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Arab Bank Group reported net income after tax of $ 152.1 million for the first half of 2020 as compared to $453.2 million for the prior period, recording a drop of 66%. 
 
The fall in the profits is attributable to the build up of higher provisions, driven by current and forecasted economic conditions, and reflect the deterioration in the macro-economic environment throughout the region and globally, and to lower revenues from interest and fee income because of the impact of the Covid-19 outbreak and lower market interest rates and weakening oil prices.    
 
The Bank has entered the crisis from a position of strength. Customer deposits grew by 5% to reach $ 35.9 billion as compared to $ 34.1 billion in the previous year, while loans grew by 2% to reach $26.7 billion as compared $ 26.2 billion. The Group maintained its strong and robust capital base with equity of $9.2 billion and with a capital adequacy ratio of 16.8% calculated in accordance with Basel III regulations. The Group enjoys high liquidity with loan-to-deposit ratio at 74.4%, while credit provisions held against non-performing loans continue to exceed 100%.
 
Mr. Sabih Masri, Chairman of the Board of Directors remarked that the pandemic has come as a shock for the global economy, which will witness contraction in 2020. He added that the Covid-19 pandemic has had, and continues to have, a material impact on businesses around the world and the economic environments in which they operate.
 
Mr. Nemeh Sabbagh, Chief Executive Officer, stated that the global and regional banking sectors will unavoidably face challenges as a result of the economic contraction, the higher cost of risk, and lower interest rates. He added that growth in the GCC countries has declined sharply due to the plunge in oil prices since the outbreak of the pandemic. 
 
Mr. Sabbagh commented that the Group net operating income dropped by 21%, and the Bank opted to build significantly more provisions during the first half of 2020 against the financial implications of Covid-19, and that this has resulted in the drop in the reported net income after tax.  He added that the drop in the Group’s profitably is also attributable to the fall in the profits of the bank’s affiliate in Saudi Arabia. 
 
Mr. Sabbagh highlighted that the increased provisions booked across the Group are in accordance with the guidelines of International Financial Reporting Standard # 9, and as per the bank’s internal expected credit loss model, and include general provisions built due to the current economic situation in Lebanon. 
 
Mr. Masri concluded by stating that while the negative impact of the pandemic is unprecedented, the effect on the Group will be well cushioned by the bank’s resilience, the strength of its franchise, and the success of its diversified business model.
 
Jul 26, 2020
Arab Bank Group reports first half 2020 net profit of $152.1 million

Arab Bank Group reported net income after tax for the first quarter of 2020 of $147.6 million as compared to $231.8 million for the prior period, recording a decrease of 36%.

Total loans amounted to $26.2 billion as of March 31, 2020 compared to $25.8 billion for the same period in the previous year, with a growth rate of 2%, while customer deposits grew by 5% to reach $35.2 billion compared to $ 33.7 billion for the same period in the previous year. The Group maintained its strong capital base with equity of $9.2 billion and a capital adequacy ratio of 16.5%.
 
Mr. Sabih Masri, Chairman of the Board of Directors remarked that the performance of Arab Bank confirms the success of the diversified business model of the Group regionally and globally. He also pointed out that the next phase will be challenging for the global and regional economies and will witness a slowdown in growth and difficulties for various sectors as a result of the outbreak of the Coronavirus pandemic. Mr. Masri added that he has great confidence in the Bank’s ability to deal with the challenges that lay ahead and noted that the Bank has in previous years demonstrated its effectiveness in operating in challenging economic environments.

Mr. Nemeh Sabbagh, Chief Executive Officer, commented that the Group net operating income dropped by only 2%, but the Bank opted to build more provisions during the first quarter of 2020 as a precautionary measure against the financial implications of COVID-19, and this resulted in the decrease in the reported net income after tax.

Mr. Sabbagh added that Arab Bank Group enjoys high liquidity and strong and robust capitalization. The Group’s loan-to-deposit ratio stood at 74.4% while the capital adequacy ratio calculated in accordance with Basel III regulations is at 16.5%, and credit provisions held against non-performing loans continue to exceed 100%. Commenting on the negative economic repercussions resulting from the outbreak of COVID-19, Mr. Sabbagh stated that the global banking sector will experience challenges as a result of the economic slowdown, the higher cost of risk and lower interest rates.

Mr. Masri concluded by remarking that Arab Bank was careful to take the necessary measures to protect the wellbeing of its employees and customers. He further added that Arab Bank has donated JD 15 million as part of its social responsibility in support of Jordan’s national efforts to combat the COVID-19 crisis and mitigate its health, economic and social repercussions on the Kingdom.

May 14, 2020
Arab Bank Group reports first quarter 2020 net profit of $147.6 million