Manama, Bahrain: Bank ABC (Arab Banking Corporation B.S.C.) today announced that its consolidated Group net profit for the year 2015 was US$180 million, 30% lower compared to a profit of US$256 million for the previous year. Net profit for the fourth quarter was US$36 million, 39% lower than the US$59 million reported for the same period last year.
The Group’s performance for the year was significantly affected by deteriorating economic conditions in key markets in which the bank operates. A combination of volatile trading conditions and appreciating US dollar against domestic currencies were the main headwinds during the year. In particular, the Brazilian Real and Algerian Dinar weakened during 2015, by over 30% and 20% respectively. However, underlying businesses continued to show strong and sustained performances in local currency terms despite the declining economic conditions; notably Wholesale and Islamic businesses in Bahrain, our subsidiaries in Jordan, Egypt, and even profits in Brazil improved year over year on a local currency basis.
After absorbing the impact of these factors, total operating income for the year was US$729 million, compared with US$888 million reported in 2014. Operating expenses were 4% lower at US$421 million compared to US$439 million last year, benefiting from currency movements and cost savings, while reflecting additional cost investments associated with strategic initiatives towards sustainable future business growth. Net impairment provisions for the year at US$70 million, were slightly higher than the previous year’s US$64 million, but largely in line with our expectations for cost of credit. The ratio of NPLs (non-performing loans) to gross loans at 3.4%, albeit slightly higher than the 2.4% at year-end 2014, remained at healthy levels. Tax charge for the year reduced by US$66 million resulting primarily from the tax treatment of currency movements in subsidiaries.
Turning to the balance sheet, Bank ABC Group’s total assets stood at US$28.2 billion at the end of 2015 compared to US$29.4 billion at the 2014 year-end, also affected primarily by the stronger US dollar. The underlying businesses broadly remained on a growth trajectory, as asset volumes grew in domestic currency terms in most businesses.
Deposits proportionately decreased by US$1.2 billion during the period to reach US$18.5 billion, again impacted by currency translation, but to some extent offset by growth in underlying deposits. The Group’s liquidity position continues to be at comfortable levels with the liquid assets to deposits ratio marginally increasing to 66% compared to 65% at year-end 2014.
Shareholders’ equity at 31 December 2015 stood at US$3,773 million after the distribution of dividend to the shareholders during 2015 and after foreign exchange movements on investments in subsidiaries. Bank ABC Group’s consolidated total capital adequacy ratio (CAR) calculated in accordance with the Central Bank of Bahrain’s Basel 3 rules remained strong at 19.4%, comprising predominantly Tier 1 at 17.3%.
Bank ABC's Chairman, Mr. Saddek Omar El Kaber, commented that “2015 was a year that was adversely affected by emerging market currency depreciation, market volatility and geopolitical issues in our key markets. Yet, many of our core businesses remained resilient and continued revenue growth trajectory. Improvements to our operational platform were also stepped up during the year as we accelerated our investments in people, products, compliance and risk management in line with our strategy to further transform the Group and to enhance the quality of earnings. We thank our Shareholders for their steady support as well as the commitment of our staff to achieve the changes that we aspire to in these challenging times.”
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.