Bank Audi’s net profits in the first six months of 2012 surged by 27.7 percent to $230.1 million thanks to the sale of 81 percent of its stake in LIA insurance, the bank said Thursday. The bank said its net profits in the same period of 2011 prior to the sale of the insurance assets had already surged by 5.6 percent.
The bank said that its sole objective in ditching the assets was to disinvest from the underwriting insurance business following new regulatory constraints, which have become increasingly restrictive, especially when it comes to computing capital adequacy ratios.
“Nonetheless, Bank Audi will continue to offer to its customers the range of LIA’s bancassurance products,” the statement said.
It added that Bank Audi and the new owning company, Saham Finances – the holding company of the Moroccan group leader in the African insurance market, excluding South Africa – have agreed to maintain and develop the existing cooperation between Bank Audi sal-Audi Saradar Group and LIA insurance sal.
“Within this context, the bank adopted throughout the first half of 2012 a conservative strategy at group level in the face of spillover effects of regional developments, and consisting of strengthening the bank’s resilience and asset quality amid the finalization of the establishment of the Turkish subsidiary that provides promising growth prospects to the group at large,” Audi said.
Audi’s consolidated assets reached $28.8 billion at the end of June 2012 and $40 billion when accounting for fiduciary deposits, security accounts and assets under management.
Such activity helps the bank maintain its position at the forefront of the Lebanese financial sector and among the top Arab banking groups, despite the contraction of assets of Bank Audi Syria by 59 percent between December 2010 and June 2012 (the equivalent of $1.2 billion).
Consolidated deposits amounted to $24.7 billion at the end of June 2012.
“While the bank’s deposit aggregates in Syria contracted further, the resilience of the consolidated deposit base stems from the relative growth in various subsidiaries despite unfavourable domestic and regional economic conditions,” the bank said.
The shareholders’ equity reached $2.6 billion, accounting for 9 percent of the bank’s consolidated assets, and translating into a Basel III capital adequacy ratio of around 12.2 percent versus a 10 percent minimum regulatory requirement.
The bank’s statement also commented on the economic slowdown in Lebanon since the beginning of the year.
“The Lebanese economy has slowed down in the second quarter of 2012, as witnessed by most real sector indicators, while relatively sustaining monetary and financial stability indicators,” the statement said.
“Bank deposits grew by $3.2 billion over the first five months of 2012, or 13 percent less than the average growth of the past five years’ corresponding period.”
It added that the bank gained $2.5 billion in new loans to the private sector, equivalent to last year’s growth and 19 percent more than the growth of the previous five years.
“Still, operating conditions continue to be tough, as domestic net profits reported a net contraction of 3.9 percent over the first five months of 2012 relative to the same period last year,” the statement said.
It added that based on such results, the bank’s profitability ratios have improved, with the return on average assets reported at 1.3 percent and the return on average common equity amounting to 16.6 percent, and respectively reaching 1.61 percent and 20.7 percent when including the profit from the sale operation.
The statement also stressed that the positive financial results of the bank in the first half of 2012 highlight its high quality franchise and its ability to maintain a sound financial standing amid adverse regional developments by safeguarding and consolidating depositors’ and shareholders’ interests.