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Ahli United Bank’s Operating Income Rises 4.5pc

The Bank’s reported net profit of $255.7 million for the year (2007: $296.3 million) was impacted by increased levels of specific and precautionary provisions taken in light of the prevailing adverse operating environment.

The results include a higher level of net loan loss provisions of $96.8 million (including $41.6 million of additional collective impairment general provisions charge) to ensure adequate coverage of problematic exposures and maintenance of asset quality in a prudent manner (2007 - net loan loss provision: $24.4 million).

This resulted in incurring a loss of $24.4 million in the last quarter of the year ($70.4 million profit in Q4 2007). The Bank maintained a prudent 90 per cent specific provision coverage of its non-performing loan portfolio at December 31, 2008, in addition to its significant general provision balances.

Non-performing loans to total loans stood at 1.9 per cent (as compared to 1.2 per cent in 31 December 2007). In addition, the bank has fully written off its impaired international investments resulting in a loss of $12.4 million as compared to a profit of $24.9 million in 2007.

Total assets of $23.6 billion grew by 2.6 per cent in 2008 (2007 - US$ 23.0 billion) as the bank focused on liability management particularly increasing its client deposits.

Client deposits rose by 22.2 per cent to $13.2 billion (2007: $10.8 billion) with strong deposit growth achieved from retail and non retail depositors reflecting our clients’ strong underlying confidence in the Bank.

AUB was also able to secure extended refinancing for two years of $800 million out of its existing medium term syndicated loan facility from 30 October 2009 to 30 October 2011 at competitive terms, despite very adverse market conditions. This represents a watershed transaction, given the prevailing turmoil, demonstrating AUB’s credentials in the global banking community. “In a year marked by an unprecedented global credit crisis and an increasingly challenging business environment, AUB has been able to report a profit of US$ 255.7 million after pro-actively identifying and absorbing the cost of fully providing/writing off problematic risk exposures”, said Fahad Al Rajaan, Chairman of AUB.

“While 2009 remains a very challenging year ahead, we nevertheless see opportunities on a number of fronts. One of these will be our entry into offering life insurance products and services across the region. Following the recent approval by the Central Bank of Bahrain, we look forward to launching during the year the commercial operations of our conventional and Takaful joint venture companies, in partnership with the U.K. based, Legal & General Group. We also look forward to completing the conversion of our 75 per cent subsidiary bank, Bank of Kuwait & the Middle East KSC, into a full fledged Shariah compliant bank which will add an important product dimension to the AUB Group services.”

business@khaleejtimes.com