Arab Banking Corporation announces USD143 million mid-year net profit in H1 2007

Total income reached US$305 million (2006: US$229 million). Interest income at US$134 million was 11% higher than the US$121 million for the same period last year as a result of increased loan and securities volumes. Non interest income totalled US$171 million (2006: US$108 million, which included US$8 million from the disposal of certain fixed assets). Loan loss recoveries net of impairment provisions totalled US$10 million (2006: net recoveries of US$27 million).

Operating expenses increased to US$148 million (2006: US$129 million) attributable to additional staff hired to develop the Group's growing business lines, cost of living increases, and additional costs linked to variable compensation schemes arising from higher earnings. ABC's expense ratio, the comparison between total income and expenses, improved to 49% over the period (2006: 56%).

ABC Group's total assets amounted to US$27.3 billion (2006 year end: US$22.4 billion). Investment in securities increased to US$11.8 billion (2006: US$8.6 billion) mainly in highly liquid investment grade securities. Loans and advances increased to US$9.6 billion (2006: US$8.6 billion) as the lending portfolio continued to grow to meet customer demand. Liquidity remains strong, with the liquid assets to deposits ratio at 78% (2006: 74%). Loans to deposits ratio decreased marginally to 45% (2006: 49%). The Group continues to maintain a strong capital base as evidenced by the risk asset ratio of 16.8% at June 2007 (2006: 17.0%).

Mr. Ghazi M. Abdul-Jawad, President & Chief Executive said, "The continuing and increasing improvement in ABC's operating results over the past three years vividly shows the achievements arising from our renewed focus on trade flows and projects in the Arab region. Our wholesale banking strengths in treasury, trade and project finance, and Islamic financial services have ably serviced the current business expansion in the region, whilst the development of retail banking activities in our niche markets continues to improve our earnings capabilities. ABC's standing on the international financial markets continues to improve, as demonstrated by upgrades of ABC's ratings by Moody's Investors Service in April 2007 to A3/Prime-2 and Capital Intelligence upgrade in May 2007 to A-."