Manama, Bahrain: Arab Banking Corporation (ABC) today announced that its consolidated Group net profit for the first quarter of 2011 was $48 million, 17% higher than the first quarter of last year. This excellent result has been achieved despite the adverse impact of recent events in the MENA region, demonstrating the resilience and diversification of the ABC franchise.
Total revenues amounted to $197 million, well above the $170 million generated in the first quarter of last year. Increased income from loans coupled with higher interest rates contributed to the $27 million increase in total revenues. Operating expenses totalled $99 million, compared to $88 million for the same period last year with Cost/Income ratio declining to 50% from 52% last year. Impairment provisions totalled $7 million net of recoveries, compared to $12 million last year despite additional reserves being prudently created this quarter for exposures in MENA.
Shareholders’ equity at 31 March 2011 stood at $3,486 million compared to $3,428 million at 2010 year end and ABC group’s capital adequacy ratio at 23.1% was comfortably above the regulatory minimum and comprised predominantly Tier 1, which totalled 18.9%. A very high level of liquid assets continues to be maintained as evidenced by the strong liquid assets to deposits ratio of 71% (72% last year end). During the quarter, ABC took steps to augment its already strong cash position and increased its liquid funds by $2.9 billion.
ABC Group’s total assets stood at $28.3 billion at the end of the first quarter compared to $28.1 billion at year-end 2010 representing a very modest growth in loans and a reduction in securities as the bank prudently increased its liquid reserves.
Mr. Hassan Juma, President & Chief Executive of ABC, said, “As noted in recent press releases, ABC is not subject to sanctions relating to the ownership of the Central Bank of Libya but scrupulously complies with all sanctions regimes and thus has lost a certain amount of its Libyan business. We are taking steps to replace this business with other customers and geographies. In addition, the Group operates or undertakes business in several countries in the MENA region in which serious social and political unrest has occurred over the course of the first quarter. We are closely monitoring developments in these countries and have taken steps to mitigate any adverse impact on our operations. However, the geographical diversification of the Group is serving it well in mitigating this situation, as a number of stable markets where the Group operates continue to perform up to expectations or better. In spite of the unstable external environment, we are extremely satisfied with the strong positive results for this quarter.”