Arab Bank Group’s first quarter net profit drops amid Covid-19 provisions
Total loans rose 2% to $26.2bn while customer deposits grew 5% during the first three months of 2020
Jordan’s biggest lender Arab Bank Group reported that its first quarter net profit slipped as it set aside provisions for bad loans and braced itself for a tough economic climate amid the coronavirus pandemic.
Net profit for the first quarter of 2020 declined 36 per cent year-on-year to $147.6 million (Dh542.1m), the lender said in a statement on Wednesday.Net operating income dropped by 2 per cent.
Total loans rose 2 per cent to $26.2 billion, compared to $25.8bn during the prior year period. Customer deposits rose 5 per cent year-on-year to $35.2bn.
The coming months will be challenging as a result of the Covid-19 pandemic as both regional and global economies will “witness a slowdown in growth and difficulties for various sectors”, said Arab Bank’s chairman Sabih Masri.
The group’s loan-to-deposit ratio stood at 74.4 per cent while its capital adequacy ratio was 16.5 per cent. Credit provisions held against non-performing loans continued to exceed 100 per cent.
Lenders in the region and across the world are facing a decline in profitability as loan growth slows and interest rates plunge as the pandemic disrupts the global economy, which is set to slide into the deepest recession since the Great Depression of the 1930s.
“The global banking sector will experience challenges as a result of the economic slowdown, the higher cost of risk and lower interest rates, said Arab Bank’s chief executive, Nemeh Sabbagh.
Published: May 13, 2020 06:58 PM