Arab Bank Group reports $152.1m in net profit for H1

AMMAN — Arab Bank Group reported net income after tax of $152.1 million for the first half of 2020 compared  $453.2 million for the same period of the previous year, posting a drop of 66 per cent.

In a statement, the Arab Bank Group attributed the drop to the build up of higher provisions, driven by current and projected economic conditions.

 They also resulted from lower revenues of interest and fee income due to the impact of the Covid-19 outbreak and lower market interest rates and weakening oil prices, the statement added.

Customer deposits grew by 5 per cent to reach $35.9 billion compared to $34.1 billion in the previous year, while loans grew by 2 per cent to reach $26.7 billion compared to $26.2 billion.

The group maintained its strong and robust capital base $9.2 billion in equity and with a capital adequacy ratio of 16.8 per cent, calculated in accordance with Basel III regulations. 

The group enjoys high liquidity with loan-to-deposit ratio at 74.4 per cent, while credit provisions held against non-performing loans continue to exceed 100 per cent, according to the statement.

In the statement, Sabih Masri, chairman of the board of directors, said the pandemic has come as a shock for the global economy, which will witness contraction in 2020. He added that the Covid-19 pandemic has had, and continues to have, a material impact on businesses around the world and the economic environments in which they operate.

The group’s CEO Nemeh Sabbagh said global and regional banking sectors will unavoidably face challenges as a result of the economic contraction, higher cost of risk, and lower interest rates. 

He added that growth in the countries of the Gulf Cooperation Council declined sharply due to the plunge in oil prices since the outbreak of the pandemic. 

Sabbagh said the group’s net operating income dropped by 21 per cent, and the bank opted to build significantly more provisions during the first half of 2020 against the financial implications of Covid-19, and that this has resulted in the drop in the reported net income after tax. 

He added that the drop in the group’s profitably is also the result of the fall in the profits of the bank’s affiliate in Saudi Arabia.