What's Down: Losses widened last year for National Development Bank, the Egyptian subsidiary of Abu Dhabi Islamic Bank, as a result of the country's revolution.
Egyptian bank records yet another poor year
Losses widened last year for National Development Bank, the Egyptian subsidiary of Abu Dhabi Islamic Bank, as a result of the country's revolution.
Net losses at the unit, which is based in Cairo, increased to 590.6 million Egyptian pounds. The lender posted a loss of 501.2m pounds in 2010.
Shares in the bank declined 1.9 per cent to 4.25 pounds on the Egyptian Exchange yesterday. The lender's shares lost 42.5 per cent of their value last year.
Egyptian banks were hurt by the uprising that toppled Hosni Mubarak from the presidency last year, when political turmoil and industrial strikes prompted the central bank to close banks for nearly two weeks. The stock exchange was closed for two months as foreign investors withdrew from Egyptian companies.
Expenses at National Development Bank rose to 75m pounds last year, 36m pounds of which was provisioning for a rise in wages, from 69m pounds in 2010.
National Development is one of Egypt's smaller banks and has been in negative territory for at least five years.
The bank's shareholders voted last year for the lender to continue operations after it shed more than half its capital in 2010.
Abu Dhabi Islamic Bank inherited 5 billion Egyptian pounds of bad loans when it bought National Development Bank in 2007 as part of Egypt's privatisation programme.
National Development Bank, previously a conventional bank, was transformed into a Sharia-compliant bank after the purchase by the Abu Dhabi lender.
"It took them a long time to adjust after the purchase," said an analyst, who spoke on condition of anonymity.
"National Development Bank, previously government-owned, was very poorly managed. Provisions continue to this day, and I would not be surprised if they need another capital increase in the near future."
The depreciation of Egypt's currency, with foreign reserves down to US$16.4bn in January from $18.1bn in December, the downgrading in economic outlook by major rating agencies, and the 50 per cent decline in value for Egypt's stock market had a direct impact on the country's economy, National Development Bank said.