Bank ABC Islamic announces 2021 year-end net profit to US$29.9 million

Bank ABC Islamic has announced its financial results for the year ending 31 December 2021.

The Bank delivered strong performance in 2021, closing the year with net profit of US$ 29.9 Million, representing a 4.4% improvement year-on-year from US$ 28.6 Million in 2020. The solid results of 2021 are a reflection on Bank’s continued focus on generating growth while maintaining prudent risk management practices. 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:

  • Net profit of US$ 29.9 million reflects the Bank’s success in returning to normal performance after absorbing the one-off exceptional fraud related impairment in 2020.
  • 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%.

Commenting on the results, Mr. 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.”

A more detailed summary of the Financial Results is explained below:

Q4 Financial Results (three-month period)

  • Net profit for the fourth quarter was US$3.2 million compared to US$6.3 million reported in the fourth quarter of 2020.
  • Total operating income was US$8.8 million compared to US$9.7 million reported for the same period last year.
  • Operating expenses were US$3.5 million, compared to US$1.4 million for the same period of last year.
  • Allowances for credit losses were US$2.0 million compared to US$1.9 million reported in last year.

FY 2021 Financial Results

  • Net profit for the year 2021 was US$29.9 million, 4.4% higher than US$28.6 million recorded in the previous year, mainly due to lower impairment charges.
  • Total operating income was US$40.0 million, 10.9% lower than US$44.9 million reported last year.
  • Operating expenses were US$8.6 million compared to US$6.4 million reported last year.
  • Allowances for credit losses for the year were US$1.1 million compared to US$9.5 million reported during last year.

Balance Sheet:

  • ABC Islamic Bank’s total assets stood at US$2.332 billion at the end of 2021, compared to US$2.314 billion at the 2020 year-end.
  • Shareholders’ equity on 31 December 2021 stood at US$297 million, compared to US$293 million at 2020 year-end.
  • The Bank’s capital base remains very strong with a capital adequacy ratio of 37.7%, predominantly Tier 1, which totalled 36.7%.