Arab Banking Corporation announces nine-month profit of $80m

Total revenues for the third quarter amounted to $167m, compared with $184m in the second quarter, however, excluding gains from buy back of its subordinated debt, total operating revenues remained robust at $159m, the same level as the second quarter.

Fee, commission and other income remained steady whilst interest income improved despite a decline in loans and advances due to run-offs and cautious lending policies in the current economic environment.

Operating expenses at $82m were lower than the previous quarter's total of $88m which had included reserves for restructuring initiatives.

In view of the deterioration in certain regional exposures, additional impairment provisions were made in line with the Group's conservative provisioning policies. However, this was cushioned by recoveries from international and other regional exposures resulting in a net impairment provision charge of $33m for the quarter, compared to $50m in the previous quarter.

Shareholders' equity at 30 September 2009 stood at $2,106m, compared to $2,043m at the end of the second quarter, the increase coming from improvement in fair values of non-trading securities, exchange translation gains on foreign subsidiaries as well as the profit for the period. ABC's capital base remains strong with a capital adequacy ratio, based on the Basel II capital adequacy regime, of 16.9%, predominantly Tier 1, which totalled 13.6%. ABC's liquidity remains comfortable with the liquid assets to deposits ratio improving to 74% compared to 71% at the end of the second quarter.

In light of the current adverse market conditions, ABC continues to de-risk the balance sheet and is maintaining its cautious approach especially in its wholesale banking businesses, even though liquidity is improving in the markets as reflected in the Group's deposits increasing by $0.8bn during the third quarter which resulted in the balance sheet footing increasing to $27.2bn from $26.5bn at end of the second quarter.

Mr. Hassan Juma, President & Chief Executive, said:

"ABC Group continues to maintain operating profit levels despite the impact of high impairment provisions demonstrating the strength of our core businesses in both wholesale and retail banking. It is also a reflection of the progress being made in the changes to the business focus, culture and organization that our new vision requires in order to become a leading Universal Bank in MENA."