Jordan's Arab Bank posts slide in first-quarter net profit
Lender reported net income after tax of $128.3 million in the first three months of 2021, compared to $147.6m for the same period last year
Arab Bank reported a 13 per cent decline in net income during the first quarter amid a "challenging economic environment" compared to the pre-pandemic period last year, the chairman of Jordan's biggest lender said.
Net profit after tax fell to $128.3 million in the first three months of 2021, compared to $147.6m in the same period last year, Arab Bank said in a statement on Saturday. The company blamed a decrease in operating revenue on lower interest rates and a higher cost of risk.
The first quarter results reflect the bank’s "resilient performance in this challenging economic environment, as compared to the pre-Covid normal operating environment which prevailed in the first quarter of the last year," Sabih Masri, chairman of the board of directors at Arab Bank, said.
Banks across the world are facing tougher operating environments, with historically low interest rates making it more difficult to earn profits. Lenders have also had to make higher provisions in anticipation of potential loan losses from struggling customers.
Arab Bank, which has 600 branches across five continents, grew its loan book by 28 per cent to $33.5 billion in the first quarter while its customer deposits grew by 30 per cent to $45.8bn.
This growth was due in part to the consolidation of the financial statements of Oman Arab Bank under its accounts in the first quarter of 2021, it said. Oman Arab Bank recently finalised the acquisition of Al Izz Islamic Bank, an Islamic lender in Oman, in line with Arab Bank’s strategy to reinforce its business in the Gulf region, according to the statement.
The consolidation "materially increased" the size of the group's balance sheet during this period, with total assets increasing by $8.1bn and loans and deposits each increasing by $7.1bn, according to the statement.
Mr. Masri said he was optimistic about future economic prospects, noting that the high pace of vaccination programmes in countries around the world will lead to the gradual recovery of regional and global economies.
The bank maintained a "strong" capital base with equity of $10bn, capital adequacy of 16.4 per cent, and a loan-to-deposit ratio of 73.1 per cent, Nemeh Sabbagh, chief executive of Arab Bank, said.
Published: May 1, 2021 05:53 PM