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Abu Dhabi, UAESunday 16 December 2018

Jordan's Arab Bank says Q3 net profit falls 3.9% as net income interest declines

Shares of the kingdom's largest lender drop 1.65% in Amman

Jordan's largest lender saw its third quarter profit decline on the back of a dip in interest income. Mohammed Hamed/Reuters
Jordan's largest lender saw its third quarter profit decline on the back of a dip in interest income. Mohammed Hamed/Reuters

Arab Bank, the biggest publicly traded bank in Jordan, said its third-quarter profit fell 3.9 per cent, weighed down by a drop in net interest income.

Net profit dropped to US$185.5 million in the three months ended September 30 from $193m a year earlier, the lender said in a regulatory filing to the Amman Stock Exchange. Net interest income slipped to $488.5m in the third quarter compared to $513.76m in the same period last year.

The earnings missed the expectations of analysts, sending the shares 1.65 per cent lower to 5.38 dinars at the end of the trading day in Amman. The Egyptian investment bank EFG-Hermes had estimated a profit of $197m for the third quarter.

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The bank said that its profit came despite what it said were foreign currency devaluations, in an apparent reference to Egypt, where the central bank devalued the pound in November 2016.

Loans and advances rose 6 per cent to $25 billion from $23.7bn, the bank said.

Nemeh Sabbagh, the bank’s chief executive, said that excluding the impact of foreign exchange, net operating income grew 9 per cent to $894m in the first nine months of the year. He noted that the bank continues to maintain high liquidity despite the difficult operating environment.

The group’s loan-to-deposit ratio stood at 69.1 per cent, while the capital adequacy ­ratio, calculated in accordance with the new Basel III regulations, reached 15.9 per cent.

Mr Sabbagh added that asset quality remained high, with credit provisions held against non-performing loans exceeding 100 per cent.

The bank, which has the largest market capitalisation on the Amman bourse, dragged the gauge down 0.4 per cent to 2093, the largest decline since September 14, according to Bloomberg. The Jordanian bourse is down 3.5 per cent year-to-date.