Interim balance sheet figures released on 30 June 2002 give ABC’s stake a book value of about $260 million. Sources say ABC is seeking a sale price of about 1.5 times book value. Sale valuations of the shareholding will be impacted by the comparatively weak earnings record of IBA, which has recently been hit by strong rises in provisioning. Its profits for the first half of 2002 of HK$ 100.8 million ($12.9 million) give an annualised return on equity of only 5.5 per cent.
The sale of IBA – if successfully completed – would be the logical extension of ABC’s strategy of focusing on the Arab world (MEED 25:10:02, The MEED Interview, page 8).
The potential sale of IBA could also release some profits for ABC’s books. Interim results point to a difficult year for the Arab world’s largest financial institution. Nine-month profits of only $55 million were posted in November, less than half the earnings generated in the corresponding period of 2001 (MEED 15:11:02).