Ahli United Bank B.S.C. (AUB) reported a net profit attributable to its equity shareholders of US$ 293.4 million for the six months ended 30 June 2020, a decrease of 22.3% as compared to US$ 377.5 million achieved in H1/2019. Basic Earnings per Share in H1/2020 fell to US 2.9 cents as compared to US 3.7 cents in H1/2019.

The first half of 2020 was defined by the onset of the Covid-19 outbreak and by the collapse in oil prices. These events triggered global recessionary conditions which have hit energy producing countries hard due to the close correlation of their economic cycles to oil prices which fell sharply in the second quarter of the year. Health imposed lockdowns of extended durations exacerbated the economic fallout as retail and corporate activities were deeply impacted.

As a result, Net Interest Income (NII) was lower by 17.0% to US$ 406.7 million in H1/2020 as compared to US$ 490.2 million in H1/2019. The drop in NII and Fees & Commission income resulted in a drop in Operating Income to US$ 575.6 million during the first six months of 2020 as compared to US$ 630.1 million in H1/2019. The cost to income ratio stood at 27.4% (H1/2019: 26.5%) reflecting AUB’s structured cost discipline.

To adjust for the heightened levels of macro-economic and sectoral risks, total provision charges (net) for H1/2020 increased by 140.0% from US$ 34.3 million to US$ 82.4 million. As a result, Net Operating Income decreased by 17.2% from US$ 595.8 million in H1/2019 to US$ 493.2 million in H1/2020. Comprehensive income attributable to the owners of the bank for H1/2020 reduced by 60.5% to US$ 157.3 million as compared to US$ 398.0 million for H1/2019 due to unrealized financial adjustments related to market fluctuations.

The Group’s equity attributable to owners at 30 June 2020 decreased by 9.5% to US$ 3.9 billion (31 December 2019: US$ 4.3 billion). The AUB Group’s total assets at 30 June 2020 marginally decreased (-0.5%) to US$ 40.1 billion (31 December 2019: US$ 40.3 billion) due to tighter asset-liability cost management. Return on Average Assets was at 1.6% for H1/2020 (H1/2019: 2.2%). Return on Average Equity for H1/2020 was 13.6% (H1/2019: 18.4%). AUB reported a non-performing loans ratio of 2.1% (31 December 2019: 1.9%) with specific provision coverage of 81.8% (31 December 2019: 85.9%). Provision coverage levels are calculated on a cash provision basis excluding the value of the additional significant non-cash (real estate and securities) collaterals available against non-performing loans.

Mr. Meshal Al Othman commented “The first half of 2020 was an unprecedented experience of two halves. An excellent start in January and February was followed by the Covid-19 pandemic and oil prices meltdown, extreme market volatility and a transformed operating and business reality imposed by lockdown conditions.” He added “AUB’s response was rapid and adaptative to this new and evolving situation which we expect to continue into the future. Our priorities were and will continue to be ensuring a safe operating environment for all staff, clients and counterparties, a seamless remote capability to transact business and support our clients in a very difficult and challenging environment and maintaining our earnings capacity in a prudent manner to be able to meet shareholders’ expectations”.