AUB reports 12.7% surge in 2018 net profit

Net profit attributable to owners of the bank reached $697.5 million

Meshal Al-Othman

KUWAIT: Ahli United Bank B.S.C. (AUB) reported a net profit attributable to its equity shareholders of $697.5 million for the year 2018, representing a rise of 12.7 percent as compared to the net profit of $618.7 million in 2017. The net profit in Q4/2018 was $169.3 million as compared to $150.0 million in Q4/2017.

Operating income increased from $1,119.4 million to $1,210.6 million in 2018 (+ 8.1 percent). The growth in operating income, mainly driven by an increase in net interest income (NII) by $64.1 million (+7.3 percent) to $940.5 million (2017: $876.5 million), was attributable to an increase in average interest earning assets and to the repricing and re-positioning of the loan portfolio, complemented by an effective interest rate risk management strategy. Net operating income increased from $1,030.4 million to $1,124.3 million in 2018 (+ 9.1 percent).

Operating income in Q4/2018 was $303.5 million as compared to $294.2 million in Q4/2017 (+3.1 percent). Net operating income for Q4/2018 was US$ 279.1 million, higher by 6.7 percent compared to $261.6 million in Q4/2017.

The continued disciplined implementation of the intelligent spend approach and the benefits of growing operational efficiencies within the AUB Group resulted in a cost income ratio of 27.1 percent (2017: 28.8 percent). Solid asset quality levels were sustained with a gross non-performing loans ratio of 1.9 percent (31 December 2017: 1.9 percent) while the specific provision coverage ratio increased to 85.5 percent (31 December 2017: 85.1 percent). The total provision coverage ratio, inclusive of credit loss provisioning under IFRS 9 but excluding very substantial non-cash collaterals available, improved to 214.7 percent as at 31 December 2018 (31 December 2017: 154.3 percent).

Overall Return on Average Equity (ROAE) increased to 18.1 percent (2017: 16.5 percent) while the Return on Average Assets (ROAA) increased to 2.2 percent (2017: 2.1 percent).

The Group’s total assets grew by $2.3 billion (+6.8 percent) to reach $35.5 billion at 31 December 2018 driven by a growth in the non-trading investments portfolio to $7.6 billion (31 December 2017: $6.0 billion) as part of an overall strategy to further balance-sheet diversification and to enhance in-built liquidity sources. Asset growth was funded from an increase in customer deposits (+$1.7 billion) and through repo borrowings (+$0.6 billion). Equity attributable to the owners of the bank increased by 2.4 percent to $3.9 billion in 2018 (2017: $3.8 billion).

The resultant basic earnings per share increased by 12.2 percent to US cents 8.3 for the year ended 31 December 2018 (2017: US cents 7.4). The Board of Directors has recommended a distribution comprising of a cash dividend of US cents 5.0 per share (2017: US cents 4.5 per share) together with a bonus ordinary share issue of 10 percent (2017: 5 percent).

Meshal Al-Othman, AUB Chairman, commented: “AUB continued its solid performance in 2018 against the backdrop of a continuing general difficult operating environment. Achieving a very robust growth of 12.7 percent in net profit over 2017 demonstrates its strong underlying fundamentals and the resilience of its diversified business and geographic model.”