Profits at ABC Investment & Services, the Bahrain-based subsidiary of Arab Banking Corporation, rose by 22 per cent to $9.3 million in 1994, although the bank's balance sheet was reduced. Total assets fell by 34 per cent to $284.4 million, after it reduced its exposure to volatile market conditions, the bank says.

'Long-term equity and bond investments performed exceptionally well, and although proprietary trading fell short of our expectations, the results were satisfactory considering market conditions,' the chairman of the bank, Adnan Yousif, said in a statement. The return on average shareholders' equity rose by almost one percentage point to 15.2 per cent in 1994. Return on average assets rose slightly to 2.6 per cent.

Islamic banking activities grew during the year, contributing 27 per cent to net earnings, the bank says. ABC Islamic Clearing Company was established, offering overnight investment opportunities for Islamic institutions on their dollar-denominated clearing balances.

The brokerage subsidiary of the investment bank, ABC Securities, also performed well, the bank says. The company accounted for 18.5 per cent of turnover on the Bahrain stock exchange in 1994.