Ahli United Bank releases 2007 year end results

The Bank has reported a consolidated net profit, attributable to the Bank's equity shareholders, of $296.3m for the year ended 31 December 2007, an increase of 42.8% over the previous year ($207.5m). Though the market conditions were most challenging since the second half of 2007 given the continued general uncertainty regarding the full implications from the US sub-prime crisis and its potentially expanding contagion effect, the Bank was able to deliver yet another record net profit mainly due to application of a prudent diversified risk management strategy, judicious cost management approach with a view to securing sustainable core earnings on a continuous basis.

At the year-end, the Bank's consolidated total assets at 31 December 2007 stood at $23.0bn, an increase of 10.6% over 31 December 2006. This was funded mainly by a 20% increase in customers' deposits to $10.8bn as compared to 31 December 2006, successful conclusion of a pre-emptive ordinary share rights issue in December 2007 which raised $373.8m in capital proceeds, together with 2007's record profit and 2006 retained earnings resulted in the equity attributable to Bank's equity shareholders rising to $2.3bn (2006: $1.5bn).

Due to continuing growth in earnings across its business segments the Bank's total operating income increased by 35.3% to $666.8m from $492.9m in 2006. Despite the cost inflationary pressures prevailing in the region, the Bank was able to improve the cost to income ratio down to 35.8% (2006: 39.8%) using judicious cost management approach and continuing streamlining in the processes. The Bank remains focused on enhancing the equity shareholders' returns in a sustainable and prudent manner as evidenced by the return on average equity rising from 15.1% (2006) to 18.0% (2007).

In keeping with the Bank's strategy, AUB continued to expand both through organic means and mergers and acquisitions. During 2007 the Bank acquired a 35% stake in Alliance Housing Bank S.A.O.G. (AHB) Oman, marking AUB's entry into the Sultanate of Oman, an economy that has tremendous, untapped potential. International Finance Corporation (IFC) also participated in this acquisition by taking an equity stake of 9.9% through participation in a capital increase. This represents IFC's third investment in the region in the last twelve months along with the AUB Group and is a reflection of its confidence that it has reposed on AUB's management team. Subsequent to the acquisition, as part of migration to a full commercial banking business model and integration with the AUB group, AHB was rebranded under a new name - Ahlibank S.A.O.G (ABO) effective 5 January 2008.

The Bank also signed a five year renewable technical services and management agreement to provide technical and management services to ABO.

Based on the results achieved and taking into consideration future business needs, the Board recommends, subject to Central Bank of Bahrain's approval, a cash dividend of 3.5 cents per share (2006: 3.5 cents) together with a bonus share issue of 1 share for every 10 shares held by eligible ordinary shareholders at the record date with appropriate conversion ratio adjustments made for outstanding convertible tranches of class B preference shares and IFC's convertible subordinated debt.

"In a year that was marked by turmoil in financial markets across the World, it is especially commendable that AUB has been able to deliver excellent results. Our ability to deliver consistent, healthy returns to our shareholders is indicative of the strength and diversity of AUB's core business activities,"

said Mr. Fahad Al-Rajaan, Chairman of AUB.

Referring to AUB's pre-emptive ordinary share issue concluded in December, Mr. Al-Rajaan said, "The success of the share issue demonstrates the continued confidence that shareholders have in AUB's management and strategies". This rights issue represents the fourth successful share capital issue since inception of the Bank and comprised a rights issue of 300 million ordinary shares to existing ordinary shareholders and 73.8 million ordinary shares to convertible debt holders. The confidence of the shareholders and debt holders is reflected by the subscription realized representing 121% and 181% of the issue size respectively.

"2007 was also another year that AUB's progress received accolades from the financial industry. We received awards for "Best Bank in the Middle East" from Global Finance and Euromoney and for "Bank of the Year - Bahrain" from The Banker. We were also awarded "Best Foreign Exchange Bank in the Middle East 2008" by Global Finance. Our regional accolades underscore AUB's focused efforts to consolidate our growth and leverage our regional network to our customer base".

The Bank's achievements did not go unnoticed by external rating agencies as it secured an updated 'A-' long term rating with stable outlook and 'A-2' short term rating from Standard & Poor and Fitch during the year while receiving a higher 'A' long term rating with a stable out look and 'A-2' short term rating from Capital Intelligence.

"Overall, our achievements in 2007 validated AUB's position as one of the Middle East region's leading, integrated banking groups," concluded Mr. Al-Rajaan.