MANAMA: Arab Banking Corporation (ABC) Tuesday announced that its consolidated group net profit for the first nine months of 2011 was $157 million, 40 percent higher than last year. Net profit for Q3 was $41 million compared to $68 million in Q2, due to net impairment provision charge of $20 million compared to net recovery of $8 million during the previous quarter.
Total operating income for Q3 amounted to $200 million, marginally below $207 million in the previous quarter, while operating expenses decreased to $97 million compared to $102 million, in part due to the impact of exchange rates. Cost/income ratio improved to 48.5 percent from 49.3 percent. Operating profit before impairment provisions reached $103 million. Net impairment provision charge of $20 million was taken during the quarter.
Shareholders' equity at Sept. 30 stood at $3.56 billion, compared to $3.60 billion at the end of Q2, the decrease occurring mainly due to exchange translation on foreign subsidiaries following the sharp rise of the US dollar in September. ABC's capital base remains very strong with a capital adequacy ratio of 23.9 percent, predominantly Tier 1, which totaled 19.1 percent. ABC's liquidity remains comfortable with the liquid assets to deposits ratio at 69 percent, compared with 73 percent at the end of the previous quarter.
Hassan Juma, president and chief executive of ABC, said: "These highly creditable results have been delivered despite the very challenging business environment that has prevailed throughout the year. ABC has continued to prudently reduce its exposure to market risk, maintain a very liquid position and to implement strict credit and liquidity guidelines but yet still has delivered strong year on year revenue growth for the nine months ended Sept. 30. Brazil has continued to be a major engine of revenue growth and I am particularly pleased that revenues from subsidiaries in MENA are up year on year despite the well known difficulties in two of our markets. Expenses remain well controlled and our cost/income ratio continues to improve."
Mohammed Layas, chairman of ABC, commended these results. Looking ahead to when our markets return to normal, Layas stressed that "ABC is well placed in terms of capital, liquidity, geographic presence and products to take advantage of the trade and business flows that will arise from the recovery. Our geographic diversification remains a major strength as is the strong support of our major shareholders. We look forward to continued sustainable growth as our transformation into a leading universal bank continues."
© Arab News 2011
