ABC Islamic Bank reports $2.1 million net profit for 2010

ABC Islamic Bank has announced a net profit of $2.1 million for 2010 compared to $10.1 million for 2009. Total operating income was $15.9 million compared to $20.4 million for 2009, due to lower rates and de-risking of balance sheet asset size. Staff and operating costs of $4.9 million were also lower than the previous year of $5 million. Impairment provisions of $8.6 million were taken for regional exposures during the year, $3.6 million higher than the previous year.

Net profit for the fourth quarter was $0.5 million, compared to $0.2 in the third quarter. Total operating income was $3.8 million compared to $4.1 million for the previous quarter. Staff and operating costs for the fourth quarter were at $0.5 million compared to $1.5 million in the third quarter. Additional impairment provision of $2.7 million was taken during the quarter.

Shareholders' equity at the year-end stood at $187.3 million compared to $176.5 million for the previous year, an increase of $10.8 million coming from improvement in fair values of available-for-sale investments and net profit for the year. The capital adequacy ratio at 2010 year-end was very strong at 24.5 per cent, predominantly Tier 1, which totalled 24.2 per cent, both up year on year.

ABC Islamic Bank's total assets declined to $1.21 billion as of 31st December 2010 from $1.32 billion at 31st December 2009 mainly due to decline in available-for-sale investments, Murabaha receivables and Ijarah assets as a result of further de-risking of the balance sheet.

Naveed Khan, Managing Director of ABC Islamic Bank, said, "During 2010 Arab Banking Corporation's Bahrain-based Islamic banking subsidiary, has built new relationships with target customers across the MENA region, as well as raising its quality of service to differentiate it from other Islamic banks. Having one of the broadest product ranges of any Islamic institution, the bank is providing selected Target Market customers with high-quality relationship banking incorporating more than one product.

"During 2010, the bank has also led several new financings for customers. Notably, it was the sole arranger of a Japanese bank's international syndicated facility, which demonstrated how Islamic finance can give conventional borrowers access to a diversified source of finance.

"During the coming year, ABC Islamic Bank expects to grow its lending activity selectively, as a result of both its recent drive to win new clients, and a gradual recovery in the borrowing appetite of customers. The bank will also work closely with ABC Group's expanding regional retail business, designing and producing Islamic products for the retail market."