29 Apr, 2009

Shoman: The economic conditions witnessed by the banking industry recently have been exceptional and require exceptional efforts to overcome their consequences

AMMAN — Arab Bank Group has announced its financial results for the period ending March 31, 2009, posting pre-tax and after provisions profits of $216 million, compared with $272 million for the same period last year.

Commenting on these results, Arab Bank Chairman/CEO Abdel Hamid Shoman said the first quarter of 2009 witnessed several developments in the banking industry at the local and international levels, where most indicators referred to considerably sluggish growth in world economies, a matter that posed as a major challenge for the industry worldwide.

Shoman also indicated that the difference in profits posted by the group in the first quarter of 2008 and 2009 is attributed basically to the fact that there were non-recurring profits of $37 million the bank achieved last year as a result of selling Arab Bank branches in Cyprus. Having said that, he added, the difference in profits shrinks to $19 million at a rate of 8 per cent, which is considered an insignificant percentage of decline when compared to the downturns witnessed by other banks all over the world.

On the other hand, Shoman underlined the need to maintain a high level of liquidity, a matter that has been and still is the main source of strength for Arab Bank, adding that all the efforts exerted to enhance the levels of liquidity at the bank were part of precautionary measure to address the undesirable developments and changes. He indicated that such measures have played a role in missing opportunities to make possible additional profits, underlining at the same time the importance of attending to asset quality, efficiency in balance sheet management, close monitoring of customers and markets and cost management under the extraordinary conditions that banks are going through these days .

Shoman also announced that in the first quarter of the current year, the bank's assets rose by 15 per cent to $46.4 billion, compared with $40.5 billion for the same period of last year. He attributed the growth to the increasing customers' deposits, which increased by $6.3 billion, at a rate of 24 per cent, to amount to $31.9 billion, reflecting a high customer confidence in Arab Bank. Meanwhile, the credit facilities portfolio grew by 8 per cent to reach $22 billion by the end of the first quarter in 2009, compared with $20.4 billion in the corresponding span last year.

The chairman also highlighted the capital base strength at Arab Bank, noting that shareholders equity reached $7.4 billion by the end of the first three months of this year, compared with $7.1 billion at the end of the same period in 2008, accounting for 16 per cent of total assets. Such a growth, he said, enhances capital adequacy, which stands at 16.5 per cent, exceeding the requirements of Basel II and the Central Bank of Jordan. He indicated that liquidity, in the form of cash and quasi-cash assets, reached 45 per cent of total assets by the end of the first quarter of 2009, compared with 43 per cent reported on March 31, 2008.

Further commenting on the Q1 results this year, Shoman said the developments witnessed by the banking sector in late 2008 and the first quarter of 2009 as a result of the global financial crisis are exceptional circumstances that require exceptional efforts. These efforts, he said, should be directed at enhancing and reinforcing banks' capabilities and improving their efficiency in managing both sides of the balance sheet: assets and liabilities. Banks should also exert additional effort to abide by regulations set by the CBJ to ensure they overcome the implications of the global crisis.

Shoman also pointed out Arab Bank's commitment to stand by its customers through continuing to support their investment projects and meet their financing needs and to stimulate feasible investment opportunities in productive economic sectors. He noted that Arab Bank has recently lowered the primary lending rate to 8.25 per cent.