Arab Bank in Brazil Grows Over 100% in First Quarter

ABC Brazil Bank ABC Brazil, controlled by the Arab Banking Corporation, headquartered in Bahrain, posted net profit of 38 million reais (US$ 22.4 million) in the first quarter this year, growth of 106.4% in comparison with the same period of 2007, according to a quarterly report disclosed by the institution.

"Basically, the result reflects our credit operations, which consist of loans to the corporate segment, as we remain very much focussed in this field," said the investor relations manager at the bank, Alexandre Sinzato.

ABC's credit portfolio reached 5.78 billion reais (US$ 3.41 billion) in the first three months of 2008, growth of 80.9% compared with the same period of last year and 15.8% compared with the fourth quarter of 2007.

"Furthermore, there was substantial growth in consigned credit operations, but it occurred on a small basis for comparison, therefore the share of those operations is still low," stated Sinzato. In addition to granting loans to medium and large-sized companies, the bank also grants consigned credit to civil servants and retired workers.

The categories of credit that the bank operates with the most are working capital loans, exports and imports financing, including elaboration of contracts under the Islamic financial system, and investment operations with funds transferred from third parties, especially from the Brazilian Development Bank (BNDES).

Profit in the first three months of the year, however, was lower than in the last quarter of 2007. This, according to the bank, was a consequence of tax benefit from the distribution of interest on equity for fiscal year 2007 that occurred during the period.

The bank's profitability also decreased. ABC posted an average return on net equity of 13.9% in the first quarter of 2008, as against 18.6% in the last three months of 2007 and 16.4% in the period from January to March last year.

According to Sinzato, this occurred primarily because of the bank's operations in the capital market, which led to losses early this year. Furthermore, the figures do not yet reflect the value added to the bank's business by the credit portfolio, as that should happen over the course of the year.

By the same token, and especially after Brazil was promoted to "investment grade" by credit rating agency Standard & Poor's, the executive believes that there should be a resumption of capital market earnings.

According to him, the "investment grade" rating came at a time when the economy was already in a strong investment cycle, both foreign and domestic, but there are concerns regarding the impact of the United States mortgage crisis.

"The 'investment grade' is a boosting factor that should prevent this virtuous cycle from suffering damage. It is positive for the economy as a whole, and credit should remain strong," he asserted.

Also in the first quarter, the bank opened new offices in the states of Rio de Janeiro (Southeast Brazil) and Santa Catarina (South) to attract medium-sized clients, i.e., companies that post annual revenues between 30 million reais (US$ 17.7 million) and 250 million reais (US$ 147.6 million). The institution already owned premises in the cities of São Paulo, Campinas and Belo Horizonte.

Anba – www.anba.com.br

Tags:

Ads

You May Also Like

US Wants to Discuss Prosperity with Brazil, says Snow

In a note released by Brazil’s Ministry of Finance, the United States Secretary of ...

Electronic and Auto Sectors Help Brazilian Industry Grow 6.3%

According to the April industrial sector survey from IBGE, the Brazilian government’s statistical bureau, ...

Brazil Offers Half a Million Cheap Linux-Powered Computers

Beginning next week, stores all over Brazil will start selling computers on the installment ...

Brazil’s 70% of GDP Debt Puts It Far from Investment Grade

Brazil is still far from the much coveted Investment Grade in spite of financial ...

Chicken and Beef Help Brazilian Farming Exports Jump 8.7%

Exports from Brazilian agribusiness yielded US$ 4.072 billion, an increase in 8.7% in comparison ...

Brazil’s Exports of Granite and Ornamental Stones Grow 56%

The Brazilian Association for Dimension Stones Industry (Abirochas) is going to participate in the ...

Brazil’s Fragole Uses Art to Sell Clothes Worldwide

A garment factory from Porto Alegre, capital of the southernmost Brazilian state of Rio ...

7 Minors Are Massacred and Dismembered in Rio, But Brazil Barely Notices

The community of Del Castilho, in the North side of Rio de Janeiro, Brazil, ...

Brazil Is Getting Old: 15 Million Are Over 60

The demographer and researcher at the Institute of Applied Economic Research (IPEA), Ana Amélia ...

Let’s Hear from the Real Experts on Gun, in Brazil: the Thieves

Brazil is a funny country. You are taxed to guarantee your medical care… and ...