Apicorp reports 17 per cent increase in recurring income

Apicorp's headquarters in Al Khobar in Saudi Arabia's Eastern Province. The lender decided to increase its callable capital to $8.5 billion from $1bn. Image courtesy of Apicorp

The Arab Petroleum Investments Corporation (Apicorp), a multilateral lender owned by the 10 members of the Organisation of Arab Petroleum Exporting Countries, reported a 17 per cent year-on-year increase in recurring income for 2019.

The lender said recurring income increased to $112 million (Dh411m) in 2019, up from $96m a year earlier. Net profit attributable to shareholders dropped to $111.6m from $182.8m, although the prior year figure included an $86.6m one-off gain from a divestment.

The lender's corporate banking and treasury divisions, whose gross income increased 32 per cent and 24 per cent annually to $201m and $80m, respectively, drove Apicorp’s profitability in 2019, it added.

Apicorp has delivered another set of strong results as it continues to navigate a "rapidly evolving energy landscape”, the company's chief executive, Ahmed Ali Attiga, said. “Our balance sheet growth … paves the way for Apicorp to continue an upwards trajectory, notwithstanding the limitations that the current coronavirus crisis poses upon all sectors of the global economy.”

The work that the lender has already put into diversifying its portfolio in terms of sectors and geography will help it address the current challenges, he noted.

“When the world eventually begins to recover from the dual impact of the coronavirus pandemic and oil price fluctuations, we will most likely see changes in the region. Going forward, we believe that there will be a greater role for multilaterals [banks] like Apicorp, serving in a countercyclical capacity to reinvigorate the economies of the region,” Mr Attiga said.

The size of the corporation’s balance sheet increased 5.7 per cent in 2019 to $7.35 billion. Its debt-to-equity ratio reached 2.13 at the end of last year, slightly higher than 2.07 reported a year earlier. Capital adequacy improved slightly to 29.6 per cent in 2019, from 29.34 per cent in 2018.

Apicorp’s corporate banking assets rose 5 per cent to $3.69bn as the business booked $1.4bn in new commitments. Net income from corporate banking climbed to $121m last year, up from $90m, as fee income continued to rise.

The lender said it continued to invest with "like-minded partners" and made its first direct equity investment in Kuwait in 2019 into an oil and gas services and facilities management company. Its total equity portfolio under management stood in excess of $1bn across 19 direct and three indirect investments at the end of the year.

“For 2020, Apicorp is committed to playing a strong developmental role by way of partnering with key players in the regional and global energy sector, especially in light of the uncertainties created by the coronavirus pandemic,” the company said.

Moody’s Investors Service in October upgraded Apicorp’s long-term issuer and senior unsecured rating to Aa2 from Aa3, both of which are high quality and very low credit risk rating categories. Its short-term issuer rating was affirmed at Prime-1, the highest level, indicating its ability to repay short-term debt. The rating agency, however, revised down its outlook as challenges rise for the lender in most of its markets.