The Group reports a net profit of US$100 million
attributable to the shareholders of the parent
Bahrain: Bank ABC (Arab Banking Corporation B.S.C.) -
Bahrain Bourse Trading Code “ABC” - today announces its results for the Year
ended 31 December 2021.
The Group delivered solid results during 2021, benefitting from a
pick-up in activities across its core markets and much lower impairment charges.
The current year performance of a headline net profit attributable to the
shareholders of the parent of US$ 100 million marks a robust turnaround from
the previous year, which was impacted by abnormally elevated ECL charges related
to regional fraud cases, leading to a net loss of US$ 89 million.
Achieving another strategic milestone on August 11th, the Group
successfully completed the acquisition of BLOM Bank Egypt S.A.E (“BBE”). BBE is
a leading bank in Egypt, with a national presence through 41 branches, and its
merger with our existing Bank ABC franchise will drive a new strategy to build
a banking powerhouse in this market of fundamental importance to MENA.
The digital transformation programme of the Bank made significant progress
during 2021 with many notable achievements, including the launch of fully
digital onboarding for corporates. Bank ABC’s world-class digital mobile-only bank,
ila was able to establish itself as a leading innovator and digital disruptor
in its home market of Bahrain, exceeding its annual growth targets. The Group’s fintech payments provider, AFS,
installed a new management team and refreshed its strategy to strengthen its
market value proposition, creating renewed emphasis on growth in its core
processing and merchant acquiring business lines, with the latter set to launch
in Egypt shortly. The Bank also collaborated with various stakeholders to
facilitate seamless cross-border payments using our API interface together with
JP Morgan’s blockchain platform technology, overseen by the Central Bank of
Bahrain. The pilot was tested using USD, and this technology will allow us to
expand our existing offering and introduce more currencies in future. The Group
also won several awards including ‘Best Innovation Lab’, ‘Best Consumer Digital
Bank’ and ‘Best Digital Banking App’ for ila, at the Global Finance Innovators
Awards; ‘Best Bank in Trade Finance Bahrain’ at the GTR Leaders in Trade Awards
and Global Finance’s World’s Best Treasury & Cash Management Banks 2022
Award for “Best Overall Bank for Cash Management” in Bahrain and Tunisia.
Key performance highlights:
- Net profit attributable
to the shareholders of the parent of US$100 million with cost of risk retracing
towards pre-pandemic levels. In comparison, the Group’s result for 2020 was a
net loss of US$89 million, mainly arising as the result of abnormally elevated
ECL charges incurred due to major regional fraud events.
- Total Operating Income significantly
increased on a headline basis by 32% and on an underlying basis* grew by 17%
compared to 2020, despite lower interest rates and challenged economic conditions,
also partially benefiting from consolidation of BBE.
- Operating expenses on a
headline basis was higher by 17% and an underlying basis* were higher by 18% with integration of BBE together with related
acquisition expenses and with our businesses returning to normal level of
activity. The Group also continued to invest into digital transformation to
build its ‘bank of the future’.
- Balance sheet remains
strong with capital and liquidity ratios well above the regulatory requirements:
the Group’s T1 ratio is at 15.9%, comprising predominantly 15.5% CET1 LCR 228%
and NSFR 128%.
- On this occasion, the
Board of Directors recommend, for approval at the Annual General Meeting, a
cash dividend distribution of 1% (US$0.01 per share, net of treasury shares),
amounting to approximately US$31 million and translating to 31% of the net
profit for the year, attributable to the shareholders of the parent.
ABC's Group Chairman, Mr. Saddek Omar El Kaber commented, “We are pleased with our
performance during 2021. The Group successfully transitioned from a challenging
2020, to delivering higher levels of profitability, with the continued focus on
execution of its growth strategy, which also included the acquisition and
consolidation of BBE. Despite continued headwinds in the global economy related
to the various Covid-19 variants, inflation and supply-chain bottlenecks we
remain optimistic on the future growth as business sentiment improves in the
region and beyond.”
A more detailed summary of the Financial Results is explained below:
Q4 2021 Business Performance
- Consolidated net profit attributable to the shareholders of the parent,
for the three months of Q4 2021 was US$20 million, US$53 million higher compared
to a net loss of US$33 million reported for the same period last year.
- Earnings per share for
the period was US$0.01 compared to US$-0.01in the same period in the previous
- Total comprehensive income
attributable to the shareholders of the parent was US$13 million, compared to US$91
million reported for the same period last year.
- On a headline basis, Total
Operating Income was US$228 million, 5% higher compared to US$218 million reported
for the same period last year (last year’s comparatives being affected by the
adverse impact of COVID pandemic). On an underlying basis*, Total Operating Income
was at US$234 million for the period, a 24% increase on the US$188 million reported
for the same period last year, also benefiting from consolidation of BBE.
