Jordan’s Arab Bank Group Profit Surges To $204 Mln

Jordan-based Arab Bank Group posted a 10 percent rise in quarterly profit on Tuesday to $204 million, as revenues rose and its wide geographical spread left it less exposed to the region’s political turmoil than some of its peers.

The bank, one of the Middle East’s major financial institutions with a presence in 30 countries across five continents, saw assets grow 1.5 percent to $46.3 billion at end-March 2012, according to a bourse statement.

Gross income for January-March rose 8.5 percent to $459.6 million with a healthy rebound in the bank’s core commission and trade finance business.

Arab Bank Group chairman Abdel Hamid Shoman said in March he hoped the bank would continue the steady performance it achieved last year with 13 percent growth in net profit to $306 million, even though unrest in the Arab world made it difficult to predict the outlook.

He said growth in the bank’s balance sheet last year reflected its financial strength despite a difficult business climate that saw many global and regional banks’ earnings fall.

Bankers said Arab Bank set aside nearly $1 billion in provisions in the last two years to cover non-performing loans by businesses reeling from the global downturn, but was cushioned by a healthy capital base.

Figures show shareholder equity rose 1.3 percent in the first quarter to $7.7 billion at end-March 2012 against the same period last year.

Non-performing loans stood at $1.6 billion at the end of March and comprise 7.5 percent of total credit facilities with non-performing loans covered by 102 percent of provisions as of March 2012.

Investment analysts say the bank has traditionally had a lower risk appetite than peers and its favoring of capitalization and liquidity versus profitability.

The Amman-based Arab Bank’s growth has long been tied to its regional and global expansion and it has built a reputation for low vulnerability to major political upheaval.

Despite the regional downturn, the bank’s traditionally loyal, mainly Arab customer base remained steady, with deposits reaching the level of $28.6 billion at the end of March.

Bankers say the bank’s geographic spread – 70 to 80 percent of its assets, funding, capital and revenue lie outside Jordan in 30 countries across five continents – would help the bank weather the turmoil that has hurt many of its peers.

Growth in Arab Bank’s traditional trade finance business conducted by its European and Asian subsidiaries helped buck the trend, with a healthy 6 percent rise in commissions last year, especially in the oil producing Gulf and Algeria, bankers say.

A rebound in global oil prices was expected to improve the bank’s operations in the oil producing Gulf Arab states.

Arab Bank Group’s focus on top-tier assets and its steering away from significant lending to governmental entities has served it in a climate where banks exposed to former toppled governments in the Middle East had suffered, bankers say.

Arab Bank owns 40 percent of Saudi Arabia’s Arab National Bank ANB, Reuters reported.