which included provisions for certain regional exposures as well as lower operating expenses which showed a 6% decline compared to the third quarter. The total operating income for the fourth quarter, excluding gains from buy-back of its subordinated debt amounted to US$150 million, slightly below US$159 million in the third quarter.

The Group’s net profit for 2009 was US$122 million after impairment provisions of US$115 million, a strong recovery from the loss of US$880 million for 2008. Total revenues for 2009 amounted to US$641 million compared to US$607 million for 2008, an increase of 6%. Operating expenses for 2009 were US$326 million, reduced by US$26 million or 7% from 2008 despite absorbing costs related to business expansion and restructuring.

Shareholders’ equity at the year-end stood at US$2,191 million compared with the total of US$1,793 million in December 2008. ABC’s capital adequacy ratio, calculated on the basis of the Basel II capital adequacy regime stood at 16.9%, predominantly Tier 1, which totalled 13.4%, both up year on year. At the same time, ABC’s liquidity remains comfortable, with the liquid assets to deposits ratio at 71%, compared with 68% at 2008 year end.
ABC's balance sheet contracted during 2009 as part of an ongoing de-leveraging and de-risking process to total US$26.0 billion at the year-end, down US$2.5 billion over the past year, mainly because of run offs in the Loans and Securities portfolios.

Building on the strength of this platform, and the positive results of 2009, the shareholders have approved the new US$1.11 billion rights issue to cement ABC’s strategic transformation plan.

Commenting on the 2009 results and the rights issue, ABC's Chairman, Mr. Mohammed Layas, stated: “ABC’s return to profitability in 2009 validates the efforts of the Board and the Management to achieve positive results and build a solid foundation for steady growth, which we are now further enhancing through the rights issue.”

Mr. Hassan Juma, President & Chief Executive added, "We thank the shareholders for their continuous support and faith in our transformation plan by approving the capital increase. ABC intends to grow through rapid expansion in its existing universal banking units as part of its new business model and to set up units in new geographies. Expansion by way of an acquisition is also not excluded, as and when the right opportunity presents itself for a suitable target with a significant retail footprint in MENA.”


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