Bank ABC (Arab Banking Corporation) has reported a consolidated Group net profit of $183 million for the year 2016, 2 per cent higher compared to a profit of $180 million reported for the previous year.

Overall during 2016 the group traded well given challenging external conditions in Mena and Brazil, a statement said.

The bank reported a net profit of $33 million for the fourth quarter, after absorbing the significant impact of the devaluation of the Egyptian Pound in November, resulting in a slightly subdued performance against the $36 million in the same period last year, it said.

The board of directors recommend, for approval at the Annual General Meeting to be held on March 26, in Bahrain, a cash dividend distribution of 3 per cent of the issued share capital ($0.03 per share), translating to approximately 50 per cent of the net profit for the year attributable to the shareholders of the parent amounting to $93.3 million.

Total operating income grew to $865 million, a 19 per cent increase compared with $729 million reported for the last year, driven by core income growth but also benefiting from the tax treatment of hedging currency movements, which also created an increased tax charge.

Operating expenses were largely controlled at $436 million, a 3.5 per cent increase compared to $421 in 2015, with the increase primarily arising from inflation, continuing strategic investment into geographic expansion and upgrading the business model, including risk and regulatory infrastructure, and were to some extent offset by cost savings.

Impairment charges for the year were $92 million, compared with $70 million reported in the previous year. This level of provisions was higher compared to historic trends experienced by the Group, primarily due to the difficult macro-economic conditions prevailing in Brazil, while our provision experience in other parts of the Group was relatively benign, reflecting a tight control on credit, recognising the challenging conditions. Despite this our operation in Brazil performed well in terms of top line and overall profitability, a spokesperson for the bank said.
 
The tax charge was at $103 million, against a reported tax charge of US$1 million in 2015, the variance largely arising from the tax treatment of currency hedges noted above.
 
Turning to the Balance Sheet, Bank ABC Group’s total assets grew to $30 billion at the end of 2016, compared to $28 billion at the 2015 year-end, to some extent driven by improving Brazilian Real levels, and slightly impacted by the Egyptian Pound devaluation. The ratio of non-performing loans to gross loans increased to 4.1 per cent, (3.4 per cent 2015) reflecting the additional impairments noted above, but being better than those experienced by many other regional players.

The group continues to place emphasis on controlled growth and sound credit practices to manage its diversified and high grade asset base.
Deposits increased by $1.7 billion to reach $20.2 billion. The group’s liquidity position continues to be at comfortable levels, with the liquid assets to deposits ratio at 68 per cent, slightly higher than the 66 per cent at the year-end 2015.

Equity attributable to shareholders of the parent increased to $3,826 million ($ 3,773 million at December 31, 2015), reflecting profits of 2016, impacted by the foreign exchange movements on investments in subsidiaries and fair value changes on marketable securities.

Bank ABC Group’s consolidated capital adequacy ratio (CAR) at December 31, 2016 was 19.1 per cent, comprising Tier 1 at 17.5 per cent (December 31, 2015 - Total CAR, 19.4 per cent, Tier 1 CAR 17.3 per cent). The tier 1 CAR was better than the previous year reflecting the group’s priority on maintaining a strong balance sheet, bolstered by predominantly Tier 1 capital.

Bank ABC's group chairman Saddek Omar El Kaber said: “The group overall had an encouraging year. Our core businesses in Mena and Brazil showed good performance and absorbed the impact of significant economic challenges broadly to meet their targets, remaining on course for future growth plans. Our strong balance sheet, with high capital and liquidity levels, remains a key differentiator given the outlook. The progress in implementing our strategy initiatives to develop our branch network in locations such as Singapore and to build our fee based businesses such as ‘Debt Capital Markets’ and ‘Financial Markets Sales’ position us well to steer through these conditions and further improve performance in 2017.”

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. - TradeArabia News Service