London-based British Arab Commercial Bank (BACB) is looking to its core Arab markets to provide the impetus for growth over the next three years, the bank says in its financial review of 1997. This has just been illustrated by a move to establish a direct presence in Morocco.

Results for the year were positive, with an 11 per cent rise in net profits to £12.8 million ($20.9 million). This followed a sharp decline in profits in 1996. The bank says its operating income, in dollar terms, was $29.3 million in 1997, $1.5 million ahead of the previous year. The improvement was not so marked in sterling terms because of the strengthening of the UK currency against the dollar. The dividend has been set at £12 million ($19.6 million),

20 per cent higher than in 1996.

The bank's total assets rose only marginally to £1,309 million ($2,134 million), and gross lending actually fell by 20 per cent to £189 million ($308 million). The bank says the fall in lending was a result of completing the major part of a disposal programme for previously restructured and provisioned debt. However, the bank said demand from Arab borrowers in particular is continuing to rise.

'Structured long-term project financing with private sector involvement is becoming a feature of many of the markets to which BACB remains committed,' the bank says. It cites as examples its participation in the Jorf Lasfar power project in Morocco and the Yanpet petrochemicals project in Saudi Arabia.

The bank's direct involvement with the region was strengthened in 1997 when it became a founder shareholder in Banque d'Affaires de Tunisie, with 10 per cent, and it is now setting its sights on Morocco.

BACB has received authorisation to open a representative office in Casablanca, general manager Mohamed Fezzani said on 28 May. The office is to be headed by Farid Arfaoui, former chief executive of Morocco's Banque Marocaine du Commerce Exterieur. 'We have established an office in Morocco because the Arab Mediterranean countries are one of our niche markets and we are very active there. It is also a shareholder country,' says Fezzani. The central bank of Morocco holds a 7.86 per cent stake in the bank. BACB already has a representative office in Beirut, and is considering establishing its presence elsewhere in the region.

The largest shareholder in BACB is the HSBC Group, with 46.5 per cent. Arab institutions own the rest.