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H1 NET TOPS $387m

Arab Bank sees double-digit profit growth this year

Amman, July 27, 2013

Jordan's Arab Bank, one of the largest Middle East financial institutions, expects double-digit growth in net profit in 2013, bank officials said on Saturday.

The bank reported first-half net profit up 7.5 percent to $387 million on a year ago and officials said the full-year outcome would be boosted by much lower provisions compared with a year ago, along with steady growth in net operating income.

Both those trends would improve the bank's bottom line, officials said after a first half in which the lender benefited from an upturn in the oil-producing Arab Gulf region, where it has a strong presence.

"The bank is capitalising on strong growth opportunities in the Arab Gulf region," said the bank's chairman Sabih Masri in a statement.

Bank officials say the wave of political unrest across the region since 2011 would continue to affect business, but a diversified regional and global portfolio helped reduce risks.

Arab Bank is one of the Arab world's largest privately owned banks, with over 20 percent owned by the family of Lebanon's former prime minister, Rafik al-Hariri, who was assassinated in 2005. The remainder is mainly held by other long-term investors.

Masri said the bank's latest results showed Arab Bank's "strong performance reflected the bank's ability to deal with a challenging environment in the region and to grow in its core markets."

LOAN PROVISIONS

Arab Bank, which has a $45.6 billion balance sheet spread across 30 countries and five continents, has seen a slowdown in profit growth in recent years as it puts aside provisions to cover non-performing loans to businesses reeling from the global downturn.

Bankers said Arab Bank set aside nearly $1 billion in provisions in the last two years to cover non-performing loans by businesses reeling from the global downturn, but was cushioned by a healthy capital base.

Arab Bank Chief Executive Nemeh al-Sabbagh said the bank was focused on keeping a high level of liquidity. The bank had a capital solvency ratio of 14.83 pct at the end of June, above a 12 percent minimum required by Jordan's monetary authorities.

Non-performing loans of total credit facilities were a minimum, with non-performing loans covered by 117 percent of provisions, Sabbagh said.

Investment analysts say the bank has traditionally had a lower risk appetite than peers. Based in Amman but with only a fifth of its assets and a quarter of its deposits in Jordan, the bank has built a reputation for stability amid regional political upheaval.

Other shareholders in Arab Bank, which owns 40 percent of Saudi Arabia's Arab National Bank (ANB), include the Saudi finance ministry with 4.5 percent and Qatar with 1.65 percent.

The bank said customer deposits stood at $32.7 billion at the end of the June, while its loan portfolio had grown a modest 2 percent from last year to $22.9 billion due to the depreciation of key currencies against the dollar in the last few months.

Pretax profit rose to $511 million in the first six months of the year, the bank said. It gave no comparable figures. – Reuters




Tags: Jordan | Arab Bank | profit | Amman | First half |

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