AMMAN: Jordan's largest lender, Arab Bank Group, reported on Saturday a 66% year-on-year drop in first-half net profit to $152.1 million as it set aside more money to cope with the economic fallout of the COVID-19 pandemic.
Chief Executive Officer Nemeh Sabbagh did not give a figure for the provisions, but said the bank had decided to set aside "significantly more" money to cover the "deterioration in the macro-economic environment throughout the region and globally."
The provisions would also cover the bank's operations in Lebanon, where the economy is in crisis, he added.
Arab Bank, one of the Middle East's major financial institutions, also said on Saturday that total loans rose 2% to $26.7 billion as of the end of June, while deposits climbed 5% to $35.9 billion. Group equity stood at $9.2 billion, it said.
Lower interest rates and weakening oil prices hurt revenues, it added.
Chairman Sabih al Masri said that while the impact of the pandemic was unprecedented, the bank was helped by a diversified presence in many markets.
Arab Bank operates in 30 countries on five continents and owns 40% of Saudi Arabia’s Arab National Bank (ANB).
Bankers say nearly 70% of the bank's revenues come from its global operations, including the stake in ANB.
Sabbagh said liquidity continued to be high, with a loan-to-deposit ratio of 74.4% as of the end of June. The bank’s provisions coverage ratio for non-performing loans continued to be in excess of 100%.
Based in Amman, but with most of its assets and deposits outside Jordan, Arab Bank has built a reputation for stability amid regional political upheaval.
The bank's revenues have also been hit by a drop in profits from Saudi Arabia's ANB, where it has been hurt by the plunge in oil prices since the pandemic, Sabbagh said.
(Reporting by Suleiman Al-Khalidi; Editing by Mark Potter) ((email@example.com; +96279-5521407;))