The Bahrain-based Arab Banking Corporation (ABC), the parent company of the Arab banking group, announced its financial results for the first half of 2003. ABC Group’s operating income increased to $157 million for the first half of the year, 16 percent higher than the $135 million generated in the first half of 2002.
Total income increased to $408 million, up from $359 million in the corresponding period in 2002. Net interest income for the first half was marginally lower than last year at $222 million, compared to $235 million in 1H02, depressed by the declines in US dollar and European interest rates witnessed over the period.
Non-interest income improved by 50 percent to $186 million, up from $124 million in 2002, boosted by improved performance from capital markets, trade finance, consumer banking, and foreign exchange activities.
Loan loss provisions for the half-year amounted to $65 million, compared to $46 million in 2002, mainly because of the continued economic downturn in Europe, North America and Asia, and the debt default by Argentina.
Operating expenses totaled $251 million, up from $224 million in the first six months of 2002, impacted by the decline of the US dollar against other major currencies, including both the euro and sterling. However the overhead expense ratio remained steady at 62 percent, reflecting the stronger earning capacity of the Group’s product platforms, despite the increase in costs.
Net profit amounted to $47 million, compared with the net profit of $51 million for the same period in 2002. Despite the continued weakness of the US dollar, ABC Group’s total consolidated assets declined by two percent to $28.7 billion in June this year from $29.3 billion at the year end 2002.
Liquidity remained strong with liquid assets to deposits ratio at 49 percent. The figure stood at 51 percent in 2002. At the same time, loans to deposits ratio reached remained at 66 percent. ABC Group’s capital base remained strong, with a risk asset ratio of 14.2 percent at June 2003, compared to 13.2 percent at December 2002, calculated in accordance with Bahrain Monetary Agency requirements.
ABC President and Chief Executive Ghazi Abdul-Jawad said, “Compared to the final quarter of last year there has been a significant improvement. It is worth noting that our income generating capabilities have actually improved year-on-year.”
“The recession in the USA, Europe, Japan and the other major industrialized economies that started in the second half of 2002 has not abated, and is affecting banks worldwide, as well as depressing equity markets and business activities in general.”
“Maintaining our earnings level in the face of adversity remains a high priority, and despite this setback we remain firmly on course towards achieving this goal,” Abdul-Jawad concluded. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
