The Arab Banking Corporation (ABC), the parent company of the Arab Banking Group headquartered in Bahrain, recorded $55 million in net profits in the first three months of 2002, compared with a net profit of $103 million for the corresponding period last year.
The Corporation attributed the decline to the continued economic deterioration in emerging markets, particularly in Latin America, aggravated by the sharp sell-off of sovereign debt experienced in the capital markets of that region.
Total consolidated assets of the ABC Group rose by eight percent to $28.8 billion in September this year from $26.6 billion in December 2001. Liquidity remained strong with liquid assets to deposits ratio at 52 percent and loans to deposits ratio at 67 percent. ABC's shareholder' funds amounted to $1.9 million.
Despite the increase in assets and the foreign currency translation impact from the sharply rising euro against the US dollar the Group continues to maintain a strong capital base as evidenced by the risk asset ratio of 13.2 percent in September, calculated in accordance with the capital adequacy guidelines established by the Bahrain Monetary Authority.
ABC Group's net interest income for the first three quarters amounted to $337 million, mainly because of the impact of the continuing worldwide low interest rate environment. Non-interest income amounted to $205 million, reflecting the losses resulting from the falls in the Latin American and certain Middle Eastern capital markets.
Operating expenses remained reasonably steady at $346 million whilst the overhead expense ratio increased to 64 percent mainly due to the decline in operating income. Various options to rationalize the expense base of ABC’s operations in the US and Europe are being considered and its capital market activities in Egypt are being curtailed, although the Group's other product platforms continue to be strengthened. Loan loss provisions for the first three quarters amounted to $90 million, reflecting the prolonged recessionary conditions affecting global economies. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
