28/07/2015 09:22 AST
Manama: Bank ABC (Arab Banking Corporation) yesterday announced that its consolidated group net profit for the first half of this year was $96 million.
This was 30 per cent lower compared with a profit of $137m reported in the first half of last year.
Net profit for the second quarter was $44m, 33pc lower than $66m reported for the same period last year.
“We are encouraged by the underlying business performance of most of our units which continued to show improved performance year-on-year,” Bank ABC said.
“Notably, despite the exceptional economic conditions in Brazil at present, our subsidiary managed remarkable results in local currency terms.
“Yet, we suffered from the steady strengthening of US dollar against most domestic currencies in which Bank ABC operates, reinforcing the trend experienced from the beginning of the year.
“In particular, the Brazilian real weakened more than 30pc and the Algerian dinar weakened by over 20pc during the first half of 2015 compared with the same period in the previous year.
“This, combined with volatile trading conditions and the lack of exceptional items, which benefited the group last year, resulted in a total operating income of $204m for the second quarter, compared with $242m reported for the same period in 2014,” it added.
Operating expenses were 4pc lower at $109m compared with $113m last year, benefiting from currency movements while reflecting additional cost investment in strategic initiatives to support sustainable business growth.
Net impairment provisions for the second quarter of $13m, were below the previous year’s $19m benefiting from weak FX as well as some
recoveries, but also indicating robust asset quality.
Tax charge for the period was $24m against a charge of $28m in 2014, benefiting from the tax treatment of currency movements in subsidiaries.
Bank ABC Group’s total assets stood at $28 billion at the end of the half year compared with $29.4bn at 2014 year-end, also affected primarily by the stronger US dollar.
The underlying businesses broadly remained on a growth trajectory, as the asset volumes grew in domestic currency terms in most businesses.
The ratio of non-performing loans (NPLs) to gross loans at 2.7pc remains healthy (2.4pc at year-end 2014).
Deposits decreased by $0.9bn during the quarter to reach $18.7bn, again impacted by currency translation.
The group’s liquidity position continues to be at comfortable levels with the liquid assets to deposits ratio marginally increasing to 66pc compared to 65pc at year-end 2014.
Shareholders’ equity at June 30 stood at $3,844m after the distribution of 5pc dividend to the shareholders and after foreign exchange movements on investments in subsidiaries.
Bank ABC Group’s consolidated total capital adequacy ratio (CAR) continued to remain strong at 20.2pc, comprising predominantly Tier 1 at 17.9pc.
The total CAR, calculated in accordance with the Central Bank of Bahrain’s newly introduced Basel III equivalent rules, remains
well above the regulatory minimum of 12.5pc.
“ABC continues to steer through a very challenging environment in a number of key markets in which it operates, caused by FX and trading volatility,” chairman Saddek Omar El Kaber said.
“However, the bank’s capital and liquidity position remains strong, with healthy asset quality.
“The board and management are confident that the investments currently underway to deepen the markets of ABC
and its reach will eventually deliver increased sustainable shareholder value, while taking robust tactical actions to improve performance in the near term,” he added.
Bank ABC is a leading player in the region’s banking industry and provides innovative wholesale financial products and services that include corporate
Gulf Daily News
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