Arab Banking Corp announces further sub-prime writedowns

07 August 2008
Arab Banking Corporation (ABC) has announced a net loss for the second quarter of 2008 of $71m, following further provisions of $134m relating to assets affected by the sub-prime crisis.

The bank says that the provisions are the result of the bank writing off all its investments in collateralized debt obligations (CDOs), which bundle together assets with different probabilities of default into more highly rated securities.

It brings the total provisions made by ABC since the end of 2007 to $1.2bn.

Interest income in its latest results reached $106m, 56 per cent higher than the same period in 2007. Non-interest income fell by 12 per cent to $86m due to the deteriorating performance of hedge fund investments, which have subsequently been divested.

Before the provisions for sub-prime investments, total profit for the second quarter of 2008 was $192m, up 15 per cent from the same period in the previous year.

Total assets at the bank fell from $32.7bn at the end of 2007 to $31.8bn at the end of June.

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