ABC profits down 31% first half of 2002

Arab Banking Corporation (B.S.C.), the parent company of the Arab banking group headquartered in Bahrain, reported a net profit of US $51 million for the first half of 2002, a decline of 31% from US$74 million for the first half of 2001.

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By  Massoud Derhally Published  August 26, 2002

Arab Banking Corporation (B.S.C.), the parent company of the Arab banking group headquartered in Bahrain, reported a net profit of US $51 million for the first half of 2002, a decline of 31% from US$74 million for the first half of 2001.

The bank said the earnings were impacted by the economic deterioration being experienced in the emerging markets, particularly in Latin America, which was aggravated by the sharp sell-offs experienced in the capital markets in that region.

Mr. Ghazi M. Abdul-Jawad, president and CEO said, “It is unfortunate that turbulent market conditions have affected the half year result, although our income generating capabilities have actually improved year-on-year. The volatility and financial instability in the major industrialized economies which started in the second half of 2001 have not yet abated, and have spread to the emerging markets, affecting banks worldwide, depressing equity markets and business activities in general. Maintaining our earnings level in the face of adversity remains a high priority, and despite this setback we remain firmly on course towards achieving this goal”.

However, total consolidated assets of the ABC Group rose by 9% to US$28.9 billion in June this year from US$26.6 billion at the year-end 2001 (June 2001: US$25.7 billion, +12%). Liquidity remained strong with liquid assets to deposits ratio at 51% and loans to deposits ratio at 66%, same as last year.

ABC Group’s net interest income for the first half was 1% higher at US$235 million (2001: US$233 million) whereas non-interest income declined substantially to US$124 million (2001: US$154 million), reflecting the losses resulting from the falls in the Latin American capital markets. The bank says that expected economic recovery in the industrialized world led by the US feeding through to the emerging markets could help reverse some of these losses in the near term.

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