Jordan's largest lender, Arab Bank Group, posted a 15% rise in 2012 net profit to $352mn on higher revenues, with its chairman saying a conservative policy eased the impact of political upheaval across the Arab region.
Its focus on top-tier assets and steering away from significant lending to governmental entities has served it in a climate where banks exposed to former toppled governments in the Middle East had suffered, bankers say.
Chairman Sabih al-Masri said in a statement the bank, one of the Middle East's major financial institutions with a strong presence across the region, saw deposits increase by $1.2bn to $32.9bn against $31.7bn at end of 2011.
"This exceptional performance shows the bank's ability to adjust to the changes and the circumstances the Arab region is going through by adopting a conservative credit policy" al-Masri said.
Investment analysts say the bank has traditionally had a lower risk appetite than peers and it favours capitalisation and liquidity versus profitability.
Al-Masri said the results showed that Arab Bank, which has a $45.6bn balance sheet spread across 30 countries and five continents, was able to maintain the steady growth it has shown in recent years.
The Amman-based Arab Bank's growth has long been tied to its regional and global expansion and it has built a reputation for low vulnerability to major political upheaval.
Al-Masri also said the board proposed paying 30% of 2012 profits in a cash dividend, up from 25% in 2011.
Arab Bank's chief executive officer Nemeh al-Sabbagh said the bank would focus on keeping a high level of liquidity, with a capital adequacy of 15.09% at the end of 2012.
"It's important to keep high liquidity which is a main pillar of the bank's solid financial position," al-Sabbagh said.
Net operating income of the bank, which has a $45bn balance sheet, rose 8% in 2012 as a result of growth in net interest and cost cutting measures, al-Sabbagh said.
Non-performing loans as a total of credit facilities were a minimum with non-performing loans covered by 100% of provisions, al-Sabbagh said.
Al-Sabbagh said the bank, one of several major regional and international banks exposed to the debt ridden Saudi conglomerates Saad and Algosaibi, had now fully set aside provisions for their exposure in the troubled firms.
Bankers said Arab Bank set aside nearly $1bn in provisions in the last two years to cover non-performing loans by businesses reeling from the global downturn, but was cushioned by a healthy capital base.
The firm is one of the Arab world's largest privately owned banks. Over 20% is owned by the family of Lebanon's former prime minister, Rafik al-Hariri, who was assassinated in 2005. Jordan's social pension fund has a 15.5 stake.
The remainder is mainly held by long-term investors. Arab Bank owns 40% of Saudi Arabia's Arab National Bank ANB.
MMG deepens losses
Financially troubled Saudi contractor Mohammed al-Mojil Group said yesterday its cumulative net loss now stands at 2.01bn riyals ($536mn) after reporting a fourth-quarter net loss of 526mn riyals.
The company is attempting to stabilise its financial position after it replaced its management team last year and held a shareholders meeting in which it voted against liquidation.
Although its fourth-quarter loss was less than half that of the last quarter of 2011, it was considerably more than its third-quarter 2012 loss of 33.8mn riyals.
MMG's net loss over the year was 1.20bn riyals, compared to 1.11bn riyals in 2011.
The company is now starting legal action against clients on some major projects to claim payment for work. An MMG official said in an e-mail yesterday it has started proceedings against the Saudi unit of Britain's Petrofac.
MMG "served a formal notice of arbitration" to Petrofac Saudi Arabia on Wednesday, seeking 177mn riyals for its work on the Karan gas field development, the official said in the email.
"This move follows unsuccessful negotiations to achieve an amicable resolution following the earlier issue of a Notice of Dispute," he added.
A Petrofac Saudi official declined to comment.
On January 20, MMG said it plans to start legal action to collect dues and claims worth more than 400mn riyals ($107mn). It said it was contemplating legal action against two other companies: Saudi Binladin Group and South Korea's SK Engineering and Construction.
Earlier yesterday MMG said the drop in its quarterly loss from a year earlier was due to a decline in provisions the company took against an expected increase in the cost of completing projects. Its fourth-quarter 2011 loss was 1.18bn riyals.
However, MMG's liabilities now exceed its assets by 1.37bn riyals and shareholders face a total deficit in equity of 840mn riyals, it said in the statement.
In November, shareholders in MMG rejected the idea of liquidating the company, which is involved in oil and gas projects, mainly for state oil company Saudi Aramco.
The company's recovery plan includes asset sales, cutting bank debt and absorbing accumulated losses.
© Gulf Times 2013
