ABC profits drop by 22 per cent, but expansion continues

21 April 1995

Bahrain-based Arab Banking Corporation has released its full consolidated results for 1994, following its annual general meeting on 9 April. The results showed a fall of 22 per cent in net profits to $105 million. However, the bank is maintaining the 1993 dividend of 6 per cent and plans to continue expanding its activities in the Arab world and Asia.

The drop in profits was attributed to a shrinkage in several of the bank's traditional Arab world markets and in the Near East, bank chairman Abdulmohsen Yousef al-Hunaif said. This was offset by strong performances in Asia from International Bank of Asia (IBA), ABC's Hong Kong subsidiary. IBA's net profits rose by 46 per cent to $32.2 million and assets grew by 28 per cent to $1,943 million.

The group's net operating income fell 28 per cent to $225 million. ABC says that profits in 1993 were bolstered by $51 million from the sale of a 45 per cent stake held in IBA. Income was affected by a need to maintain high liquidity in early 1994. There was a net loss of $19 million on trading and investment securities, compared with a profit of $41 million in 1993. Foreign exchange dealing income dropped to $17 million. There were also thinner margins on documentary credits as ABC shifted emphasis away from traditional markets to Latin America and the Far East to maintain volume.

Assets rose by 6 per cent to $19,517 million. At the end of 1994, 65 per cent of assets and 87 per cent of liabilities were of no more than one year's maturity.

Loans and advances rose by 7 per cent to $10,425 million, 53 per cent of assets. The increase was due to improved economic conditions in Europe and the US, the renewal of Latin American trade finance opportunities and the emergence of project finance and export credit-related business in the Gulf, Al-Hunaif said. Loan loss provisions were cut by 52 per cent to $70 million. Customer deposits rose by 17 per cent to $8,487 million.

During 1994, ABC opened a representative office in Morocco and IBA established an affiliate finance company in the Philippines. ABC also obtained approval for an office in Vietnam in December.

ABC's new president Ahmed Abdullatif is due to take charge in April and the exact date will be announced soon, ABC says.

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