Annual Report - Ahli United Bank

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Annual Report - Ahli United Bank

These adverse trends gradually receded in the second half of the year with a degree of stability, albeit at very low growth levels, settingin. Massive OECD fiscal and monetary interventions have hopefully removed the risk of double-dip global recession but the economicoutlook remains a concern, as sustainable signs of a broad based, robust recovery have not yet emerged.In the Gulf and broader MENA region, strong oil prices have given governments the ability to increase spending without running downlegacy reserves which has created a degree of cautious optimism in most markets that the worst of the storm is behind us.At AUB, we remain in a very prudent and risk averse stance, by very closely monitoring the potential impact of OECD stimulus reductionand the policies of our different host governments in terms of helping their respective economies to return to better levels of economicperformance.PERFORMANCE OVERVIEWWhile the Bank remained focused on its core regional commercial banking business model within its established strategy, further focuswas given to the following:• Tight asset liability management ;• Focused monitoring of identified risk exposures to ensure prompt recognition of impaired assets, related provisioning with a morevigorous asset review and remedial asset management approach;• Selective business growth within prudent risk parameters focusing on contra-cyclical sectors;• A phased de-risking of the balance–sheet profile by deploying liquidity from corporate credits to sovereign and quasi sovereignbond and FRN exposures with better risk and liquidity features;• Maintaining counterparty and client confidence at high levels;• Continuing operational streamlining and disciplined cost control.Against the backdrop of the continuing challenging operating environment and the Bank’s pro-active management responses as outlinedearlier, the key highlights of our performance for the fiscal 2009 are:• Consolidated net profit, attributable to the Bank’s equity shareholders, of US$200.7 million as against US$255.7 million in 2008, adrop of 21.5%, impacted by prudent provisioning for loan losses and contingencies of US$228.1 million (2008: US$98.6 million) toensure adequate mitigation of identified risks. This included provisions of US$171.5 million allocated representing circa 90% of itsexposures to specified impaired Saudi corporate assets.• Total operating income increased by 4.6% to US$ 696.4 million from US$ 665.5 million in 2008, supported by a higher Net InterestIncome (+15.7%).• Total assets were maintained at US$23.6 billion (2008 – US$ 23.6 billion) with loans and advances conservatively placed at US$13.3billion (2008: US$13.6 billion).• Given the set policy of limiting absolute asset growth due to prevailing risk factors, customers’ deposits were maintained at US$13.2 billion (2008: US$ 13.2 billion).• Deposit stability facilitated prepayment of US$ 400 million of the US$1.2 billion syndicated loan in August 2009 ahead of its finalmaturity date to reduce interest charges.• Reduction of cost to income ratio to 34.2% (2008: 39.1%) is a testament to the effectiveness of the cost discipline measures and tothe increase in staff productivity levels.AUB Annual Report 200917

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