JORDAN’S Arab Bank nine-month net profits dropped 19.7 per cent to $402.3m (£251m) against the same period last year, according to financial statements released yesterday that showed higher provisions.
The bank saw a three per cent growth in assets to $52.12bn against $50.6bn at the start of the year, financial statements showed. Arab Bank Group, which includes Arab Bank Switzerland based in Zurich, also reported third-quarter net profit fell to $99m, down 37 per cent from the same period a year ago.
The balance sheet showed the bank had set aside $203m in provisions for non-performing loans in the first nine months of 2010, up from $111m in the same period last year. Arab Bank, one of the Middle East’s major financial institutions, put aside $79.3m in provisions in the third quarter, up from $54.7m in the same period last year.
Most Jordanian banks are setting aside higher provisions to cover possible defaults and non-performing loans by businesses and real-estate firms reeling from the impact of the global downturn on the aid-dependent economy. The bank saw a 4.4 per cent drop in net earnings and commissions to $990.5m in first nine months, the financial statements showed.
Bankers said while the credit provisions weighed on profits, Arab Bank was cushioned by a healthy capital base and $8bn of shareholder equity.
Bankers said that as long as few economic recovery signs emerge, Arab Bank and other financial institutions will continue to book provisions to cover anticipated defaults, though not at the same high levels they have put aside since the start of last year.
Deposits rose to $32.8bn by the end of September 2010 from $31.5bn at end of last year.
City A.M. Reporter