Arab Banking Corporation (ABC) announced that its consolidated Group net profit for the year ending 2012 was $205 million, compared to $204 million last year.
Total operating income amounted to $816 million as against $818 million in the previous year, despite the severe impact of the stronger dollar in translating the revenues of subsidiaries in 2012. Strong revenues from our subsidiaries in MENA, Europe and Brazil, as well as from our Wholesale Banking and Treasury operations boosted the Group’s earnings. Operating expenses decreased by $11 million to $403 million.
This is also due in part to currency translation from the stronger dollar, but overall positive operating leverage resulted in an improved cost to income ratio of 49.4% compared to 50.6% in 2011. Operating profit before impairment provisions reached $413 million (2011: US$404 million). Net impairment provision charge of US$62 million was US$34 million higher than last year. This is partly due to prudent additional provisions made for regional and international exposures. It is noteworthy that the 2011 charge was cushioned by exceptional recoveries.
Asset quality remained very healthy as evidenced by the ratio of NPLs (non-performing loans) to gross loans declining to 3.2% from 3.5% in 2011. After tax charge and share of minority interests, net profit for the year amounted to US$205 million. Net profit for the fourth quarter was US$47 million.
The Group’s assets totaled $24.527 billion, 2% below last year. The Group continued to restructure the balance sheet by exiting low-yielding securities and growing the retail, corporate and trade finance businesses. Liquidity continues to be plentiful with liquid assets to deposits ratio at 60%.
Shareholders’ equity at 31 December 2012 stood at $3.796 billion compared to $3.598 billion last year. ABC Group’s capital adequacy ratio at 2012 year-end was very strong at 23.6%, predominantly Tier 1, which totalled 18.6 %.
“The year’s strong results demonstrate the earning capability from core businesses over the past several years despite the financial crisis which many major economies are still grappling with. With relentless focus on maintaining asset quality and cost discipline we have restructured the balance sheet and prepared a strong platform for expansion. We will remain vigilant in looking for asset growth in the face of the rapid compression in credit spreads regionally and in major economies since last year. Going forward, our product and geographical diversification and strong franchises in the niche markets we operate in place us in an excellent position to deliver consistent profits despite adverse conditions,” Hassan Juma, President and Chief Executive of ABC, said.
“I am delighted at ABC’s results for the year, building on several years of steady and growing profitability. With very strong capital, liquidity and funding in place and assisted by the continued support from the shareholders, I am confident that ABC will continue to grow and further enhance its global presence as a leading Universal Bank in MENA,” ABC’s Chairman, Saddek El Kaber added.