AMMAN - Arab Bank Group announced in a press release on Saturday that its midyear net income was lower due mainly to additional provisions against non-performing and watch list credits.
According to the press release, net income before tax and after provisions for the six months ended June 30, 2010 dropped by 9 per cent to $410 million from $452 million posted during the same period of last year.
"Arab Bank Group's net income after tax stood at $303 million, a drop of 11.8 per cent compared to prior period net income of $343 million," the bank said in its press statement.
Midyear financial statements showed total revenues at $905 million, 0.7 per cent higher than the $899 million on June 30, 2009 with net interest and commission income from accounting for 71 per cent of total revenues. Expenses dropped by 4 per cent or $15.2 million whilst provision for doubtful loans amounted to $124 million as compared to $56 million in previous period.
Due to the drop of some major currencies against the US dollar, total assets declined to $48.9 billion, compared with $50.6 billion at the end of 2009.
Other data showed that, at $34.2 billion, customer deposits accounted for 70 per cent of the bank's total sources of funds compared with $34.9 billion at the end of 2009. Total banks deposits amounted to $5.4 billion compared with $6.3 billion at the end of 2009.
Shareholders' equity stood at $8 billion, constituting 17 per cent of total assets; total capital adequacy ratio came at 15.8 per cent exceeding the requirements of both Basel II of 8 per cent and the Central Bank of Jordan of 12 per cent. Further, liquidity ratio as represented by cash and quasi cash accounted for 48 per cent of total assets, whilst loans to deposit ratio stood at 64 per cent.
Commenting on the results, Arab Bank Executive Chairman Abdul Hamid Shoman said: "The bank's profits were generated from the core operational income represented by interest income and commissions."
He attributed the drop in net profit to the bank's prudent policies against provisions indicating that the bank has booked additional provisions of $124 million against non-performing and watch list credits.
Shoman also pointed to the global economic conditions that led to lower interest rates on US dollar and other foreign currencies and the low volume of demand for banking facilities which resulted in a drop in the growth of the loan book.
Shoman concluded by stating that, in recognition of its outstanding ranking in the banking sector, Fitch has in May 2010 affirmed Arab Bank's rating of (A-) long-term with a stable outlook. The bank has also been recently reaffirmed by Standard and Poor's with a rating of (A-) and by Moody's with a rating of (A3).
© Jordan Times 2010
