Board proposes cash dividend of $1.25 per share
KUWAIT CITY, Feb 22: Ahli United Bank B.S.C. (AUB) reported a net profit attributable to its equity shareholders of US$ 42.9 million for Q4/2020 (Q4/2019: US$ 172.1 million, -75.1%) primarily due to lower net interest income and higher precautionary provisioning attributable to Covid-19 pandemic. The Basic and Diluted Earnings per Share were US 0.2 cents in Q4/2020 versus US 1.6 cents in Q4/2019.
Comprehensive income attributable to the owners of the bank for Q4/2020 was US$ 47.9 million (Q4/2019: US$ 194.5 million, -75.4%). Net interest income was US$ 199.4 million in Q4/2020 (Q4/2019: US$ 228.8 million, -12.8%) and total operating income was US$ 289.0 million in Q4/2020 (Q4/2019: US$ 316.2 million, -8.6%). AUB reported a net profit attributable to its equity shareholders of US$ 452.2 million for the full year 2020 (2019: US$ 730.5 million, -38.1%). The Basic and Diluted Earnings per Share in 2020 were US 4.3 cents, compared to US 7.2 cents in 2019.
Comprehensive income attributable to the owners of the bank for the full year 2020 was US$ 334.9 million (2019: US$ 772.3 million, -56.6%). Net interest income for 2020 was US$ 799.4 million (2019: US$ 951.5 million, -16.0%). Total operating income for the full year was US$ 1,111.9 million (2019: US$ 1,235.5 million, -10.0%).
The steep decline in US dollar benchmark interest rates by the Fed was followed by similar rate movements in all AUB’s key operating markets which adversely affected interest earnings. Subdued economic activity levels also hit income generated from trade finance, asset management and other fee generating activities which impacted income from fees & commissions.
The bank’s cost of risk was impacted by the raising of incremental gross Stage 1 and Stage 2 provisions taken on performing risk exposures as a precautionary measure against the evolving and uncertain implications of the current pandemic in accordance with IFRS-9. Net provision charges were accordingly increased to US$ 254.9 million for 2020 (2019: US$ 54.4 million).
Non-performing loans ratio stood at 2.6% (31 December 2019: 1.9%) with specific provision coverage of 85.9% (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) collateral available against non-performing loans. The cost to income ratio was sustained at 29.3% (2019: 28.6%) reflecting AUB’s entrenched intelligent spend approach and the impact of the operational efficiencies achieved through streamlining of processes and leveraging from technology and digitization initiatives as part of the overall transformation plan.
The Group’s equity attributable to owners at 31 December 2020 decreased by 6.2% to US$ 4.0 billion (31 December 2019: US$ 4.3 billion). Return on Average Equity for 2020 was 10.4% (2019: 17.7%).
The AUB Group’s total assets at 31 December 2020 was marginally lower (-0.5%) to US$ 40.1 billion (31 December 2019: US$ 40.3 billion) reflecting our prudent liquidity management under volatile operating conditions. Return on Average Assets was at 1.2% for 2020 (2019: 2.1%).
The Board of Directors has recommended a distribution comprising of a cash dividend of US cents 1.25 per share (2019: US cents 5.0 per share) together with a bonus ordinary share issue of 5% (2019: 10%), subject to AUB Annual General Assembly approval. Meshal Al Othman, AUB Chairman, commented “Global and regional economies were strongly impacted by the Covid -19 out-break and the resultant extended lockdowns.
The GCC economies were further hit by the continuing weakness in energy prices seriously limiting their budgetary spend and thereby affecting business confidence. AUB traversed these challenging market conditions in a balanced and structured manner and its results reflect its usual conservative stance in terms of risk assessment and management.”
He added “Though there have been recent positive developments with regards to the approved usage, availability and progressive roll-out of different vaccines for Covid-19 by different countries, the crisis is far from over. This is evident from the current subsequent waves of the Covid-19 spread as well as from the emergence of new more infectious strains of the virus.
Accordingly, AUB will continue to prudently navigate these challenging and unprecedented times by providing a safe operating environment for all staff, clients and counterparties, building a seamless remote capability to transact business and support all our client needs and protecting its core earnings capacity until business as usual conditions can be restored”.