Shareholders in the Manama-based Arab Financial Services (AFS) will receive a dividend for 1994 worth 5 per cent of the paid-up capital of $60 million, after no dividend was paid in 1993. The dividend announcement follows profits of $557,000 for 1994, compared with $2 million for a year earlier. However, AFS says the profits were higher than expected because the freezing of the firm's US assets at the start of 1994 was expected to lead to a loss of more than $2 million.

The assets were frozen by the US Treasury Department when the company was declared a specially designated national of the Libyan government on 17 December 1993 (MEED 14:1:94). The US instituted an embargo of Libya in 1986, which included freezing assets of Libyan-owned companies. The group said the profits for 1994 represented nine months trading, and were affected by the costs involved in releasing the assets.

'During the rest of 1994, the company made a major effort to overcome the effects of the crisis and rebuild its business,' chairman Abdulhadi Shayif said in a statement. The company said there was a strong recovery in the wholesale dealing of banknotes and in issuing Mastercard and Visa credit and charge cards to bank and corporate customers. AFS also provides processing services to regional banks.

Shayif said the company planned to return to the travellers cheque market, which accounted for about one third of AFS' business in 1993, but was halted in 1994 because of declining regional demand (MEED 6:5:94). As a result, the company's assets fell to $151 million in 1994, compared with $264 million a year earlier.

Shareholders' funds in 1994 rose to $73 million, compared with $72 million a year earlier. The company, which was set up in 1984, is owned by 55 Arab banks throughout the Middle East.