Arab Banking Corporation (ABC) is planning to pay a dividend to its shareholders for the first time in three years, after reporting a
12.4 per cent increase in its worldwide profits to $145 million. The Bahrain-based banking group, which is controlled by three Arab governments, made net profits of $129 million in 1996.
ABC says that its lending grew by 7 per cent during 1997 to $12,100 million, while total deposits rose by 3.2 per cent to $19,600 million. The group’s board proposes to pay shareholders a 6 per cent cash dividend, totalling $60 million. The governments of Kuwait, Abu Dhabi and Libya jointly own about 70 per cent of ABC, and the rest of its shares are traded on the stock exchanges of Bahrain, Kuwait and Paris.
In 1995 and 1996, ABC retained all profits without paying a dividend in order to strengthen its capital base.
According to headline figures released by ABC on 2 March, the group made consolidated operating profits of $338 million last year, up 40 per cent on 1996. However, net profits were equal to only 40 per cent of operating profits last year, as opposed to 53 per cent in 1996. This implies that either ABC’s provisioning costs or its tax bill, or both, increased during 1997. The group, which includes a branch network and subsidiaries in Europe, Asia and the Americas, is expected to publish a full breakdown of its results after its annual general meeting on 22 March. ABC’s operations in the West are being consolidated into a single bank based in London (MEED 27:2:98).
ABC is about to raise a $200 million, five-year syndicated loan at an interest rate of 35 basis points over Libor, roughly equal to the pricing obtained by other Arab regional banks. There are five arranging banks: Bank of Tokyo-Mitsubishi, Banque Paribas, Chase Manhattan (bookrunner), JP Morgan and Greenwich NatWest (facility agent).
Co-arrangers are currently being sought for amounts of $15 million each, and the loan should go into general syndication by mid-March. ABC is a regular borrower from the syndicated loan market.
The group also announced more details about its new Algerian subsidiary, Arab Banking Corporation-Algeria. The new unit will have authorised capital of $20 million, half of which will be paid-up. ABC will own 70 per cent of the new bank.
The International Finance Corporation, part of the World Bank, will own 10 per cent, with The Arab Investment Company, which is based in Saudi Arabia and owned by Arab states, holding another 10 per cent. The remaining 10 per cent will be held by Algerian investors. The new bank has just received authorisation from the Algerian government (MEED 6:3:98).