Profit at $52m STRONG DOLLAR HURTS Q1 NET PROFIT OF ABC

The soaring US dollar has badly hurt the profit of Arab Banking Corporation (ABC) in the first quarter of 2015, the Bahrain-based bank announced yesterday pointing out that the dollar has strengthened against almost all domestic currencies in geographies where it operates. Higher operating expenses and net impairment provisions also impacted the bottom line.

Consolidate net profit of ABC for the quarter was US$52 million, down compared to a profit of US$71m reported last year.

Brazilian Real and Algerian Dinar weakened by over 20 per cent during the quarter, which were further These adverse movements were further compounded by exceptionally volatile trading conditions, which negatively impacted ABC’s Treasury operations.

Core business volumes continued to grow during the quarter, in spite of challenging market conditions arising from sustained lower oil prices as well as the economic and political climate in a number of key markets.

All these factors resulting in the total operating income dipping to US$168 million from US$226m reported in the first quarter of last year.

Operating expenses at US$104m were marginally higher (US$103m Q1 2014), with some cost investment on strategic initiatives to support business growth being offset by weaker domestic currencies.

Net impairment provisions of US$9m, were slightly above the previous year’s US$8m indicating sustained asset quality as well as robust management.

Tax for the quarter was a credit of US$12m against a charge of US$29m in 2014, benefiting from the tax treatment of currency movements in subsidiaries.

Deposits decreased by US$0.7 billion during the quarter to reach US$18.9 billion again impacted by currency translation. Liquidity continues to be at comfortable levels with liquid assets to deposits ratio increasing to 70% compared to 65% at year-end 2014.

Shareholders’ equity at 31 March 2015 stood at US$3,790m after the distribution of 5 per cent dividend to the shareholders and after foreign exchange movements on investments in subsidiaries.