Bank ABC reports financial results

TDT | Manama

The Daily Tribune – www.newsofbahrain.com

Bank ABC (Arab Banking Corporation) announced its results for the first nine months of 2020, saying it is seeing signs of some recovery from the unprecedented and deeply challenging trading conditions encountered during H1 2020, while it also warned that a number of the challenges encountered in the first half continue to impact results.

“The Group started the year well with a strong balance sheet and good client transaction pipeline as we continued our digital and wholesale bank transformation. However, as the year progressed, our plans were heavily impacted by the unique combination of Covid19, collapse in oil prices and consequent economic and market pressures, together with the emergence of some major fraud cases which significantly affected Loan Loss Provisions,” the bank said.

The bank also said it incurred a significant nine months ECL charge of USD234 million (Q3 2019 $46 m), largely as a result of a major client fraud, combined with the forward-looking nature of IFRS9, has led to the Group reporting a net loss of USD56 m.

Q3 results

Third-quarter consolidated net profit attributable to the shareholders of the parent was USD11 m, compared to a net profit of USD49 m reported for the same period last year. Earnings per share were minimal, compared to USD0.02 in the same period in the previous year.

Bank ABC’s Group Chairman, Saddek Omar El Kaber, said “Q3 results show our significant capacity to weather extreme volatility. Against the backdrop of the pandemic and other market uncertainties, we have been able to maintain a strong balance sheet, excellent liquidity and effective operating processes. We will continue to adapt our business model by further reducing our operating costs and increasing our focus on fee-generating businesses of the Group. Likewise, our digital transformation will remain a key driver in moving us to the Bank of the future. “ On a headline basis, total operating income was USD 188 m, 4 per cent lower compared to USD 196 m reported for the same period last year. On an underlying basis, total operating income was at USD 212 m for the period, compared to USD 218 m for the same period last year.

Net interest income was USD 130 m, 8pc lower against USD 142 m reported for the same period last year, after absorbing the impact of declining interest rates and FX depreciation.

Operating expenses were at USD 113 m, 11pc lower than USD 127 m for the same period last year, benefiting from the cost savings initiatives during the year, while reprioritizing the continuing investments into the Group’s digital transformation and strategic initiatives.

Impairment charges (ECL) for the period were USD 60 m compared to USD 25 m reported for the same period last year.

Nine-month results

Consolidated net loss attributable to the shareholders of the parent was USD 56 m, com- pared to a net profit of USD 161 m reported for the same period last year.

Earnings per share were USD 0.02, compared to USD 0.05 in the previous year.

Total comprehensive loss attributable to the shareholders of the parent was USD 358 m compared to total comprehensive income of USD 176 m reported last year, reflecting the net loss and significant market volatility during nine months 2020 from Brazilian Real depreciation of 21pc and unfavourable movements in fair value of debt instruments.

Operating expenses were at USD 360 m, 6pc lower than USD 384 m for the same period last year.

Impairment charges (ECL) for the period were USD 234 m compared to USD 46 m reported for the same period last year. The sharp increase in ECL arising from the application of IFRS 9 to the portfolio under the stressed macroeconomic conditions was exacerbated by a major client fraud, which affected many banks in the region. Deposits were at USD 20.4 billion, compared to the levels of USD 21.0 billion at 2019 year-end, the reduction primarily attributable to the BRL depreciation referred above.