Annual Report - Ahli United Bank

ahliunited.com

Annual Report - Ahli United Bank

Group CEO & ManagingDirector’s Statement“OUR VISION FOR THE GROUP REMAINSCLEAR AND CONSISTENT: TO BE THELEADING PROVIDER OF INTEGRATEDFINANCIAL SERVICES ACROSS THEMIDDLE EAST”.In 2009, AUB’s operating environment was impacted significantlyby the global financial crisis with some regional economiesfurther aggravated by deflating real estate prices, tight liquidityand increasing cost of funds. Consumer spending remainedweak with general credit conditions in the market affectingoverall returns and the pace of recovery in the global economy.In the face of these challenging market conditions, assetand liability management was tightened supported byimplementation of a more robust risk management process.Selective business growth was pursued within prudent riskparameters, focusing on contra-cyclical sectors. A phased deriskingof the balance sheet profile was achieved by deployingliquidity from corporate credits to sovereign and quasi sovereigninstruments with better risk and liquidity profiles. Disciplined costcontrol, operational streamlining and maintaining counterpartyand client confidence at high levels were key priorities inmanagement’s pro-active response to the unprecedentedbusiness environment.For 2009, the Bank achieved a 4.6% growth in total operatingincome which increased to US$ 696.4 million, supported bya 15.7% increase in net interest income to US$ 466.6 million(2008: US$ 403.1 million). Despite the tight liquidity and creditconditions that prevailed in the first half of 2009, the Banksuccessfully managed to contain its cost of funding throughtight asset liability management and asset re-pricing resulting inimproving Net Interest Margin from 2.2% (2008) to 2.4% (2009).The Bank reported net profit of US$ 200.7 million for the year,a drop of 21.5% over the US$ 255.7 million net profit of 2008,was impacted by increased levels of provisioning on its loansportfolio to ensure prudent mitigation of identified risks giventhe continuing uncertain operating environment furtheraffected by regional credit events. Consequently, the charge forprovisions for loan losses and contingencies rose to US$ 228.1million (2008: US$ 98.6 million). This included provisions ofUS$171.5 million exceeding 90% coverage for its entire portfolioexposures to specified impaired Saudi corporate assets so as tofully absorb any potential losses related to these accounts. Nonperformingloans portfolio represented 2.8% of its total loanportfolio in 2009.In view of the uncertainty in timing and prospects of economic24 AUB Annual Report 2009

More magazines by this user
Similar magazines