Apicorp's first-half net profit slides on lower revenue amid pandemic

The multilateral lender raised $750m through the issuance of a five-year bond at record low rates in June

Apicorp’s headquarters in Saudi Arabia. The lender's assets rose by 10 per cent to $8.1 billion in the first half. Courtesy Apicorp

The Arab Petroleum Investments Corporation, a multilateral lender focused on the energy sector, reported that its first-half net profit fell by 22 per cent, compared with a year ago, as the coronavirus-induced slowdown hit revenue.

Net income for the six-month period to June 30 declined to $54.8 million (Dh201.28m) from a year ago, the lender said on Sunday.

Gross operating income for the reporting period fell by 20 per cent to $144.7m.

“Net profit results are notable under the current market conditions due to the Covid-19 pandemic and oil price fluctuations,” Apicorp said.

“Revenue was mainly affected by the decrease in dividends from portfolio companies, as well as revaluations in the equity investment portfolio due to the pandemic.”

Income from the lender’s treasury and capital markets business rose by an annual 38 per cent to $60.4m.

Apicorp’s assets rose by 10 per cent to $8.1 billion in the first six months, mainly due to growth in its treasury and capital markets portfolio, it said.

The share of Apricorp’s liabilities with a maturity beyond two years rose to 45 per cent of its total debt. Impairment charges at the end of the reporting period climbed to $4.5m, from zero during the same period a year ago.

Chief executive Ahmed Attiga said the results were a “testament to the resilience of Apicorp in the face of a tough global business environment”.

The lender strengthened its operational and capital base despite the triple crisis of Covid-19, oil price volatility and an economic downturn, Mr Attiga said.

“We are looking forward to the coming period for a gradual recovery in our operating environment and the new opportunities it will bring,” he said.

Lenders around the world are making provisions for loan losses and revaluing their investment levels as the global economy slides into its deepest recession since the 1930s.

Apicorp is owned by 10 members of the Organisation of Arab Petroleum Exporting Countries – Saudi Arabia, the UAE, Kuwait, Libya, Iraq, Qatar, Algeria, Bahrain, Egypt and Syria.

The multilateral lender was set up in 1975 to extend financial support to Arab countries in the energy sector.

Apicorp raised $750m in June through the issuance of a five-year bond at record low rates.

The lender said at the time that the bonds, which were issued under its $3bn Global Medium-Term Note programme, would allow it to take a “countercyclical role in 2020” to support the Mena region’s energy sector at a time of falling demand.

Apicorp unveiled a $500m support package in April to help clients in the energy sector to continue to fund their projects amid lower oil prices after the pandemic hit demand.

Earlier this year, Apicorp increased its callable share capital from $1bn to $8.5bn to boost investment in the energy sector.

It also increased its authorised capital from $2.4bn to $20bn while subscribed capital rose from $2bn to $10bn.

“We will continue to support our member countries and partners to alleviate the impact of Covid-19, with a focus on sustainable impact-driven energy projects and activities in the region,” Mr Attiga said.