AUB record net profit of $310.6 M

Ahli United Bank (AUB) has reported a record net profit attributable to its equity shareholders of $310.6 million for the year ended December 31, 2011, a landmark result since its inception in 2000. This represents a 17% increase over the 2010 result. The last quarter of 2011 contributed $70.3 million to the overall result, as compared to $64.4 million in Q4/2010. The year 2011 witnessed major geopolitical developments with associated economic ramifications ranging from declining consumer and business confidence, subdued lending demand and reduced client activity driven by market volatility, widening credit spreads and pro-active downward revisions in credit ratings of US and many Euro-zone countries. The advent of the Arab Spring added a regional dimension to the earlier evolving Euro-zone debt crisis and generally worsening macro-economic indicators globally. Against the backdrop of a very challenging business environment, AUB pursued prudent liquidity build-up and capital preservation measures as its key priorities complemented by stringent cost controls to ensure its ability to effectively service its customers in providing necessary credit and other banking support under the most challenging conditions. Long term liquidity and funding profiles were augmented with the conclusion of the landmark deals with IFC/IFC Capitalization Funds in March 2011. These included raising $290 million through the issuance of Tier-1 Mandatorily Convertible Preference Shares of $125 million and a Tier-2 eligible 10 year Subordinated Term Debt of $165 million. Moreover, existing subordinated term debt from IFC of $ 200 million was elongated to increase its capital effectiveness and eligibility. Overall customer deposits were increased by 16.9% ($2.5 billion) to reach $17.3 billion, while the overall Interbank & Repo Borrowings decreased by $0.8 billion as part of a plan to reduce wholesale funding dependence. The AUB Group maintained its focus on prudent lending norms while meeting its   commitments to its customers and maintaining support for viable initiatives. Overall loans and advances rose by 7.0% to $15.5 billion (2010: $14.5 billion).