Arab Banking Corporation, the parent company of the Arab banking group headquartered in Bahrain, announced its financial results for the first half of 2002 with a net profit of $51 million, compared with a net profit of $74 million for the first half of 2001, representing a 31 percent bottom line decrease.
The earnings were impacted by the economic deterioration being experienced in the emerging markets, particularly in Latin America, aggravated by the sharp sell-offs experienced in the capital markets in that region, according to a bank press release.
Total consolidated assets of the ABC Group rose by nine percent to $28.9 billion in June this year from $26.6 billion at year-end 2001, and 12 percent from June 2001($25.7 billion). Liquid assets to deposits ratio remained stable at 51 percent and loans to deposits ratio at 66 percent, same as last year.
The group maintained a strong capital base as evidenced by the risk asset ratio of 12.7 percent at June 2002, compared to 14.1 percent in June 2001, despite the increase in assets and the foreign currency translation impact from the sharply rising Euro against the US dollar.
ABC Group's net interest income for the first half was one percent higher at $235 million, from $233 million in 2001, whereas non-interest income declined substantially to $124 million feom $154 million in 2001, reflecting the losses resulting from the falls in the Latin American capital markets. Expected economic recovery in the industrialized world led by the US feeding through to the emerging markets could help reverse some of these losses in the near term.
Operating expenses declined by two percent to $224 million, from $228 million in 2001, whilst the overhead expense ratio increased to 62 percent, from 59 percent in 2001, as the group's product platforms continue to be strengthened.
Although this was mainly due to the decline in operating income, various options to rationalize the expense base in ABC’s operations in the US and our capital market activities in Egypt are being considered, according to a bank press release.
Loan loss provisions for the half-year amounted to $46 million, up from $34 million in 2001, reflecting the reversionary conditions continuing to affect economies globally. ABC President and Chief Executive Ghazi Abdul-Jawad said, “It is unfortunate that turbulent market conditions have affected the half year result, although our income generating capabilities have actually improved year-on-year.“
”The volatility and financial instability in the major industrialized economies which started in the second half of 2001 have not yet abated, and have spread to the emerging markets, affecting banks worldwide, 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,” he concluded. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
