Rise in provisions dent Arab Bank's first half net profit
Jordan's biggest lender saw net income decline 66 per cent to $152.1m in the first six months of 2020
Arab Bank Group, Jordan's biggest lender, reported an almost two-thirds drop in its first-half net income as provisions for potential bad loans rose.
Net profit for the six month ending June 30 slipped to $152.1m from $453.2m reported a year earlier, the lender said in a statement on Saturday. Net operating income for the period also declined 21 per cent, it said, without giving the figures.
Global and regional banks "will unavoidably face challenges as a result of the economic contraction, the higher cost of risk and lower interest rates", chief executive Nemeh Sabbagh said in the statement.
The higher percentage of decline in net profit than the lender's operating income was due to the bank opting "to build significantly more provisions during the first half of 2020 against the financial implications of Covid-19", he said.
A decline in profitability at the bank's affiliate in Saudi Arabia also proved a drag in the group's income, he added.
Arab Bank has a network of more than 600 branches on five continents worldwide, according to its website, with branches in places such as London, Dubai, Geneva, Sydney, Frankfurt, as well as a network of affiliates and subsidiaries.
The company said customer deposits grew 5 per cent year-on-year to $35.9bn, while loans grew 2 per cent to $26.7bn.
The provisions made mean that buffers held against non-performing loans continue to exceed 100 per cent and the bank maintains a "strong and robust" capital base with a capital adequacy ratio of 16.8 per cent, the lender said.
Published: July 25, 2020 08:02 PM