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Sun 27 Apr 2008 05:18 PM

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Arab Bank profit up on regional expansion

One of Middle East's major financial institutions sees Q1 earnings rise 24.4%.

Jordan-based Arab Bank Group's net profit rose 24.4% to $232.8 million in the first quarter, the bank said on Sunday, as it diversified its operations and expanded its regional presence.Chairman and CEO Abdel Hamid Shoman said in a statement growth had come from the bank's "policy of avoiding risks and diversifying its investments geographically and sectorally".

Shoman said total assets of Arab Bank Group, one of the Middle East's major financial institutions which includes Arab Bank Switzerland headquartered in Zurich, rose 21.6% in the quarter to $40.5 billion from $33.3 billion in the same period last year.

Pretax profit rose 26% to $295 million.

Total shareholders' equity rose to $7.1 billion from $6.2 billion and accounted for 17.5% of the bank's total assets, Shoman said, adding it had enhanced its capital adequacy ratio to 20.2%.

Arab Bank Group's credit facilities and loans rose to $20.4 billion from $14.7 billion in the same period last year, Shoman said, adding these constituted 50% of total assets.

Shoman attributed this to the bank's expanding syndicated project financing business in the Arab Gulf.

The bank's geographic diversification - 70% of the bank's assets, funding, capital and revenue lie outside Jordan in 26 different countries - has helped it weather regional turmoil.

The bank, which has also sought acquisitions as part of an expansion drive, won a tender last February to buy 19% of Libya's Wahda Bank and the right eventually to raise its stake to 51% in the potentially lucrative country with rich oil and gas reserves.

Arab Bank's project-related finance and trade operations in the oil-rich region has also picked up, with the bank last year participating more aggressively in large syndicated loans for major corporations.

The bank is one of the region's largest privately owned banks with Saudi Arabia and Qatar owning minority holdings. It owns 40% of Saudi Arabia's Arab National Bank.

The largest single shareholder in the bank, which is a pillar of the economy that constitutes over 40% of the Amman bourse's capitalisation, is the family of Lebanon's former prime minister Rafik Al-Hariri with over 20%. Around 42% is owned by local investors. (Reuters)

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