Bank ABC posts $41m Q1 profit

Manama  : Bank ABC (Arab Banking Corporation B.S.C.) yesterday announced that its consolidated Group net profit, attributable to the shareholders of the parent, for the first quarter of the year 2016 was US$41 million, 21 per cent lower compared to a profit of US$52m reported for the same period last year.

The performance for the quarter compared to the previous year was affected by some deterioration in economic conditions and a stronger US dollar against domestic currencies, a trend which intensified since the second half of 2015. However, the core franchise for the group continued to show sustained performance in local currency terms. Compared to Q1 of 2015, the Brazilian Real and Algerian Dinar were weaker in Q1 2016 by over 25pc and 13pc respectively. 

Bank ABC’s Group Chairman, Saddek Omar El Kaber, commented: “Whilst the economic conditions in the region are weakening, our core businesses continue to perform well, helped by robust risk management and proactive business strategy. We continue to progress steadily with our strategic initiatives to improve performance and organisational health, as we simultaneously steer the Bank through turbulent times.”

Total operating income for the quarter was US$209m, compared with US$168m reported in the first quarter last year, the increase to a large extent is attributable to currency movements. 

Operating expenses at US$104m remained at the same level as last year, with some reduction benefiting from currency translation. Net impairment provisions for the quarter at US$18m, were higher than the previous year’s US$9m. Whilst the previous year had benefited from certain write-backs, the provision charge for the current quarter was in line with our expectations and past experience. 

The ratio of non-performing loans to gross loans remained healthy at 3.5pc, compared to 3.4pc at 2015 year-end. Tax charge for the year was at US$35m, whilst last year it was a positive US$12m arising from the tax treatment of currency movements in subsidiaries.

Deposits in turn increased by US$0.5bn during the quarter to reach US$18.9bn. Liquidity position continues to be at comfortable levels with the liquid assets to deposits ratio at 67pc, similar to the 66pc at the year-end 2015.

Shareholders’ equity at 31 March 2016 stood at US$3,775m after absorbing the foreign exchange movements on investments in subsidiaries and fair value changes on marketable securities. The Bank ABC Group’s consolidated total capital adequacy ratio (CAR) remained strong at 18.7pc, comprising predominantly Tier 1 at 16.7pc.