Bank ABC announces Q1 2021 results with a return to net profit of US$30 million attributable to the shareholders of the parent
Bahrain: Bank ABC (Arab Banking Corporation B.S.C.) - Bahrain
Bourse Trading Code “ABC” - today announces its results for the first quarter
The Group started the year on a solid and profitable footing,
recovering from the impact of 2020 and carefully navigating post-COVID 19 transitional
operating conditions, still characterised by episodical lockdowns and a constrained
work environment across our markets. Bank ABC continues to support its clients,
staff and communities on the path to recovery whilst pursuing its growth and
digital transformation plans. Notably, the
Group’s acquisition of BLOM Bank Egypt S.A.E, signed in January, is progressing
well and is in the advanced stages of regulatory approval and closing processes.
Key highlights of Q1 performance:
- Net profit of $30
million with cost of risk returning to pre-pandemic levels, reflecting better
economic outlook, after the Bank absorbed the impact of regional fraud events
experienced in 2020.
- Total Operating Income significantly
increased on a headline basis, and on an underlying basis in line with previous
year’s levels, despite lower interest rates and the challenged economic
- Costs remain lower than
prior year, comparatives reflecting rationalisation actions, greater discipline
and cost control while continuing investment into our strategic priorities on
transforming the Bank.
- Balance sheet remains
strong with capital and liquidity ratios well above the regulatory requirements:
Group CET 1 Ratio is 16.6%, LCR 200% and NSFR 124%.
- Our payment and digital
retail banking capabilities gain steady traction. A new management team have
taken over in Arab Financial Services to steer the next phase of its transformation.
ila Bank’s customers and deposits have been growing from strength-to-strength.
- Overall asset portfolio
quality remains solid with sound credit underwriting standards evidenced by
client-level stress-testing reviews.
ABC's Group Chairman, Mr. Saddek Omar El Kaber commented “We are pleased to see
the Group’s return to a more usual level of profitability, reaffirming the
strong underlying fundamentals of the Group’s diversified franchise. Despite a more challenging transition from the
pandemic than previously expected, Bank ABC continues to operate strongly,
adapting to the “new normal” and steering effectively through this prolonged
A more detailed summary of the Financial Results is explained below:
Q1 2021 Business Performance
- Consolidated net profit attributable to the shareholders of the parent,
for the first quarter of 2021 was US$30 million, compared to a net loss of US$62
million reported for the same period last year.
- Earnings per share for
the period was US$0.01, compared to negative US$0.02 for the same period last
- Total comprehensive loss
attributable to the shareholders of the parent was US$16 million, impacted by
foreign exchange translation in foreign subsidiaries, compared to US$534
million reported for the same period last year.
- On a headline basis, Total
Operating Income was US$182 million, 78% higher compared to US$102 million
reported for the same period last year. On an underlying basis*, Total Operating
Income was at US$205 million for the period, compared to US$200 million for the
same period last year.
- Net interest income was US$122
million, 11% lower against US$137 million reported for the same period last
year, after absorbing the impact of declining interest rates compared to the same
period last year.
- Operating expenses were
at US$125 million, 6% lower than US$133 million for the same period last year, continuing
to benefit from the cost optimisation initiatives during last year, while
reprioritising the continuing investments into the Group’s digital
transformation and strategic initiatives.
- On an underlying* basis, the Group achieved a Net Operating Profit of
US$76 million for the quarter, 13% higher compared to US$67 million in Q1 2020.
- Impairment charges (ECL)
for the period were US$20 million compared to US$120 million reported for the
same period last year, with reversal of economic outlook from the lows last
year flowing through the expected loss estimates under IFRS 9, and without the
major impact of regional fraud events such as NMC, that created abnormally elevated
ECL charges during 2020.
- The ratio of impaired loans
to gross loans was at 5.4% compared to 2020 year-end levels of 5.2%, the
increase largely attributable to the decline in gross loans. The ratio normalises
to 4.5%, when long-standing legacy fully provided loans are adjusted for.
- Tax charge US$1 million,
compared to the recovery of US$98 million for the first quarter of 2020, the
variance largely arising from the tax treatment of currency hedges in Banco ABC
Brasil (BAB) which have an offsetting impact in Total Operating Income. On an
underlying basis, tax charge for the period was at US$15 million compared to
nil for the same period last year.
- Notwithstanding these challenging conditions, the
Group’s overall asset portfolio quality remains solid and our underwriting
standards are sound.
- Equity attributable to the shareholders of the parent at the end of the
period was US$3,753 million, compared to the US$3,767 million at the 2020
year-end, 0.4% lower.
- Total assets stood at
US$30.2 billion at the end of the period, 1% lower compared to US$30.4 billion
at the 2020 year-end. On an underlying* basis, total assets grew by 2%.
- Loans and Advances stood
at US$15.2 billion compared with levels of US$15.7 billion at 2020 year-end
reflecting our continuing emphasis on prudent use of balance sheet.
- Deposits were at US$21.6
billion, compared to the levels of US$21.3 billion at 2020 year-end. Despite
the prevailing conditions, our deposit experience remained steady underscoring
the confidence of our clients. Our efforts to diversify and improve the quality
of our deposit base continue.
- Liquidity ratios are strong
with LCR and NSFR at 200% and 124% respectively with
comfortable buffer and liquid assets to deposits ratio healthy at 53% improved
from 52% at 2020 year-end.
- Capital Ratios strong: CET1 at 16.6%, Tier 1 at 16.9% and total Capital
Adequacy Ratio (CAR) at 17.8%.
- 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 and through ila Bank in Bahrain.
*’Underlying’ basis referred above calculated after adjusting for normalization of tax treatment of currency hedges in BAB which have an offsetting effect between Income and tax, FX depreciation and other one-off exceptional items. Further details are explained in the Investor presentation available on Bank ABC website.
Mr. Saddek Omar El Kaber
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