The Arab Bank Group, Jordan’s largest lender, reported on Wednesday a 36% drop in its first-quarter profit by the time it increased provisions to cope with disruptions from the new coronavirus pandemic.
This drop has not affected loans and customer deposits, which continued to grow.
The Amman-based bank said first quarter net profit fell to $147.6 million from $231.8 million a year earlier, while loans grew 2 percent to $26.2 billion and customer deposits rose 5% to $35.2 billion compared with the same period last year.
Chairman Sabih al-Masri said the bank’s diversified operations in over 30 countries in five continents would cushion the impact of coronavirus, Reuters reported.
“The bank has in previous years demonstrated its effectiveness in operating in challenging economic environments,” he added.
Arab Bank, one of the Middle East’s major financial institutions, has built a reputation for stability amid regional political upheaval. Its Chief Executive Officer Nemeh Sabbagh attributed the drop in net profit to “building more provisions during Q1 as a precautionary move against the financial implications of COVID-19.”
He did not give a figure of how much was set aside in provisions but said the bank’s provisions coverage ratio for non-performing loans continued to exceed 100%.
Sabbagh said net operating income had dropped by only 2% and liquidity continued to be high, with a loan-to-deposit ratio of 74.4% as of end of March.
According to Reuters, the bank maintained a strong capital base with equity of $9.2 billion and a capital adequacy ratio of 16.5%, it said.
