Bahrain-based Arab Banking Corporation reported a decline in profit last year after setting aside $230 million (Dh844m) to cover for US-related writedowns, one of the first Gulf banks affected by the sub-prime mortgage crisis.
Net income in the year to December 31 fell 38 per cent to $125m (Dh458.8m), compared with $202m in 2006, the bank said in a statement on Sunday.
"The significant change was entirely due to the net provision of $230 million resulting from securities writedowns that the group was obliged to take in the wake of the global credit squeeze that followed the US sub-prime housing loan crisis," the bank said in a statement.
Of the 20 biggest Gulf Arab lenders by market value, only the United Arab Emirates' Abu Dhabi Commercial Bank has reported any sub-prime losses, writing down $19m in the third quarter.
Banks in the Middle East will announce losses from exposure to the sub-prime mortgage crisis when they report fourth-quarter earnings, the Middle East Economic Digest (MEED) reported last month, citing unidentified bankers.
Gulf Arab officials, including central bankers, have repeatedly said the region's banks are largely shielded from the crisis triggered by defaults on sub-prime mortgages, or home loans for people with a poor credit history.
Global banks including Citigroup and Merrill Lynch have written down at least $75 billion (Dh275bn) in credit market losses.
Banks in the United Arab Emirates and Bahrain, the Middle East's biggest financial centres, will be worst affected, London-based MEED said.
Many of the region's largest lenders have missed analysts' fourth-quarter profit forecasts, although none have attributed that to the sub-prime crisis. Most have yet to release detailed financial statements.
Banque Saudi Fransi, among several large Saudi banks to miss fourth-quarter forecasts, was "totally immune to the sub-prime crisis", Chief Financial Officer Philippe Touchard said last month.
Fransi, Samba Financial Group, Al-Rajhi Bank and SABB bank all blamed weak earnings on declines in stock market-related income.
UAE banks had only "marginal" exposure to US sub-prime mortgages and the credit crisis would not have a "significant impact" on the profits, UAE Central Bank Governor Sultan Nasser Al Suweidi said in December. (Reuters)
Follow Emirates 24|7 on Google News.