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Bank Achieves Another Record Profit Of US$ 164.9 Million

Ahli United Bank B.S.C. (AUB), one of the region’s leading banking institutions, has announced today its results for 2005. A consolidated net profit of US$164.9 million was reported for the year ended 31 December 2005, an increase of 54.8% over the previous year (US$ 106.5 million).

The Bank, in keeping with its strategy, continued to expand both through organic growth and mergers and acquisitions. During 2005 the Bank acquired a 27% voting stake, in the Bank of Kuwait and the Middle East K.S.C. (“BKME”). This has resulted in BKME, the oldest bank in Kuwait, becoming a 75% subsidiary of the Bank and its results have been consolidated for around 5 months of the year. The Bank also achieved a groundbreaking entrance into the Iraqi market through its acquisition of a 49% stake in Commercial Bank of Iraq P.S.C., one of the largest private banks in Iraq, through fully underwriting the latter’s capital increase. Furthermore, following receipt of necessary regulatory consents, the operations of the Bank’s wholly owned subsidiary Ahli United Bank (Bahrain) B.S.C. (c) were integrated with the parent Bank from 1 July 2005 to streamline operations and improve capital efficiency.

The Bank reported a consolidated net profit, attributable to the Bank’s equity shareholders, of US$164.9 million, which represents a 54.8% increase over the comparable figure for 2004 of US$106.5 million. At the year-end, total assets stood at US$13.9 billion (2004 – US$8.1 billion) and the Bank’s shareholders’ equity amounted to US$1.4 billion (2004 – US$1.0 billion). The total operating income increased by 47.7% to US$358.9 million from US$ 243.0 million in 2004, despite pressure on asset margins in a very competitive environment and against a rising interest yield curve.

The resultant cost to income ratio improved to 36.8% (2004: 41.2%). Total deposits amounted to US$10.5 billion, a 78.0% increase on 2004. In summary, 2005 was another year of solid achievement and continuing growth as evidenced by the return on average equity rising from 11.3% (2004) to 13.5% (2005) and the return on average assets improving from 1.6% (2004) to 2.1% (2005). The capital base was re-inforced by AUB’s first subordinated Lower Tier 2 floating rate note issue, listed on the London Stock Exchange. This transaction raised US$100 million which further diversified AUB’s capital funding profile.

Based on the results achieved and taking into consideration future capital needs, the Board recommends an increased cash dividend of 3 cents per share (2004: 2.7 cents) together with a bonus share issue of 5% i.e. one ordinary share for every 20 ordinary shares held, with Class A and Class B preference shares conversion ratios adjusted accordingly.

“Ahli United Bank’s recent financial performance reflects the well planned and executed strategic acquisitions and milestone transactions the Bank achieved in 2005, falling in line with its group wide corporate strategy. Through the acquisitions in Kuwait and Iraq, AUB demonstrated its continuing commitment to solidify new growth opportunities, in an effort to offer a comprehensive range of services to a wider customer base in the Gulf region and beyond,” said Mr. Fahad Al-Rajaan, Chairman of AUB.

The continuing trend of strong financial and operating performances achieved and the effectiveness of the Bank’s business strategy have been recognised by Euromoney Magazine, who recently rated the Bank’s private banking arm as the “Best Local Private Bank in the Middle East” and “Best Local Private Bank in Bahrain”.