Bank ABC Islamic announced yesterday its financial results for the nine months ended September 30, 2020.
The bank’s report indicated that the Covid-19 pandemic continues to affect most of our customers in various geographical regions. The epidemic, coupled with an environment with low profit margins and low oil prices, has resulted in a general slowdown in business momentum, especially in the corporate sector. Despite this, we have remained active in the corporate and sovereign domain during the year and we have successfully led 8 mandates of sukuk and two syndicated loans.
On the level of overall revenues, the bank’s performance was satisfactory, with a growth of 2% year-on-year in total operating income. The net profit during this period decreased to $ 22.3 million compared to $ 28.9 million during the same period last year, mainly due to the increase in expected credit losses. The increase in expected credit losses during this period was a specific provision related to customer fraud in the UAE in addition to future expected credit losses based on FAS 30. In making estimates of the latter, the Group and the Bank have conservatively tested macroeconomic stressors in our ECL model.
Financial Performance (for the three-month period):
} The net profit for the third quarter of this year was 7.9 million dollars, compared to 9.9 million dollars recorded for the third quarter of last year.
} Net operating income was $ 11.9 million, compared to $ 12.3 million in the corresponding period last year.
} Operating expenses were $ 1.4 million compared to $ 1.8 million for the same period last year.
} The value of provisions during the period amounted to $ 2.5 million, compared to $ 0.5 million recorded during the previous year.
Financial performance (nine-month period):
} The net profit for the first nine months of this year was $ 22.3 million, compared to $ 28.9 million recorded during the first nine months of last year.
} Total operating income increased to $ 35.3 million, registering an increase of 2% compared to the first nine months of last year, which amounted to $ 34.6 million.
} Operating expenses were $ 5 million, compared to $ 5.6 million in the same period last year.
} The amount of provisions during the period was $ 7.6 million, compared to the provision recovery of $ 0.2 million recorded during the previous year.
} Total assets of Bank ABC Islamic reached USD 2.152 billion as of September 30, 2020 compared to USD 2.079 billion at the end of 2019.
} Total shareholders’ equity as of September 30, 2020 was $ 287 million, compared to $ 365 million at the end of 2019. This decrease is mainly due to the payment of dividends of $ 100 million to shareholders during this period.
} The bank’s capital base remained very strong, as the overall capital adequacy ratio reached 33.5%, and the first class of capital reached 32.5%.
Commenting on the financial results, Hammad Hassan, Managing Director of ABC Islamic Bank, said: “We are pleased with our performance despite the negative effects of the pandemic and the unstable market conditions we are facing. We have seen some recovery during the third quarter that we have taken advantage of. We will continue to focus on asset quality and reducing costs to counteract impacts.