Arab Banking Corporation announces 22% increase in half–year net profit to $137M

Arab Banking Corporation (ABC) has declared that its consolidated Group net profit for the first half of 2014 was $137 million - a 22 % increase when compared to $112 million for the same period last year. Net profit for the second quarter was $66 million, 18 % higher than $56 million reported last year.

For the second quarter total operating income amounted to $242 million on the back of growth in business volumes across all our geographies. This was 15 per cent higher than the $210 million achieved during the same period last year. Operating expenses decreased two per cent to $113 million compared to last year which had included one-off restructuring costs. Cost to income ratio improved to 46.7 per cent from 54.8 per cent mainly from revenue growth. Net impairment provisions for the second quarter of $19 million was higher than $10 million in the same period last year, however, net charge for the half-year at $27 million was lower than $38 million for the same period last year.

ABC Group’s total assets registered a growth of six per cent during 2014 to stand at $28.1 billion as of 30 June 2014, reflecting growth in loan volumes and liquid assets. The ratio of NPLs (non-performing loans) to gross loans declined to 2.5 per cent from 3.0 per cent at 2013 year-end. The Group has maintained a diverse and primarily short term asset book with 56 per cent of assets having a tenor of less than one year. 

Deposits grew 8 per cent in the first half of the year to $19.7 billion from $18.3 billion at 2013 year-end. The Group’s liquidity position continues to be strong with liquid assets to deposits ratio at 59 per cent (63 per cent at 2013 year-end). Liquid assets ratio stood at 42 per cent (44 per cent at 2013 year-end). 

Shareholders’ equity at 30 June 2014 stood at $3,980 million, compared to $3,897 million at the end of the first quarter 2014 and $3,940 million at 2013 year-end. ABC’s capital base remains very strong, with a capital adequacy ratio of 20.7 per cent, predominantly Tier 1, which totalled 17.3 per cent.  Adjusted to Basel III basis, in line with the Central Bank of Bahrain’s draft rules, the Group’s total capital adequacy ratio is 20.3 per cent, and its Tier 1 ratio is 17.4 per cent.

As ABC's Chairman, Mr. Saddek El Kaber, has said:

“I am happy to see the excellent half-year results which show year-on-year profit growth for the sixth consecutive year. During the first half of the year, we have also strengthened our management team with the addition of a new Group Chief Banking Officer, Group Chief Financial Officer and Group Head of Compliance, all with significant international banking experience. I am confident that with our reinforced top management team in place, and with substantial capital resources and comfortable liquidity, ABC will be able to continue on its growth path with robust risk management to deliver sustained returns for our shareholders.”