Bahrain-based Arab Banking Corporation (ABC) on Thursday announced that its consolidated group net profit for the year ending 2010 reached $143 million, 17% higher than last year. Revenues surged by $78 million to $719 million, whilst operating expenses increased by $33 million to $359 million, resulting in the Group’s cost to income ratio improving to just fewer than 50%.
“Total operating revenues for the fourth quarter rose to $191 million, 6% increase over the previous quarter. With positive operating leverage, operating profit before impairment provisions rose 5% to $98 million. Higher impairment provisions of $23 million compared to $20 million and increase in tax charge, partly from timing differences ($28 million compared to $22 million in the third quarter), resulted in the net profit for the quarter of $31 million, compared to $37 million in the third quarter,” it added.
“ABC’s Brazilian subsidiary continued to grow with significant contribution to the Group’s earnings, which also benefited from strong revenues from Treasury, Trade Finance and Retail business lines in the Arab World.”
The Group’s total assets grew eight per cent to $28.1 billion with growth in the more profitable business lines and geographies accompanied by de-risking through reduction in securities portfolios from run-offs and in international wholesale lending where we continue to remain watchful. Short term placements with banks and financial institutions increased to maintain liquidity which remains comfortable with liquid assets to deposits ratio at the year-end of 72% compared to 71% in the previous year.
Shareholders’ equity at 31 December 2010 stood at $3.42 billion compared to $2.19 billion last year, boosted by the $1.11 billion share capital increase in the first quarter of 2010. ABC Group’s capital adequacy ratio at 2010 year-end was very strong at 23.1%, predominantly Tier 1, which totalled 18.4%.
“Financial results have improved due to the careful expansion strategy, prudent balance sheet management and cost discipline. The Group’s well-diversified business lines across various geographies have contributed to the stability in the earnings stream which augurs well for the future,” ABC’s Chairman, Mohammed Layas, while commenting on the results said.
“It is gratifying to see the positive results for the year from the actions we have taken over the past two years to build a platform for profitable growth,” added Hassan Juma, President and Chief Executive of ABC.