ABC International Bank (ABCIB), the London-based unit of Bahrain’s Arab Banking Corporation, has reported a 21 per cent increase in net profits in 1996 to £9.2 million ($14.8 million) from its main business of trade-related finance with the Arab world. Interest and fee income both rose, while the size of the bank’s balance sheet was little changed at £1,272 million ($2,040 million) compared to £1,270 million ($2,037 million) in 1995. Like its parent bank, ABCIB is not paying a dividend.
The bank says that in 1996 it continued to seek out a wider range of clients and to increase its geographical reach. ‘We’ve maintained our focus on our niche business. We’re filling in the gaps and focussing on areas we haven’t covered extensively,’ says chief executive Abdulmagid Breish. He says ABCIB is doing more business in regions like the former states of the Soviet Union and Latin America through its existing Arab and European clients: it is also doing more commodity financings.
Net interest income rose by 15 per cent to £16.8 million ($26.9 million) while fee income rose by 7 per cent to £6.5 million ($10.4 million). Loans accounted for £510 million ($817.9 million) of ABCIB’s assets at the end of 1996, slightly less than in 1995, while customer deposits fell by about 30 per cent to £81.3 million ($130.4 million). About 70 per cent of its loans mature within two years. ABCIB borrowed $100 million in late 1996 through a five-year term loan.
The bank reduced its loan-loss provisions by 28 per cent to £2.7 million ($4.33 million). Off-balance sheet exposures grew by 9 per cent to £1,512 million ($2,424 million) in letters of credit, acceptances and guarantees. ABCIB has created a separate head office under the chief executive, set apart from its London branch operations, to oversee business in the London and Paris branches.