Manama, Bahrain: Bank ABC Islamic has announced its financial results for the year ending 31 December 2020.
2020 was a year like no other. Bank ABC Islamic started the year with an optimistic outlook following its exceptional performance in 2019, achieving double digit growth in both total operating income as well as net profit. Before the end of first quarter 2020, the Covid 19 pandemic broke out, triggering unprecedented challenges that required us to swiftly adapt to the new environment.
The Bank remained resilient during the year and responded well to the pandemic across all fronts. Our operational resilience helped in keeping our staff safe at office and providing secure and seamless access to those working from home, as we continued to serve our clients without comprising on our service standards. The pandemic, combined with low profit rate environment and depressed oil price, resulted in overall slowdown of business momentum. On top of this, a regional fraud case resulted in significantly higher loan provisions as compared to the previous year.
However, these challenges were unable to over shadow the resilience of our business, and we achieved total operating income of $44.9 million in 2020 compared to $46.7 million in 2019. Our core customer business and balance sheet showed a strong 11.3% growth on a year on year basis. Moreover, our financial health remained solid, with a capital adequacy ratio of 34.7% as compared to regulatory requirement of 12.5%.
Our activity in the market remined unabated; we successfully led nine Sukuk mandates and three Syndicated deals.
An important milestone during the year was receiving regulatory approvals and laying down the ground work to set up an Islamic banking widow in Algeria, called ‘alburaq’. The first ‘alburaq’ branch has recently started its operations in 2021.
The achievements of Bank ABC Islamic have been recognized by our external rating agency, IIRA (Islamic International Rating Agency), who reaffirmed our 2019 rating of A-/A-2 on the International scale and A=(bh)/A-1(bh) on the National scale with a stable outlook.
A more detailed summary of the 2020 Financial Results follows below:
Q4 Financial Results (three-month period)
- Net profit for the fourth quarter was US$6.3 million compared to US$8.5 million reported in the fourth quarter of 2019.
- Total operating income was US$9.7 million compared to US$12.1 million reported for the same period last year.
- Operating expenses were US$1.4 million, compared to US$2.8 million for the same period of last year.
- Allowances for credit losses were US$1.9 million compared to US$0.7 million reported in last year.
FY 2020 Financial Results
- Net profit for the year 2020 was US$28.6 million compared to US$37.3 million recorded for the previous year, 23.4% lower than previous year, mainly on account of higher loan provisioning.
- Total operating income was US$44.9 million compared to US$46.7 million reported for last year, only 3.7% lower than previous year.
- Operating expenses were US$6.4 million compared to US$8.5 million for last year.
- Allowances for credit losses for the year were US$9.5 million compared to US$0.5 million reported during last year. The exceptional increase in ECL during the year was primarily on account of a fraud case in GCC.
- ABC Islamic Bank’s total assets stood at US$2.314 billion at the end of 2020, compared to US$2.079 billion at the 2019 year-end, showing a growth of 11.3% on year on year basis.
- Shareholders’ equity at 31 December 2020 stood at US$293 million, compared to US$365 million at 2019 year-end. The decrease is mainly due to the US$100 million dividend payment to the shareholders made during the year.
- The Bank’s capital base remains very strong with a capital adequacy ratio of 34.7%, predominantly Tier 1, which totalled 33.7%.
Commenting on the results, Mr. Hammad Hassan, Managing Director of Bank ABC Islamic, said, “In the backdrop of the pandemic, and a very difficult operating environment, realising $44.9 million in total operating income compared to $46.7 million in 2019, and balance sheet growth of 11.3% is a major achievement and is a testament to the hard work of and exemplary performance of our staff. Net profitability of the Bank was adversely impacted due to a regional fraud case that led us to take a large provision. During the year, in line with CBB’s directives, we supported our clients who needed forbearance during these tough times. We remain committed to building our customer franchise and look at 2021 with optimism and hope for business environment to return to normalcy during later part of the year.”
© Press Release 2021