Bahrain's Bank ABC reports profit drop as costs and credit losses climb
Efforts aimed at digital transformation drove costs 11 per cent higher last year amid fourth-quarter launch of mobile-only 'ila Bank'
The Arab Banking Corporation, a Manama-listed lender, reported a 4 per cent drop in full-year net income dragged down by a rise in costs and provisions for credit losses.
Net profit attributable to the shareholder of the parent at the end of December last year declined to $194 million (Dh712m), the lender said in a statement to the Bahrain Bourse, where its shares trade. Total comprehensive income for the reporting period, however, climbed to $261m, from $57m in 2018.
The lender, known as Bank ABC, also reported a 23 per cent slide in its fourth-quarter net profit to $33m. The bank attributed the drop in quarterly profit to variations in impairment charges and higher investment and inflation-related costs. It did not give a breakdown of its quarterly figures in a statement accompanying its earnings on Monday.
Despite challenging external conditions, 2019 “witnessed a good underlying revenue and asset growth for Bank ABC without compromising on our strong balance sheet and conservative credit risk management approach,” Bank ABC group chairman, Saddek El Kaber, said.
“We remained focused on delivering our strategy, recognising the disruptive forces at play in our industry, and the need to transform and build Bank ABC for the future.”
The bank’s full-year operating expenses climbed to $524m, an 11 per cent year-on-year rise. Inflation and its continuing investments into digital transformation drove operating expenses higher, Bank ABC noted. The lender in the last quarter of 2019 launched its mobile-only "ila Bank".
Impairment charges for credit losses also rose to $82m at the end of last year, up from $79m reported at the end of 2018. The ratio of impaired loans to gross loans, however, improved to 3.7 per cent, from 4 per cent at the end of the prior year.
Total assets rose marginally to $30.1 billion at the end of 2019. Loans and advances grew by 11 per cent during the year to $16.5bn, while deposits rose to $21bn from $20.7bn reported at the end of 2018, it said.
The board of Bank ABC recommended shareholders approve a cash dividend distribution of 3 per cent, or $0.03 per share, at their scheduled March 29 meeting. The total proposed dividend payout amounts to approximately $93m and translates to approximately 48 per cent of net profit for the year.
Bank ABC, which has a presence in several markets outside Bahrain, is looking to expand its footprint in the wider Middle East and North Africa market. The lender is open to mergers and acquisition opportunities and is well capitalised to fund such deals from its own balance sheet, its deputy group chief executive, Sael Al Waary, told The National in an interview last year.
Updated: February 10, 2020 05:44 PM