Bahrain-based Arab Banking Corporation (ABC) reported a consolidated group net profit of $96 million for the first half of 2015, 30 per cent lower compared to a profit of $137 million reported in the first half of last year.

ABC also reported a net profit of $44 million in the second quarter, 33 per cent lower than $66 million reported for the same period last year.

The business performance of most of ABC’s units continued to display improved performance year on year, said a statement from the bank.

Its subsidiary in Brazil managed remarkable results in local currency terms, despite the present exceptional economic conditions in the country, it added.

The steady strengthening of US dollar against most domestic currencies in which ABC operates affected the banks performance, reinforcing the trend experienced from the beginning of the year, it said.

In particular, the Brazilian real weakened over 30 per cent and the Algerian dinar weakened by over 20 per cent during the first half of 2015 compared with the same period in the previous year, said the statement.

This, combined with volatile trading conditions and the lack of exceptional items, which benefited the group last year, resulted in a total operating income of $204 million for the second quarter, compared with $242 million reported for the same period in 2014, it said.

Operating expenses were 4 per cent lower at $109 million compared to $113 million last year, benefiting from currency movements while reflecting additional cost investment in strategic initiatives to support sustainable business growth.

Net impairment provisions for the second quarter of $13 million, were below the previous year’s $19 million benefiting from weak FX as well as some recoveries, but also indicating robust asset quality.

ABC noted the tax charge for the period was $24 million against a charge of $28 million in 2014, benefiting from the tax treatment of currency movements in subsidiaries.

The group’s total assets stood at $28 billion at the end of the half year compared to $29.4 billion at 2014 year-end, also affected primarily by the stronger US dollar.

The underlying businesses broadly remained on a growth trajectory, as the asset volumes grew in domestic currency terms in most businesses. The ratio of non-performing loans (NPLs) to gross loans at 2.7 per cent remains healthy (2.4 per cent at year-end 2014), said the statement.

Deposits decreased by $0.9 billion during the quarter to reach $18.7 billion, again impacted by currency translation. The group’s liquidity position continues to be at comfortable levels with the liquid assets to deposits ratio marginally increasing to 66 per cent compared to 65 per cent at year-end 2014, it added.

Shareholders’ equity as on June 30, stood at $3.8 billion after the distribution of 5 per cent dividend to the shareholders and after foreign exchange movements on investments in subsidiaries.

Saddek Omar El Kaber, chairman at ABC, said: “ABC continues to steer through a very challenging environment in a number of key markets in which it operates, caused by FX and trading volatility.”

“However, the bank’s capital and liquidity position remain strong, with healthy asset quality.  The board and management are confident that the investments currently underway to deepen the markets of ABC and its reach will eventually deliver increased sustainable shareholder value, while taking robust tactical actions to improve performance in the near term,” he added. – TradeArabia News Service