Bank ABC Announces First Half 2018 Results Net Profit of $113 Million

Bank ABC (Arab Banking Corporation B.S.C.) - Bahrain Bourse Trading Code “ABC” - today announces its results for the first half of 2018:

Business Performance (six-month period):

• Consolidated net profit, attributable to the shareholders of the parent, for the first half of 2018 was US$113 million, 11% higher compared to US$102 million reported for the same period previous year.
• Profit before Taxation was US$119 million, 25% lower compared to US$158 million in the first half of 2017, and normalises to a positive 6% growth, after adjusting for effects of foreign currency hedging transactions in Banco ABC Brasil (“BAB”), which have an offsetting tax charge impact and other one-off non-core items.
• On a headline basis, total operating income was US$389 million against US$432 million reported for the first half of last year, and normalises to 1% growth year on year, after adjustment as mentioned above.
• EPS for the period was US$0.04 compared to US$0.03 in the same period of the previous year.
• Operating expenses were at US$240 million, US$16 million higher than the first half of 2017, due to inflation and flow through effect of investment costs.
• Impairment charges for the period were US$30 million compared with the US$50 million reported for the same period last year, mainly indicating the improving market conditions in Brazil. Impairment for the period is now computed on IFRS 9 basis covering the entire portfolio.
• Ratio of non-performing loans to gross loans at 3.9% compared to 2017 year-end levels of 3.5%, and normalises to 3.0%, when legacy fully provided loans are adjusted for.
• Tax credit (savings) of US$20 million, compared to the charge of US$26 million for the first half of 2017 (the variance largely arising from the tax treatment of currency hedges in BAB noted above). Effective tax charge remains at comparable levels, after adjusting for the currency impact noted above.

Business Performance (three-month period):

• Consolidated net profit, attributable to the shareholders of the parent, for second quarter was US$60 million, 15% higher compared to US$52 million in Q2 2017.
• Profit before Taxation for the quarter was US$39 million, 44% lower compared to US$70 million in Q2 2017, and normalises to a positive 5% growth, after adjusting for effects of foreign currency hedging transactions in Banco ABC Brasil (“BAB”), which have an offsetting tax charge impact.
• On a headline basis, total operating income was US$178 million against US$203 million reported for the same period last year, and normalises to 5% growth year on year, after adjustment as mentioned above.
• EPS for the quarter was US$0.02, similar to the second quarter of the previous year.

Balance Sheet:

• Total assets stood at US$27.9 billion at the first half of 2018, comparable to US$29.5 billion at the 2017 year-end, as the Group continues to prioritise asset quality and returns. Total assets also declined due to the effect of USD strengthening, against Brazilian Real (BRL) in particular.
• Deposits at the end of the period were US$19.2 billion slightly lower than the US$20.2 billion at 2017 year-end.
• Customer deposits decreased by US$0.6 billion during the year, also resulting from strengthening of USD against BRL.
• Liquidity ratios strong with LCR and NSFR on a Basel III basis exceeding 100% with comfortable buffer and liquid assets to deposits ratio healthy at 51%.
• Capital Ratios strong: Tier 1 16.8% and total capital adequacy ratio (CAR) 18.1%.

Bank ABC's Group Chairman, Mr. Saddek Omar El Kaber, commented that “We are building on the momentum from the previous quarter, with improved growth in our net profit year on year.  The growth is backed up by stabilising credit conditions particularly in Brazil. Balance sheet and risk metrics remain strong and benchmark well against regional and international standards. We remain cautiously optimistic on the outlook for the full year. ”

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.

The full set of the financial statements and the press release are available on Bahrain Bourse’ website.