- Net interest income was
US$173 million, 29% higher against US$134 million reported for the same period
last year, after absorbing the impact of declining interest rates compared to the
same period last year supported by growing volumes in certain markets.
- Operating expenses were
at US$169 million, 34% higher than US$126 million for the same period last
year, from a combination of consolidation of BBE as well as the Group returning
to a more normal level of activity (underlying basis* 35%). The Group continues
to enforce appropriate cost discipline without compromising on investment into
the Group’s digital transformation and strategic initiatives.
- Headline Net Operating Profit before credit loss expense and taxation was
US$59 million, 36% lower compared to US$92 million reported for the same period
last year. On an underlying basis*, the
Group achieved a Net Operating Profit of US$64 million for the quarter, 3%
higher compared to US$62 million in Q4 2020. (current year impacted by proportionately
higher expenses due to continued investment in our business model and as
business operations returns to normalcy during 2021).
- Impairment charges (ECL)
or credit loss expenses for the quarter were US$28 million
compared to US$95 million reported for the same period last year, with stabilising
economic outlook from the lows last year, and without the major impact of
regional fraud events that created abnormally elevated ECL charges during 2020.
- Tax charge for the quarter was US$4 million, compared to the US$28 million
for the same period last year. On an underlying basis*, tax charge for the
period was at US$9 million compared to a tax credit of US$2 million for the
same period last year.
FY 2021 Financial results
- Consolidated net profit
attributable to the shareholders of the parent, for the year 2021 was US$100 million,
compared to a net loss of US$89 million reported for the same period last year.
- Earnings per share for the period was at US$0.03, compared to US$-0.03
in the previous year.
- Total comprehensive income attributable to the shareholders of the
parent was US$105 million compared to total comprehensive loss of US$267 million
reported last year, reflecting the net profit and relatively stable markets
during 2021 compared to last year.
- On a headline basis,
total operating income was US$854 million, 32% higher compared to US$646 million
reported for the same period in 2020 (last year’s
comparatives being affected by significantly higher hedging in Banco ABC Brasil*).
On an underlying basis*, total operating income was at US$879 million for the
period, a growth of 17% over US$749 million for the same period last year,
reflecting strong recovery across most of our markets and business lines and to
some extent consolidation of BBE recently.
- Net interest income was
US$592 million, 15% higher against US$516 million reported for the same period
last year, after absorbing the impact of declining interest rates and FX
depreciation. On an underlying basis*, net interest income was 16% higher year
- Operating expenses were
at US$569 million, 17% higher than US$486 million for the same period last
year. Cost trajectory returning to normal levels with unrelenting focus on cost
discipline and continuing investments into the Group’s digital transformation
and strategic initiatives.
- On a headline basis, the Group achieved a net operating profit before
credit loss expense and taxation of $285 million, 78% higher than the US$ 160
million reported in the previous year. On an underlying basis* the Group
achieved a net operating profit before credit loss expense and taxation of US$306
million, 16% higher than the US$263 million reported last year.
- Impairment charges (ECL)
or credit loss expenses for the period were US$106 million, 68% lower than the US$329
million reported for the same period last year. Impairment charge for the year
returning to pre-pandemic levels with stabilising economic outlook leading to
normalised IFRS 9 ECL charges, and without the impact of a major client fraud
which affected many banks in the region and comprised $183 million of the abnormally
high 2020 ECL charge.
- The ratio of impaired
loans to gross loans was at 3.4%, 1.8% lower than 2020 year-end levels and 0.9%
lower, after normalising 2020 for long-standing legacy fully provided loans.
- 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$3,872 million, 2.8% higher than the US$3,767 million reported at
the 2020 year-end.
- Total assets stood at
US$34.9 billion at the end of the period, 14.8% higher compared to US$30.4
billion at the 2020 year-end mainly from inclusion of US$3 billion of assets of
BBE. On an underlying basis*, total assets grew by 14.2%, also benefiting from
consolidation of BBE.
- Loans and advances stood
at US$16.8 billion, 7.1% higher than the US$15.7 billion reported at 2020 year-end
after including US$0.8 billion of loans and advances of BBE.
- Deposits were at US$25.8
billion including US$2.6 billion of BBE, 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 228% and 128% respectively and
liquid assets to deposits ratio healthy at 52.5%.
- Capital ratios are strong: Tier 1 is at 15.9% comprising predominantly CET1
at 15.5% and total Capital Adequacy Ratio (CAR) at 16.9%.
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 its digital,
mobile-only ila Bank in Bahrain.
The full set of the financial
statements and the press release are available on the Bahrain Bourse and Bank
*’On an underlying’ basis referred above calculated after adjusting for normalisation of tax treatment of currency hedges in Banco ABC Brasil 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’s website