ANB’s real profit growth hit by 2018 Zakat restatement, says CEO

Arab National Bank (ANB) reported a strong set of results for 2019, as net profit before Zakat and income tax rose 7.3% to SAR 3.55 billion, from SAR 3.31 billion in 2018, Robert Eid, Managing Director and Chief Executive Officer, told Argaam in a phone call.

Meanwhile, two exceptional factors have significantly impacted profitability in in 2018 and 2019.

In 2018, all banks have agreed with the General Authority of Zakat and Tax (GAZT) to settle Zakat claims for the period from 2006 to 2017.

ANB was almost the sole bank that reported an increase of SAR 1.1 billion in its shareholders' equity following that settlement.

However, the accounting policy was changed in 2019. Accordingly, Zakat and income tax were recognized in the income statement instead of the statement of changes in shareholders' equity. 

This move led to a restatement of the surplus arising from the settlement reached with the Saudi tax authority as an additional profit in 2018.

Accordingly, the bank’s 2018 net income increased by SAR 1.1 billion, Eid said.

“When we compare ANB’s 2019 net profit to that of 2018, we find that the bank was more profitable in 2018, thanks to the Zakat surplus,” he added.

Therefore, the “swelled” net income after Zakat and income tax hit SAR 3.97 billion in 2018, compared to SAR 3.02 billion in 2019 – an apparent drop of 23.8%.

Commenting on the bank’s performance in 2019, Eid said, “the housing business saw a cautious growth, with a reasonable growth in the corporate segment. ANB posted a very strong set of results.”

The bank will maintain its strategy this year, focusing on growth in its SMEs portfolio, Eid added, expecting solid financial results in 2020.

Meanwhile, Eid shrugged off any possibility for mergers with other banks.