Arab Banking Corporation (ABC) has announced that its consolidated Group net profit for the year ending 2010 was US$143 million, 17% higher than last year. Revenues surged by US$78 million to US$719 million, whilst operating expenses increased by US$33 million to US$359 million, resulting in the Group’s cost to income ratio improving to just under 50%. Prudent impairment provisions taken for regional and international exposures (mainly from the Eurozone crisis), cushioned by recoveries, resulted in the net charge for the year of US$77 million compared to US$115 million for the previous year.
Total operating revenues for the fourth quarter rose to US$191 million, 6% increase over the previous quarter. With positive operating leverage, operating profit before impairment provisions rose 5% to US$98 million. Higher impairment provisions of US$23 million compared to US$20 million and increase in tax charge, partly from timing differences (US$28 million compared to US$22 million in the third quarter), resulted in the net profit for the quarter of US$31 million, compared to US$37 million in the third quarter.
The Group’s total assets grew 8% to US$28,105 million with growth in the more profitable business lines and geographies accompanied by de-risking through reduction in securities portfolios from run-offs and in international wholesale lending. Short term placements with banks and financial institutions increased to maintain liquidity which remains comfortable with liquid assets to deposits ratio at the year-end of 72% compared to 71% in the previous year.
Shareholders’ equity at 31 December 2010 stood at US$3,428 million compared to US$2,191 last year, boosted by the US$1,110 million share capital increase in the first quarter of 2010. ABC Group’s capital adequacy ratio at 2010 year-end was very strong at 23.1%, predominantly Tier 1, which totalled 18.4%.