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Bank ABC reports 5pc growth in net profit

November 5, 2018

Bank ABC (Arab Banking Corporation) reported a consolidated net profit, attributable to the shareholders of the parent, of $159 million for the first nine of 2018, a 5 per cent increase compared to $151 million reported for the same period in the previous year.

The increase in net profit shows improvement in operating performance and cost of credit despite external headwinds, the bank said.

The bank’s profit before taxation was $178 million, 28 per cent lower compared to $247 million in the nine months of 2017, and normalises to a positive 1 per cent growth, after adjusting for effects of foreign currency hedging transactions in Banco ABC Brasil (BAB), which have an offsetting tax charge impact and other one-off non-core items.

On a headline basis, total operating income was $592 million against $653 million reported for the nine months of last year, and normalises to 2 per cent growth year on year, after adjustments as mentioned above.

Earnings per share for the period remained stable at $0.05 compared with the same period of 2017.

Operating expenses were at $352 million, $13 million higher than the nine months of 2017, mainly due to continuing investment costs into the new geographies and strategic initiatives whilst maintaining tight grip on the business as usual costs.

Impairment charges for the period were $62 million compared with the $67 million reported for the same period last year, mainly indicating the generally improving market conditions in select markets where we operate and is largely in line with our expectations for cost of credit. Impairment for the period is now computed on IFRS 9 basis covering the entire portfolio.

Total comprehensive income attributable to the shareholders of the parent was $24 million compared to $196 million reported for the same period of 2017, primarily due to depreciation in BRL against USD impacting the Foreign exchange translation adjustments in equity.

Ratio of non-performing loans to gross loans increased to 4.3 per cent compared to 2017 year-end levels of 3.5 per cent, and normalises to 3.3 per cent, when legacy fully provided loans are adjusted for. Provisions coverage of the impaired exposures remained comfortable at 98 per cent.

Tax credit (savings) of $19 million, compared to the charge of $53 million for the nine months 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.
Business Performance (three-month period):

Consolidated net profit, attributable to the shareholders of the parent, for third quarter was $46 million, 6 per cent lower compared to $49 million in Q3 2017.

Profit before taxation for the quarter was $59 million, 34 per cent lower compared to S$89 million in Q3 2017, and normalises to 8 per cent reduction, after adjusting for effects of foreign currency hedging transactions in Banco ABC Brasil (BAB), which have an offsetting tax charge impact.

On a headline basis, total operating income was $203 million against $221 million reported for the same period last year, and normalises to 3 per cent growth year on year, after adjustment as mentioned above.

Impairment provisions for the quarter at $32 million was higher compared to the third quarter of the previous year, although remained in line with targeted levels on a year-to-date basis.

Total comprehensive income attributable to the shareholders of the parent was $38 million compared to $80 million reported for the same period of 2017.

Earnings per share for the quarter was $0.01, compared to $0.02 in the third quarter of the previous year.

Bank ABC's group chairman Saddek Omar El Kaber said: “We are pleased with the group’s core business performance as the year draws to its last quarter while we continue to retain focus on maintaining a strong balance sheet, with healthy capital and liquidity levels.”

“Our strategic initiatives to build on our franchise strengths and transform the bank are progressing well. We have already started seeing the results of some of these initiatives,” he said.

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.

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