Arab Bank posts $215.2 million net profit in 9 months

AMMAN — Arab Bank Group reported net income after tax of $215.2 million for the nine months of 2020, compared to $668.9 million for the same period last year, recording a drop of 68 per cent.

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

According to Nemeh Sabbagh, the increased provisions booked across the Group are in accordance with the guidelines of International Financial Reporting Standard #9, and as per the bank’s internal expected credit loss model, and include general provisions built due to the current economic situation in Lebanon.

The results also reflect the deterioration in the macroeconomic environment in the region and globally, the statement added, in addition to lower revenues because of the impact of the COVID-19 outbreak, lower market interest rates and weakening oil prices.

The Group’s net operating income stood at $808 million, recording a drop of 22 per cent as a result of a decrease in net interest and commission income, in addition to a drop in the profit of the bank’s associates in the Arab Gulf countries.

Customer deposits grew by 8 per cent to $37.5 billion compared to $34.7 billion, while loans grew by 2 per cent to reach $26.7 billion compared $ 26.1 billion, said the statement.

In the statement, Sabih Masri, chairman of the Board of Directors said the pandemic has had, and continues to have, a significant impact on businesses around the world.

Sabbagh added that the global and regional banking sectors will continue to face challenges because of the economic contraction, the higher cost of risk, and lower interest rates.

He noted that growth in the Arab Gulf countries has also declined sharply due to the plunge in oil prices. 

The Group maintains robust capital base with equity of $9.3 billion and with a capital adequacy ratio of 16.7 per cent calculated in accordance with Basel III regulations, it indicated. It enjoys high liquidity with a loan-to-deposit ratio of71.1 per cent, while credit provisions held against non-performing loans continue to exceed 100 per cent.