Arab Banking Corporation (ABC) announces its result for the first three quarters

This decline largely arose because of the continued economic deterioration in emerging markets, particularly in Latin America, aggravated by the sharp sell-off of sovereign debt experienced in the capital markets of that region.

Total consolidated assets of the ABC Group rose by 8% to US$28.8 billion in September this year from US$26.6 billion in December 2001 (September 2001: US$27.0 billion, +7%). Liquidity remained strong with liquid assets to deposits ratio at 52% (September 2001: 53%) and loans to deposits ratio at 67% (September 2001: 63%). ABC's shareholder' funds amounted to US$1,901 million (September 2001: $1,912 million). Despite the increase in assets and the foreign currency translation impact from the sharply rising Euro against the US dollar the Group continues to maintain a strong capital base as evidenced by the risk asset ratio of 13.2% at September 2002 (September 2001: 13.7%), calculated in accordance with the capital adequacy guidelines established by the Bahrain Monetary Authority.

ABC Group's net interest income for the first three quarters amounted to US$337 million (2001: US$353 million), mainly because of the impact of the continuing worldwide low interest rate environment. Non-interest income amounted to US$205 million (2001: US$222 million), reflecting the losses resulting from the falls in the Latin American and certain Middle Eastern capital markets.

Operating expenses remained reasonably steady at US$346 million (2001: US$342 million) whilst the overhead expense ratio increased to 64% (2001: 59%) mainly due to the decline in operating income. Various options to rationalise the expense base in our operations in the US and Europe are being considered and our capital market activities in Egypt are being curtailed, although the Group's other product platforms continue to be strengthened.

Loan loss provisions for the first three quarters amounted to US$90 million (2001: US$61 million), reflecting the prolonged recessionary conditions affecting global economies.

Mr. Ghazi M. Abdul-Jawad, President & Chief Executive said, "Turbulent market conditions have persisted throughout the year to date, depressing our results. The major industrialized economies have been particularly volatile since the second half of 2001, noticeably with the continuing slide in equity markets and reduced international trade flows. Over the course of 2002, the emerging markets, particularly in Latin America, have progressively declined, as the expected economic recovery in the US and the industrialized world has been slow to materialise. In the near term therefore, we cannot expect to reverse the losses we have incurred in the emerging markets, indeed the fact that our earnings have declined by so little in the face of such adversity is the clearest possible indication of ABC's core strengths".

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