The expansion of Arab Banking Corporation (ABC) into Egypt is moving ahead rapidly, says Taher Makkiyah, ABC's chief banking officer. 'We expect the transfer of ownership of EAAB [Egypt Arab African Bank] to be completed on 16 November, and ABC Securities is entering the final stages of regulatory approval,' says Makkiyah.

The securities operation, which will have capital of $30 million, is awaiting the last phase of approval from the Egyptian authorities and Makkiyah says it will be operating by the start of next year (MEED 15:10:99). ABC Securities will focus on portfolio management, corporate finance, equity underwriting and direct investment. ABC senior vice-president Omar al-Abd will run the operation, for which offices have already been established.

The full branding of ABC's presence in Egypt, a market it has been keen to enter for some time, will be completed in the first quarter of next year with the renaming of EAAB as ABC Egypt. 'We will be careful to inform our clients and customers so there will be no impact on the retail operations,' says Makkiyah.

The financial performance of ABC's subsidiaries has contributed to the Bahrain-based bank's profits in the first nine months of the year. Net profits, published on 5 November, are up 35 per cent at $85 million from the$63 million reported in the same period of last year. 'We have the extra contribution from ABC Algeria this year, and ABC Islamic has also made a good contribution,' says Makkiyah. 'Expansion of our operations in the Arab world has been our focus for the last 18 months and we are now getting a higher rate of return on recently acquired assets than on older parts of the balance sheet.'

After a difficult year in 1998, in which exposures in the Far East and China induced a sharp hike in provisioning levels and a sharper drop in profits, ABC has concentrated on diversifying its income generation streams and improving the quality of its assets. The success of this approach, and a more benign global market, has led to loan loss provisions in the first nine months being halved, and a slight contraction in total assets since the start of the year.

'We have controlled the balance sheet as we want growth from higher quality assets,' says Makkiyah. 'We have remained consistent in our more cautious approach to risk management.' The bank's loans:deposits ratio has remained steady at about 60 per cent, the liquid assets:deposits ratio fell slightly to52 per cent and the risk:asset ratio, calculated according to Bahrain Monetary Agency (central bank) guidelines, was up to 15 per cent from 14 per cent at the end of last year.