Ahli United Bank reports 18% rise in Q1 2011 profit to US$ 77.3 million

Press release

Published April 17th, 2011 - 01:05 GMT

Fahad Al-Rajaan, Chairman, AUB

Ahli United Bank (AUB) reported a net profit attributable to its equity shareholders of US$ 77.3 million for the quarter ended 31 March 2011, a 17.7% increase over the same period in 2010 ( Q1/2010: US$ 65.7 million). The resultant Earnings per Share were US 1.6 cents, compared to US 1.3 cents achieved in Q1/2010. The result also represents a 20.0% improvement over the Q/4-2010 trailing quarter reported profit of US$64.4 million.

These results were primarily delivered on the back of AUB’s success in sustaining core earnings through maintenance of net interest margins with selective asset growth and a continued tight focus on its risk exposures and operating costs. This resulted in a 16.3% increase in Net Interest Income from US$ 117.5 million to US$ 136.7 million. The Bank’s results were further enhanced by continuing strong performances by its major associate banks in Qatar & Oman with share of profits from associates increasing to US$ 15.9 million. Effective remedial asset management measures resulted in asset provisioning requirements reducing by 34.4% from US$54.7 million in Q1/2010 to US$35.9 million in Q1/2011.

The Group’s Return on Average Equity for Q1/2011 stood at 12.9%, compared to 11.9% achieved in the first quarter of 2010. Return on Average Assets also improved to 1.3% for Q1/2011(Q1/2010: 1.2%).

Group’s total assets grew by 5.9% to US$ 28.0 billion from US$ 26.5 billion at 31 December 2010 attributable mainly from additional liquidity mobilizations while adopting a cautious lending stance in a challenging regional business environment.

AUB concluded on 31 March 2011 landmark capital raising agreements with the IFC Capitalization (Equity) Fund L.P. and IFC Capitalization (Subordinated Debt) Fund L.P. (jointly launched by International Finance Corporation (IFC) and the Japan Bank for International Cooperation) to provide AUB with Tier I qualifying US$ 125 million in new equity and Tier II qualifying US$165 million in new sub-debt facilities. An agreement was also executed with IFC to extend the maturity date of its existing Tier II US$ 200 million subordinated debt from 15 December 2016 to 15 December 2018, thereby increasing its capital effectiveness for AUB. The impact of these agreements will be reflected starting Q2/2011 after their drawdown.

“The signing of these agreements with IFC/IFC Capitalization Funds is a clear testament to AUB’s underlying strong fundamentals and credentials as a major regional banking institution and represents a very significant long term capital commitment, undertaken by a premier World Bank Group member institution, consummated in the midst of very challenging times for regional markets” said Fahad Al-Rajaan, Chairman, AUB.

“AUB’s first quarter results are very positive against the backdrop of testing times. While these results are very encouraging, we remain cautious amidst the current regional developments and are confident that the bank is well positioned to meet any emerging challenges”, added Mr. Al-Rajaan.

Background Information

Ahli United Bank

Ahli United Bank BSC (AUB) is a full fledged commercial and investment banking group providing wealth management, retail, corporate, treasury, offshore and private banking services.

The Group's businesses consist of the operations in Bahrain, a wholly owned subsidiary in the UK and associates in Kuwait, Qatar, Oman, Egypt and Iraq. In Kuwait, AUB has an effective holding of 75% in the Bank of Kuwait and The Middle East while in Qatar, AUB has a 40% stake in Ahli Bank QSC. In Oman, AUB has a 35% stake in Ahli Bank SAOG while in Iraq AUB has a 49% stake in the Commercial Bank of Iraq. In Egypt, AUB, its associate banks and other Gulf financial institutions together hold an 89.3% stake in Ahli United Bank SAE. Apart from these banks, AUB has a nominal stake of 75% in KMEFIC, a brokerage, asset management and corporate finance company based in Kuwait with operations around the Arabian Gulf.

Overall, the AUB Group, through its subsidiaries and associates, operates through a network of 93 branch offices and employs over 3,000 people.

AUB’s stated mission is to create an unrivalled ability to meet customer needs, provide fulfillment and development for staff and to deliver outstanding shareholder value. AUB’s strategy is to expand through both organic growth and acquisition in order to act as a ‘multifaceted financial bridge’ between the international financial markets and its Gulf clients. It has sought to establish an operating presence in each of the Pan-GCC countries with a targeted 10% - 20% market share. To this end, AUB continues to develop and invest to increase its ability to acquire new businesses and rapidly integrate them with the bank’s systems. This development has helped accelerate progress in the delivery of financial services and penetration into targeted geographical markets.