Political tensions in Jordan may have eased, but a downgrade of Arab Bank by Moody's Investors Service will give little relief to shareholders in the Amman lender.
Moody's cut its rating on Arab Bank by one notch to "C minus" from "C" with a "negative" outlook. The bank's Dubai branch was also downgraded in line with the parent company.
The downgrade followed the same ratings agency's lowering of Jordan's sovereign rating to "Ba2" from "Baa3". The kingdom's demotion to "speculative grade" has raised concerns about the exposure of its banks to sovereign debt.
"The negative outlook [on Jordan's banks] . reflects the continued fragile regional political landscape and related downside economic and financial risks," Moody's said in its report. "The [Arab Bank] group could be faced with additional asset quality pressure because of the likely economic slowdown in the politically troubled countries to which it is exposed."
The bank's first-quarter net profit rose 13.7 per cent to US$181.8 million from the same period last year. Operating income rose 4.3 per cent to $157.7m, although revenue fell 3 per cent to $370.4m.
The trouble for Arab Bank is that states in the Middle East and North Africa that have recently experienced unrest, including Egypt, Tunisia, Libya, Bahrain, Syria and Yemen, account for more than one third of its assets, according to Moody's estimates.
"Increased loan loss provisions during 2010 have also exerted negative pressure on the group's profitability," the agency said.
The increasing nervousness among ratings agencies will be watched carefully at National Bank of Abu Dhabi, which plans to expand in the kingdom as it seeks greater access to the Levant.
Investors have been dumping Arab Bank's stock for some time,with the shares falling 9.82 per cent since the start of the year.
Amman's stock exchange has been one of the region's worst-performing this year.
ghunter@thenational.ae
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Director: Neeraj Pandey
Rating: 2.5/5
The Case For Trump
By Victor Davis Hanson
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Countries recognising Palestine
France, UK, Canada, Australia, Portugal, Belgium, Malta, Luxembourg, San Marino and Andorra
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Twelve books were longlisted for The Orwell Prize for Political Writing. The non-fiction works cover various themes from education, gender bias, and the environment to surveillance and political power. Some of the books that made it to the non-fiction longlist include:
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Founder: Omar Onsi
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Employees: 35
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Heavily-sugared soft drinks slip through the tax net
Some popular drinks with high levels of sugar and caffeine have slipped through the fizz drink tax loophole, as they are not carbonated or classed as an energy drink.
Arizona Iced Tea with lemon is one of those beverages, with one 240 millilitre serving offering up 23 grams of sugar - about six teaspoons.
A 680ml can of Arizona Iced Tea costs just Dh6.
Most sports drinks sold in supermarkets were found to contain, on average, five teaspoons of sugar in a 500ml bottle.
