In a fast-changing market, Arab Bank has long demonstrated an ability to navigate difficult market conditions, while ensuring consistent growth in balance sheet and profitability.
An established presence across the Middle East and North Africa — coupled with a strong international network — gives the bank a competitive edge and a platform for expansion.
Strategic planning and prudent risk management have kept Arab Bank on a solid growth trajectory, despite wider market uncertainty. Diversified revenue streams and cost optimisation initiatives exemplify Arab Bank’s responsive business model.
Over the past three years, Arab Bank has achieved a compound annual growth rate (CAGR) of 62% in net profits after tax, which reached $829m in 2023. Net operating profit over the same period grew at a CAGR of 28% to reach $1.8bn.
Building on this impressive growth, the bank reported strong financial results for the first half of 2024, reflecting its robust asset base and strong capitalisation.
Net income after tax was up 25% to $503m. Net operating profit grew by 11%, driven by core banking activities and controlled operating expenses. The bank has a solid capital adequacy ratio of 17.5% and a strong common equity tier one ratio of 15.1%.
In its corporate lending, Arab Bank is taking advantage of concerted efforts towards economic diversification across the region. “This has resulted in a significant growth momentum in many non-oil sectors across several countries, especially in the GCC,” says Randa Sadik, the bank’s CEO. “We have seen varying levels of growth in several sectors, including renewable energy, real estate, construction, transportation, technology and infrastructure projects, in addition to a steady growth in trade finance triggered by increased trade volumes within the region and beyond.”
In the thriving retail space, segmentation and customer lifecycle management are at the heart of Arab Bank’s strategy. “This approach is executed through customised offerings for salaried, professional and self-employed customers, catering to a wide range of the working population,” says Sadik. “As over 70% of the MENA region has internet access, digitisation is also an important driver of our retail banking strategy.”
Sadik notes that Arab Bank is also witnessing an increase in demand for financial planning and wealth management solutions, across several markets in the region.
“This is opening up new opportunities to deepen our relationship and increase share-of-wallet in this key customer category,” she says. “We offer our exclusive programme for high net worth individuals, supported by our wealth management and private banking value propositions.”
Growing the ecosystem
Digitisation is not just a feature of Arab Bank’s retail offering, but is fundamental to its broader operations. Arab Bank was among the first MENA banks to pursue partnerships with the burgeoning FinTech landscape, accelerating innovation and integrating FinTech solutions into its platforms and systems.
The bank established a FinTech accelerator programme, ABX, back in 2018, and has invested in around 20 start-ups across MENA and beyond. ABX has also engaged with over 25 high growth potential start-ups on pilots and proofs of concept.
Most recently, Arab Bank launched its new banking-as-a-service platform — Omnify — in the United Arab Emirates and Jordan. This provides FinTechs with the opportunity to scale up their innovative solutions in their respective markets with the backing of Arab Bank. “As we enter the era of generative AI, we can see a new level of collaboration with the FinTech community developing cutting edge solutions,” she says.
The bank’s approach to sustainability and environmental, social and governance (ESG) issues is a holistic one. Arab Bank works to embed sustainability and responsible banking practices into every facet of its operations. “Sustainable finance is an important focus area for us,” says Sadik. “Our customers and stakeholders increasingly expect us to finance projects and initiatives that help improve society and the environment.”
In 2022, the bank developed and launched a comprehensive Sustainable Finance Framework that lays the groundwork for Arab Bank to issue financial instruments such as green, social and sustainable bonds.
Arab Bank’s ESG goals include growing its sustainable finance activities, committing to projects aligned with the UN Sustainable Development Goals, reducing its environmental footprint and improving gender equality and empowerment. Sadik highlights the bank’s commitment to ensuring transparency in both measuring and reporting its progress in the space.
Delivering positive ESG impacts for all stakeholders and leveraging digital innovation to deliver superior customer experience are key to the Arab Bank strategy. The bank will continue to build on its position as a leading local and regional bank, using its well-established network to expand into new markets and create new business opportunities for success.
KEY COMPANY DATA
First half of 2024
Total assets: $68.7bn
Net profit: $502.8m
Capital adequacy ratio: 17.5%
Loan to deposit ratio: 75.4%