Bank ABC Islamic posts $29.9m net profit for 2021

Bahrain-based Bank ABC Islamic has closed the year ending December 31, 2021 with net profit of $29.9 million, representing a 4.4% improvement year-on-year from $28.6 million in 2020.

The solid results of 2021 are a reflection on the bank’s continued focus on generating growth while maintaining prudent risk management practices, a statement said.

Despite a low profit rate environment and a market that was flushed with liquidity, the Bank successfully maintained its asset base on a year-on-year basis, which is a great achievement. Asset pricing came under pressure due to excess liquidity and impacted the operating income adversely, however, lower impairment charges helped the Bank in returning to normal performance after adversely getting impacted in 2020 on account of a regional fraud case.

In 2021, the Bank facilitated the expansion and outreach of Islamic products to one of ABC Group’s core network market, Algeria. An Islamic window operation, under the brand name ‘albuarq’, was launched in ABC Algeria in February 2021 offering a complete suite of Islamic products to wholesale and retail clients.

Recognizing the Bank’s performance, the Islamic Rating Agency (IIRA) reaffirmed the rating of Bank ABC Islamic at A-/A-2 on the international scale and A+(bh)/A-1(bh) on the national scale with a Stable outlook, based on the results of September 2021.

Key performance highlights:

•    Total operating income of US$40 million, 10.9% lower than US$44.9 million reported last year, mainly on account of lesser origination of new-to-bank corporate customers, lower profit rate environment and lower fee income. However, despite these challenges, the Bank was able to maintain its asset base on a year-on-year basis.
•    Operating expenses were US$8.6 million, 35% higher compared to US$6.4 million for last year. When adjusted for one-off pandemic related items, the expenses for 2021 grew by only 7.4%.
•    Balance sheet remained strong with capital adequacy ratio of 37.7%, predominantly tier 1, which totalled 36.7%.

Hammad Hassan, Managing Director of Bank ABC Islamic said: “We are pleased on the overall performance of the Bank in 2021, despite the impact on top line due to a combination of factors including lower profit rate environment and subdued new-to-bank corporate client origination because of travel restrictions.

“Our prudent risk management practices resulted in much lower impairments compared to last year, which was an exceptional year, adversely impacted by a regional fraud case. We remain optimistic about 2022, as the business sentiment improves, and travel restrictions reduce in our target market countries.” – TradeArabia News Service