A Fundamental Assignment

Arab Bank must constantly adapt to change and meet challenges in order to best fulfill the needs of its customers. The Bank's survival and steady performance over time is evidence of its ability to position itself strategically without loosing the focus of its original vision.

Arab Bank's financial objectives are best met by concentrating on targeted markets, recognizing their requirements, and satisfying them effectively. The Bank's clients have underscored the need for three new product lines in the areas of Islamic banking, funds and investment products and hedging and risk management. Arab Bank's response has been timely and effective.

The Islamic International Arab Bank Plc has just started operations. Furthermore, a new and wide range of funds and investment opportunities are being made available to Arab Bank customers...

Financial strength along with solid earning power which out-performed competitors are evident in the results of 1997. The Bank has continued improving its profitability while maintaining its asset quality and strong financial position. Arab Bank Group's net income after tax to average equity ratio was 14.8%. Return on average assets was augmented to 1.35% from 1.31%. On the other hand, the liquidity ratio is at 48.0% compared to 51.1%. Capital adequacy for credit risk is 16.28%...

The founders' mission continues to direct the efforts of the institution by meeting the needs of clients with innovative and effective financial services and products. Efficiency is achieved by the superior productivity of Arab Bank's loyal and motivated employees.

The unique position of Arab Bank is strengthened by a significant and meaningful global presence. It is considered the only Bank in the region that has successfully achieved a fitting and useful geographical diversification...

Looking to the future, Arab Bank will continue to assess its successful multinational presence as a vital participation in international markets. The energizing base will always be its strategic regional position. The Bank will work to coordinate four basic strategic elements. First and foremost is the satisfaction of customers and the realization of their needs. Products and the continuous development of human resources will always be the tools to achieve pre-set targets. Innovation and improvement in management Information systems is another important element that will participate in measuring performance and in assigning responsibilities at an extremely detailed level.

Financially, Arab Bank will work to be among the highest capitalised institutions in the region by continuously retaining its growing income. Anticipated average growth rate of net income after tax is expected to exceed the growth rate of the past three years. The development in asset size will be correlated with the growth in equity, leaving always a comfortable margin for the enhancements of earning power. The structure of assets may be changed slightly towards higher productivity. Again, the liquidity ratios will remain substantially better than the accepted norms in the region and in international markets.

Khalid Shoman
Deputy Chairman,
Board of Directors