MANAMA: Bank ABC Group delivered solid results during 2021, benefiting from a pick-up in activities across its core markets and much lower impairment charges.
The performance of a headline net profit attributable to the shareholders of the parent of $100 million marks a robust turnaround from the previous year, which was impacted by abnormally elevated ECL charges related to regional fraud cases, leading to a net loss of $89m.
Achieving another strategic milestone on August 11, the group completed the acquisition of BLOM Bank Egypt (BBE). BBE is a leading bank in Egypt, with a national presence through 41 branches, and its merger with our existing Bank ABC franchise will drive a new strategy to build a banking powerhouse in this market of fundamental importance to Mena.
The digital transformation programme of the bank made significant progress during 2021 with many notable achievements, including the launch of fully digital onboarding for corporates.
Key performance highlights:
Net profit attributable to the shareholders of the parent of $100m with cost of risk retracing towards pre-pandemic levels. In comparison, the group’s result for 2020 was a net loss of $89m, mainly arising as the result of abnormally elevated ECL charges incurred due to major regional fraud events.
Total operating income significantly increased on a headline basis by 32 per cent and on an underlying basis grew by 17pc compared to 2020, despite lower interest rates and challenged economic conditions, also partially benefiting from consolidation of BBE.
Operating expenses on a headline basis were higher by 17pc and an underlying basis were higher by 18pc with integration of BBE together with related acquisition expenses and with businesses returning to normal level of activity.
The group also continued to invest into digital transformation to build its ‘bank of the future’.
Balance sheet remains strong with capital and liquidity ratios well above the regulatory requirements: the Group’s T1 ratio is at 15.9pc, comprising predominantly 15.5pc CET1 LCR 228pc and NSFR 128pc.
On this occasion, the board of directors recommend, for approval at the annual general meeting, a cash dividend distribution of 1pc ($0.01 per share, net of treasury shares), amounting to approximately $31m and translating to 31pc of the net profit for the year, attributable to the shareholders of the parent.
Bank ABC’s group chairman Saddek El Kaber commented, “We are pleased with our performance during 2021. The group successfully transitioned from a challenging 2020, to delivering higher levels of profitability, with the continued focus on execution of its growth strategy, which also included the acquisition and consolidation of BBE. Despite continued headwinds in the global economy related to the various Covid-19 variants, inflation and supply-chain bottlenecks we remain optimistic on the future growth as business sentiment improves in the region and beyond.”
Q4 2021 business performance:
Consolidated net profit attributable to the shareholders of the parent, for Q4 2021 was $20m, $53m higher compared to a net loss of $33m reported for the same period of 2020.
Earnings per share for the period was $0.01 compared to $-0.01in the same period in the previous year.
Total comprehensive income attributable to the shareholders of the parent was $13m, compared with $91m reported for the same period last year.
On a headline basis, total operating income was $228m, 5pc higher compared with $218m reported for the same period of 2020 (comparatives being affected by the adverse impact of the pandemic). On an underlying basis, total operating income was $234m for the period, a 24pc increase on the $88m reported for the same period of the previous year, also benefiting from consolidation of BBE.
Net interest income was $173m, 29pc higher against $134m reported for the same period of 2020, after absorbing the impact of declining interest rates compared to the same period of 2020 supported by growing volumes in certain markets.
Operating expenses were $169m, 34pc higher than $126m for the same period of 2020, from a combination of consolidation of BBE as well as the group returning to a more normal level of activity (underlying basis 35pc).
The group continues to enforce appropriate cost discipline without compromising on investment into digital transformation and strategic initiatives.
Headline net operating profit before credit loss expense and taxation was $59m, 36pc lower compared with $92m reported for the same period of 2020.
On an underlying basis, the group achieved net operating profit of $64m for the quarter, 3pc higher compared with $62m in Q4 2020 (impacted by proportionately higher expenses due to continued investment in our business model and as business operations returned to normalcy during 2021).
Impairment charges (ECL) or credit loss expenses for the quarter were $28m compared with $95m reported for the same period of 2020, with stabilising economic outlook from the lows and without the major impact of regional fraud events that created abnormally elevated ECL charges during 2020.
Tax charge for the quarter was $4m, compared with $28m for the same period of 2020. On an underlying basis, tax charge for the period was $9m compared with a tax credit of $2m for the same period of 2020.
Balance Sheet:
Equity attributable to the shareholders of the parent at the end of the period was $3,872m, 2.8pc higher than $3,767m reported at 2020 year-end.
Total assets stood at $34.9 billion at the end of the period, 14.8pc higher compared with $30.4bn at the 2020 year-end mainly from inclusion of $3bn of assets of BBE.
On an underlying basis, total assets grew by 14.2pc, also benefiting from consolidation of BBE.
Loans and advances stood at $16.8bn, 7.1pc higher than $15.7bn reported at 2020 year-end after including $0.8bn of loans and advances of BBE.
Deposits were $25.8bn including $2.6bn of BBE, compared with $21.3bn at 2020 year-end. Despite the prevailing conditions, deposit experience remained steady underscoring the confidence of clients.
Efforts to diversify and improve the quality of deposit base continue.
Liquidity ratios are strong with LCR and NSFR at 228pc and 128pc respectively and liquid assets to deposits ratio healthy at 52.5pc.
Capital ratios are strong: Tier 1 is at 15.9pc comprising predominantly CET1 at 15.5pc and total capital adequacy ratio (CAR) at 16.9pc.
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