Arab Bank's 2010 net profit fell 53 percent to $251 million after it set aside hefty provisions for bad loans for a second consecutive year. Arab Bank, one of the Middle East's major financial institutions, put aside $178 million in provisions for non-performing loans in 2010 compared with $207 million in 2009, according to financial statements released on February 01.
The statement showed that the assets of Arab Bank Group, which includes Arab Bank Switzerland based in Zurich, rose to $51.1 billion at the end of 2010 against $50.5 billion in the same period 2009.
Most Jordanian banks have set aside higher provisions to cover possible defaults and non-performing loans by businesses and real-estate firms reeling from the impact of the global downturn on the aid-dependent economy.
Bankers said while the credit provisions weighed on profit, the Arab Bank was cushioned by a healthy capital base and $8.3 billion of shareholders equity.
Bankers say at least half of the provisions were set aside for the bank's exposure to troubled Saudi Arabian groups Saad and Al Gosaibi.
Arab Bank is one of the few Jordanian banks active in global financial markets. Most banks in the family-dominated Arab region are shielded from exposure to Western markets by modest risk profiles and offering only relatively plain products.
Deposits rose to $35.7 billion by end of December 2010 against $34.9 billion at end of 2009.
The bank's total outstanding loan portfolio rose to $22.5 billion by end of December against $22 billion in the same period the previous year.
The bank, whose geographic diversification has helped it weather turmoil in the past, said net revenue dropped slightly to $1.764 billion in 2010 against $1.774 billion in 2009.
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