Ahli United Bank registers record net profit of $537m

24/02/2016 07:47 AST

Bahrain’s largest lender Ahli United Bank (AUB) yesterday reported a record net profit of $537.2 million for last year, representing a growth of 11.3 per cent compared with a net profit of $482.5m in 2014.

In a statement, the bank said the net profit for the fourth quarter last year was $118m compared with $106.2m for the same quarter of 2014.

The positive operating results of AUB were primarily driven by the growth in its core operating earnings across its major lines of business and markets, despite the continuing general weakness in economic trends regionally and globally, witnessed during 2015.

The surge in operating income was underpinned by a 6.7pc rise in net interest income (NII) to $814.7m despite the prevalence of very low absolute interest rate levels. The NII increase was achieved through a moderated increase in lending volumes as well as by a prudent deployment of liquidity in non-trading high quality investments within a conservative and diversified risk framework.

The result was also complemented through focused liability cost management which improved NII margins. Total operating income grew by 4.9pc to $1,091.9m (2014: $1,041.3m). The higher operating income and disciplined cost culture across the AUB Group further improved the operating cost income ratio to 28.3pc (2014: 29.2pc).

Total assets increased by 1.6pc to $34bn at end-December 2015 from $33.4bn as of 2014 year-end. The growth in total assets was primarily due to a 4.8pc growth in the loans and advances portfolio to $19.4 billion (end-December 2014: $18.5bn).

Balanced credit growth was supported by a 2.1pc growth in customer deposits to $23.5bn (end-December 2014: $23bn). The non-performing loan ratio reduced to 1.8pc as at end-December 2015 (end-December 2014: 2pc) with a healthy specific provision coverage ratio of 84.6pc (end-December 2014: 83.8pc).

The total provision coverage ratio, inclusive of collective impairment provisions, was also increased to 181.9pc as at end-December 2015 (end-December 2014: 159.4pc) as part of efforts to enhance risk coverage position. Through improved earnings and judicious cost management, return on average equity increased to 16pc (2014: 15.2pc) while the return on average assets increased to 1.7pc (2014: 1.6pc).

The resultant basic earnings per share were US cents 8.1 for the year ended end-December 2015 (2014: US cents 7.6). Given the challenging business environment, the board of directors has recommended unchanged distribution comprising a cash dividend of US cents 4.5 per share (2014: US cents 4.5) together with a bonus ordinary share issue of 5pc (2014: 5pc).

AUB chairman Hamad Al Humaidhi said it was a “robust performance” with the bank crossing the $500m benchmark in terms of operating net profit for the first time, in the face of strong economic headwinds. “The result is a testament to a well-managed business model based on diversification, targeting of cross border flows and selective growth initiatives to increase operating income that continue to serve the bank well,” he added.

AUB completed a $400m issue of Additional Tier 1 Perpetual Basel III Compliant Capital Securities in April last year at a very competitive pricing under very challenging market conditions, which the chairman said represents “an important step forward in terms of the evolution and diversification of the capital structure”.

He said while risks to the global economic outlook remain high, AUB remained cautiously confident of its resilience and ability to maintain its performance given its strong underlying operating fundamentals and prudent, proactive management of risks and costs.”

Gulf Daily News