Bank ABC posts $113m H1 net profit

Bank ABC (Arab Banking Corporation) today announced a consolidated net profit for the first half of 2018, 11 per cent higher compared to $102 million for the same period the previous year.

 

Profit before taxation was $119 million, 25% lower compared to $158 million in the first half of 2017, and normalises to a positive 6% growth, after adjusting for effects of foreign currency hedging transactions in Banco ABC Brasil, which have an offsetting tax charge impact and other one-off non-core items, said the bank.

 

On a headline basis, total operating income was $389 million against $432 million reported for the first half of last year, and it normalises to 1% growth year on year, after adjustment as mentioned above.

 

EPS for the period was $0.04 compared to $0.03 in the same period of the previous year.

 

Operating expenses were at $240 million, $16 million higher than the first half of 2017, due to inflation and flow through effect of investment costs, it said.

 

Impairment charges for the period were $30 million compared with the $50 million reported for the same period last year, mainly indicating the improving market conditions in Brazil. Impairment for the period is now computed on IFRS 9 basis covering the entire portfolio.

 

Ratio of non-performing loans to gross loans was at 3.9% compared to 2017 year-end levels of 3.5%, and normalises to 3.0%, when legacy fully provided loans are adjusted for.

 

Tax credit (savings) of $20 million was reported, compared to the charge of $26 million for the first half of 2017 (the variance largely arising from the tax treatment of currency hedges in BAB noted above). Effective tax charge remains at comparable



levels, after adjusting for the currency impact noted above, the bank said.

 

Consolidated net profit for the second quarter was $60 million, 15% higher compared to $52 million in Q2, 2017. Profit before Taxation for the quarter was $39 million, 44% lower compared to $70 million in Q2 2017, and normalises to a positive 5% growth, after adjusting for effects of foreign currency hedging transactions in Banco ABC Brasil, which have an offsetting tax charge impact, it said.

 

Balance Sheet

Total assets of ABC stood at $27.9 billion at the first half of 2018, compared to $29.5 billion at the 2017 year-end, as the group continues to prioritise asset quality and returns. Total assets also declined due to the effect of USD strengthening, against Brazilian Real (BRL) in particular.

 

Deposits at the end of the period were $19.2 billion slightly lower than the $20.2 billion at 2017 year-end.

 

Bank ABC's group chairman Saddek Omar El Kaber, commented: “We are building on the momentum from the previous quarter, with improved growth in our net profit year on year.  The growth is backed up by stabilising credit conditions, particularly in Brazil. Balance sheet and risk metrics remain strong and benchmark well against regional and international standards. We remain cautiously optimistic on the outlook for the full year. ”

 

Bank ABC is a leading player in the region’s banking industry and provides innovative wholesale financial products and services that include corporate banking, trade finance, project and structured finance, syndications, treasury products and Islamic banking. It also provides retail banking services through its network of retail banks in Jordan, Egypt, Tunisia and Algeria.