Bank ABC Announces 1H 2021 Results With A Net Profit Of $55 Million Attributable To The Shareholders Of The Parent

Press release
Published August 11th, 2021 - 05:15 GMT
Bank ABC Announces 1H 2021 Results With A Net Profit Of $55 Million Attributable To The Shareholders Of The Parent
Bank ABC
Highlights
Bank ABC (Arab Banking Corporation B.S.C.) - Bahrain Bourse Trading Code “ABC” - today announces its results for the first half of 2021.

Bank ABC (Arab Banking Corporation B.S.C.) - Bahrain Bourse Trading Code “ABC” - today announces its results for the first half of 2021.

The Group continues to recover well from the impact of 2020, improving our profitability in the first half of 2021. We are carefully navigating ongoing constrained post-pandemic operating conditions across our markets, supporting our clients, staff and communities while progressing our growth and digital transformation plans. Notably, the Group’s acquisition of BLOM Bank Egypt S.A.E, signed in January, reached final completion stage in August, and going forward will be a fully consolidated subsidiary within the Bank ABC Group.

Key performance highlights:

  • Net profit attributable to the shareholders of the parent of $55 million with cost of risk returning to pre-pandemic levels, reflecting an improved economic outlook, after the Bank absorbed the impact of regional fraud events experienced in 2020.
  • Total Operating Income significantly increased on a headline basis, and on an underlying basis* grew by 12% compared to the previous year, despite lower interest rates and challenged economic conditions.
  • Operating expenses on an underlying basis* were higher by 4% as the Group returns to normal level of activity, although continuing to employ greater discipline and cost control while continuing investment into our strategic priorities for transforming the Bank.
  • Balance sheet remains strong with capital and liquidity ratios well above the regulatory requirements: Group CET 1 Ratio is 16.1%, LCR 241% and NSFR 122%.
  • Overall asset portfolio quality remains solid with sound credit underwriting standards evidenced by client-level stress-testing reviews.
  • Our strategic transformation on various fronts continues with relentless focus. Payment and digital retail banking capabilities gain steady traction. ila Bank’s customer base and deposits have been growing from strength-to-strength as it continues to launch innovative products and features to enhance customers’ banking experience. Arab Financial Services (AFS) is building momentum into its next phase of its transformation steered by a new management team. 

Bank ABC's Group Chairman, Mr. Saddek Omar El Kaber commented, “We are pleased with the robust results of the Group. Several of our businesses have performed exceedingly well under the current conditions, reaffirming the strong underlying fundamentals of the Group’s diversified franchise. Although the transition from the pandemic continues to be challenging, Bank ABC continues to operate strongly, with undistracted focus on transforming the Bank through strategic initiatives, including the completion of the Blom Bank Egypt acquisition.”

A more detailed summary of the Financial Results is explained below:

Q2 2021 Business Performance 

  • Consolidated net profit attributable to the shareholders of the parent, for the second quarter of 2021 was US$25 million, compared to a net loss of US$5 million reported for the same period last year.
  • Earnings per share for the period was US$0.01, compared to nil for the same period last year.
  • Total comprehensive income attributable to the shareholders of the parent was US$137 million, broadly at the same level compared to US$138 million reported for the same period last year. 
  • On a headline basis, Total Operating Income was US$225 million, 63% higher compared to US$138 million reported for the same period last year (last year’s comparatives being significantly affected by currency fluctuations and hedging in Banco ABC Brasil*). On an underlying basis*, Total Operating Income was at US$208 million for the period, a 23% increase on the US$169 million reported for the same period last year. 
  • Net interest income was US$138 million, 20% higher against US$115 million reported for the same period last year, after absorbing the impact of declining interest rates compared to the same period last year supported by growing volumes in certain markets. 
  • Operating expenses were at US$128 million, 12% higher than US$114 million for the same period last year, as the Group returns to a more normal level of activity (underlying basis* 13%). Whilst last year benefited from aggressive cost containment measures, the Group continues to enforce appropriate cost discipline without compromising on investment into the Group’s digital transformation and strategic initiatives. 
  • On an underlying basis*, the Group achieved a Net Operating Profit of US$79 million for the quarter, 44% higher compared to US$55 million in Q2 2020.  Headline Net Operating Profit was US$ 97 million, compared to US$ 24 million reported for the same period last year (last year impacted by currency fluctuations explained above).
  • Impairment charges (ECL) or credit loss expenses for the quarter were US$29 million compared to US$54 million reported for the same period last year, with stabilising economic outlook from the lows last year, and without the major impact of regional fraud events such as NMC, that created abnormally elevated ECL charges during 2020.
  • Tax charge for the quarter was US$35 million, compared to the recovery of US$26 million for the same period last year. The variance largely arising from the tax treatment of currency hedges in Banco ABC Brasil, which have an offsetting impact on Total Operating Income. On an underlying basis*, tax charge for the period was at US$13 million compared to US$5 million for the same period last year.

Background Information

Bank ABC

Bank ABC (incorporated as Arab Banking Corporation B.S.C) is an international bank headquartered in Manama, Kingdom of Bahrain. Our network spreads across five continents, covering countries in the Middle East, North Africa, Europe, the Americas and Asia. 

Bank ABC, founded in 1980, is listed on the Bahrain Bourse and our major shareholders are the Central Bank of Libya and Kuwait Investment Authority. 

Bank ABC is a leading provider of Trade Finance, Treasury, Project & Structured Finance, Syndications, Corporate & Institutional Banking as well as Islamic Banking services. We are also expanding our retail banking network in the MENA region.

Bank ABC is licensed as a conventional wholesale bank by the Central Bank of Bahrain.

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