Arab Bank Group Says Profit Drops amid Coronavirus Provisions

FILE PHOTO: A general view of the Arab Bank in Amman, Jordan, October 25, 2017. REUTERS/Mohammed Hamed/File Photo
FILE PHOTO: A general view of the Arab Bank in Amman, Jordan, October 25, 2017. REUTERS/Mohammed Hamed/File Photo
TT

Arab Bank Group Says Profit Drops amid Coronavirus Provisions

FILE PHOTO: A general view of the Arab Bank in Amman, Jordan, October 25, 2017. REUTERS/Mohammed Hamed/File Photo
FILE PHOTO: A general view of the Arab Bank in Amman, Jordan, October 25, 2017. REUTERS/Mohammed Hamed/File Photo

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.



Facing Market Pain, UK’s Reeves Says ‘Pragmatic’ China Ties Will Help Growth

British Chancellor of the Exchequer Rachel Reeves looks on during the 11th China - UK Economy and Finance Dialogue in Beijing, China, 11 January 2025. (EPA)
British Chancellor of the Exchequer Rachel Reeves looks on during the 11th China - UK Economy and Finance Dialogue in Beijing, China, 11 January 2025. (EPA)
TT

Facing Market Pain, UK’s Reeves Says ‘Pragmatic’ China Ties Will Help Growth

British Chancellor of the Exchequer Rachel Reeves looks on during the 11th China - UK Economy and Finance Dialogue in Beijing, China, 11 January 2025. (EPA)
British Chancellor of the Exchequer Rachel Reeves looks on during the 11th China - UK Economy and Finance Dialogue in Beijing, China, 11 January 2025. (EPA)

British finance minister Rachel Reeves, facing criticism for travelling to China during financial market turmoil at home, said on Saturday that "pragmatic and predictable" relations with Beijing would help boost economic growth and trade.

Under pressure from a sharp rise in British interest rates, Reeves defended her budget at the start of the two-day visit to China, where she is seeking to revive high-level economic and financial talks that have been frozen for nearly six years.

"The fiscal rules that I set out in my budget in October are non-negotiable, and growth is the number one mission of this government to make our country better off," Reeves told reporters at a Brompton bicycle shop in Beijing.

"That's why I'm in China to unlock tangible benefits for British businesses exporting and trading around the world to ensure that we have greater access to the second-largest economy in the world."

The rise in British government borrowing costs, due in part to a global bond selloff, prompted comparisons with the 2022 "mini-budget" crisis that forced then-Prime Minister Liz Truss out of Downing Street.

However, this week's market moves have been less sharp and there has so far been no evidence of the strain on institutional investors that forced the Bank of England into emergency bond purchases in 2022.

On trade, asked whether Britain would follow Washington and Brussels in imposing tariffs on Chinese electric vehicles, Reeves, who will be in Shanghai on Sunday, said: "We keep issues under review but we make decisions in our national interest."

British car manufacturers, "like Jaguar Land Rover, export substantially to Chinese markets, and we want to help them to grow."

After her bicycle shop visit, Reeves met Vice President Han Zheng, telling him it was "important to have open and frank dialogue in areas where we agree, but also in areas where we have different views."

'COMMON GROUND'

Her delegation, which includes Bank of England Governor Andrew Bailey, Standard Chartered Chairman Jose Vinals, and HSBC Chairman Mark Tucker, then met Chinese counterparts led by Vice Premier He Lifeng.

He urged British financial firms to expand renminbi services and promote deeper yuan internationalization, while inviting them to participate in green finance and the pension industry in China.

Reeves said she looked forward to China issuing its first overseas sovereign green bond in London this year.

Her visit follows a dialogue opened last year between Prime Minister Keir Starmer and President Xi Jinping, the first between the two countries' leaders since 2018.

Reeves told He that Russia's invasion of Ukraine, rising geopolitical tensions and climate change meant that they faced a much more challenging environment than when their predecessors last met.

"It is important to prevent economic leaps weakening our national security and economic resilience," she said, adding both she and He wanted to "find common ground" in this regard.

He said Beijing will work with London to ensure a fair, non-discriminatory business environment for each country's firms.

The approach adopted by Starmer's Labor government, elected in July, contrasts with that of the previous Conservative administration, which took a robust path to differences with China - particularly over human rights, Hong Kong and allegations of Chinese espionage.

Starmer has long described his desire to build a relationship with China that is "rooted in the UK's national interests" by boosting trade, a task that may become more difficult if US President-elect Donald Trump follows through on his threat to impose tariffs on all imports.

China is Britain's fourth-largest trading partner, accounting for goods and services trade worth almost 113 billion pounds ($138 billion).