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AUB becomes a signatory to the UN Responsible Banking Principles

AUB becomes a signatory to the UN Responsible Banking Principles

Ahli United Bank has signed the United Nation’s Principles for Responsible Banking, an initiative spearheaded by the United Nation Development Programme (UNEP) in partnership with leading international banks, aiming at aligning global banking practices with long- term social and environmental goals and providing a roadmap for the global financial community in addressing global challenges and contributing to sustainable economic development. The Principles are accessible to all signatories at all stages of the sustainability journey.

The UN’s Principles for Responsible Banking (PRB) provide a universal framework and a set of core principles for the participating banks to implement at strategic, business and operational levels. The six cornerstones Principles require signatory banks to align their strategies and practices with the UN’s 17 Sustainable Development Goals and the Paris Climate Agreement, and to do more to have a positive impact on people and the environment. The initiative also commits banks to establishing appropriate governance structures to implement these Principles and ensure due transparency and accountability on implementation. To date, over 160 institutions from 50 countries with collective assets totaling US$ 50 trillion have joined the initiative.

AUB’s Deputy Group CEO – Operations & Technology Shafqat Anwar commented: “Since its founding twenty years ago, AUB has always been clear-eyed about its role and mission as a responsible bank, fully committed not only to serving the best interests of our customers and shareholders, but also to the common good of the communities we serve, and in the process actively contributing to the socio-economic advancement of the countries where we operate”.

“And because our prosperity as a regional bank depends on the prosperity of the region at large, we’ve put in place rigorous policies to give priority, through financing and our CSR outreach- to those projects and initiatives with the potential to strengthen the macroeconomic fundamentals of the region, advance the cause of economic inclusion and develop human and social capital, while mitigating to the extent possible adverse economic disparity and environmental degradation”.

“At AUB, we are proud of our approach of delivering profit with purpose and of our track record as a socially accountable and environmentally responsible bank. In 2011, AUB was one of the first banks in the Middle East to adopt the Equator Principles, the voluntary yet globally-recognised framework for banks to determine, assess and manage social and environmental risks in project financing. Subscribing to the UN’s Principles of Responsible Banking is a natural next step for AUB, giving us the opportunity to reaffirm our commitment to holding ourselves to the highest standards, and a much-needed platform to collaborate with like-minded banks in making a positive impact and improving people’s quality of life without compromising that of future generations”.

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Ahli United Bank B.S.C. (AUB) reported a net profit attributable to its equity shareholders of US$ 172.1 million for Q4/2019 which represents a 1.7% improvement over the Q4/2018 reported profit of US$ 169.3 million. AUB reported a net profit attributable to its equity shareholders of US$ 730.5 million for the year ended 31 December 2019, an increase of 4.7% as compared to US$ 697.5 million achieved in 2018. The Basic and Diluted Earnings per Share in 2019 was US 7.9 cents (+3.9%), compared to US 7.6 cents in 2018 (EPS: US 1.8 cents in Q4/2019 versus US 1.7 cents in Q4/2018). Comprehensive income attributable to the owners of the bank for Q4/2019 was 38.5% higher at US$ 194.5 million compared to US$ 140.5 million for Q4/2018. Comprehensive income attributable to the owners of the bank for year ended 31 December 2019 was US$ 772.3 million (31 December 2018: US$ 662.5 million) an increase of 16.6% over the prior year.

The excellent financial performance for 2019 continues to reflect the sustained benefits arising from AUB’s diversified business model, robust risk management framework and judicious business driven operating culture centred on maximising prudent and sustainable returns within a disciplined “intelligent spend” cost culture.

Despite the very low prevailing average interest rate environment and overall weak market conditions, net operating income increased (+5.1%) from US$ 1,124.3 million in 2018 to US$ 1,181.1 million in 2019 (Q4/2019: US$ 301.0 million versus Q4/2018: US$ 279.1 million). Net interest income improved to US$ 951.5 million in 2019 compared to US$ 940.5 million in 2018 driven by growth in average loans and investments. Increases in net interest income, trading and investment income and others resulted in a rise in operating income to US$ 1,235.5 million during 2019 compared to US$ 1,210.6 million in 2018 (Q4/2019: US$ 316.2 million versus Q4/2018: US$ 303.5 million). Cost to income ratio was controlled at 28.6% (2018: 27.1%) reflecting the consistent implementation of AUB’s structured cost discipline and intelligent spend approach.

Solid asset quality levels were sustained with an unchanged non-performing loans ratio of 1.9% (31 December 2018: 1.9%) with specific provision coverage ratio of 85.9% (31 December 2018: 85.5%). Coverage levels were assisted by focused asset recovery efforts during the year. Provision coverage levels are calculated on a cash provision basis excluding the value of the additional significant non-cash (real estate and securities) collateral available against non-performing loans.

The Group’s equity attributable to owners at 31 December 2019 increased by 9.1 % to US$ 4.3 billion (31 December 2018: US$ 3.9 billion). The Group’s Return on Average Equity achieved for 2019 was 17.7% (2018: 18.1%).

The Group’s total assets at 31 December 2019 increased by 13.4% to US$ 40.3 billion (31 December 2018: US$ 35.5 billion). This is attributable to a 6.3% growth in the loans and advances portfolio to US$ 20.7 billion (31 December 2018: US$ 19.5 billion) and growth in the non-trading investments portfolio to US$ 9.1 billion (31 December 2018: US$ 7.6 billion) as part of an overall strategy to further balance-sheet diversification and to enhance in-built liquidity sources while expanding risk adjusted returns on a prudent basis. Asset growth was funded from an increase in customer deposits (+US$ 1.9 billion) and through repo borrowings (+US$ 1.1 billion). Return on Average Assets was at 2.1% for 2019 (2018: 2.2%).

The Board of Directors has recommended a distribution comprising of a cash dividend of US cents 5.0 per share (2018: US cents 5.0 per share) together with a bonus ordinary share issue of 10% (2018: 10%).

Mr. Meshal AbdulAziz Alothman, AUB Chairman, commented: “AUB has achieved record results and sustained its excellent core performance for 2019 driven by its well-managed business model based on diversification and cross border flows seeking the effective deployment of capital resources across the AUB Group’s markets in a prudent and profitable manner. Our results are attributable to the clear defined vision of the bank and to the exemplary execution of its business strategies by its highly competent and dedicated management and staff.”