AUB reports 12.7% surge in 2018 net profit
Net profit attributable to owners of the bank reached $697.5 million
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 repositioning 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 balancesheet 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.”