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Feb 23 2011

Net Income of Al Baraka Banking Group Jumped by 15% to US$ 193 Million and Assets by 21% to US$ 16 Billion in 2010

The Bahrain based leading Islamic banking group, Al Baraka Banking Group B.S.C (ABG) announced that it has achieved a net income of US$ 193 million in 2010, an increase of 15% on the income achieved in 2009. Similarly, balance sheet items witnessed notable increases. Total assets increased by 21%, total finance and investments by 21%, deposits including unrestricted investment accounts by 23% while total equity increased by 5% as at the end of December 2010 in comparison with the end of December 2009. The Group's results in year 2010 reflect the ability of the Group to maintain its financial performance in a steady state of growth over the past few years, even during the global economic crisis that crippled many financial institutions. This in turn proves the soundness and robustness of the business strategies that the Group follows and which are based on unwavering commitment to the values of Islamic banking, supported by extensive experience in the markets in which the Group operates, high quality of the products and services it offers and extensive network of branches, as well as strong capital resources that enabled it to continue invest in opportunities generated by the current conditions.

The financial statements of the Group for 2010 showed that the continued expansion in business reflected positively on income, with total operating income of US$ 659 million in 2010, an increase of 4% over 2009. After deducting all operating expenses, net operating income amounted US$ 316 million in year 2010, which represents a slight 3% drop compared to the net operating income of 2009. This drop was the result of increases in the operating expenses of the Group on account of further expansion in the branch network and enhancements in IT infrastructure and human resources. The net income amounted to US$ 193 in 2010 compared to US$ 167 million in 2009, which reflects a respectable increase of 15%. The net income attributable to equity shareholders of the parent increased by 15% to reach US$ 106 million compared to US$ 92 million in 2009.

The total assets of the Group amounted to US$ 16 billion as at the end of December 2010, an increase of 21% over the comparative figure as at the end of 2009. Operating assets (financing and investments) amounted to US$ 11.4 billion as at the end of December 2010 compared to US$ 9.4 billion at the end of December 2009, an increase of 21%. Customer deposit and other accounts and unrestricted investment accounts have witnessed a marked increase of 23% from US$ 11 billion at the end of December 2009 to US$ 13.6 billion at the end of December 2010, which indicates continued customer confidence and loyalty in the Group and growing customer base as a result of expansion in the branch network.

As for the results of the last quarter of 2010, net income amounted to US$ 46 million, compared to US$ 30 million for the same period of last year, an increase of 51%. Total operating income increased to US$ 195 million in the fourth quarter of 2010 compared to US$ 180 million for the same period of last year, an increase of 8%. The net income attributable to equity shareholders of the parent increased by 33% to reach US$ 22 million compared to US$ 17 million for the same period of 2009.

The Board of Directors has recommended to the annual general meeting a distribution of cash dividend to the shareholders amounting to US$ 39.5 million (5 cents per share) and a distribution of one bonus share for every 10 fully paid up shares amounting US$ 79 million from the share premium after obtainment of the required official approvals.

Commenting on these results, Sheikh Saleh Abdullah Kamel, Chairman of Al Baraka Banking Group , said "We are very proud to see continuing growth in the revenue and business of Al Baraka Banking Group and further elevation in its regional and global standing in spite of extremely difficult economic and financial conditions. We consider the outstanding results achieved in 2010 as an embodiment of the success of the business model that we followed since the founding of the Group, a model that reflects the true values of Islamic banking and far- sighted business strategies, supported by outstanding management expertise capable of creatively translating these values and strategies to facts on the ground. These strategies not only enabled us to deal in a prudent manner with the repercussions of the economic and financial crisis, but also further expand our business while at the same time continue with our geographic expansion programs and build up the branch network of the Group as well as enhance our human and technical capabilities".

For his part, Mr. Abdulla Ammar Al Saudi, Deputy Chairman of ABG, said that "The economic and financial developments witnessed by year 2010 were very difficult indeed and they further compounded the adverse repercussions arising from the global crisis that began during the last four month of 2008. Because of this crisis, financial institutions across the world were forced to adopt conservative and cautious business strategies. In light of these developments and conditions, we consider the financial results achieved by the Group in 2010 as excellent by all standards and they reflect the success of the business strategies that we at the Board of Directors of the Group have put in place based on our points of strength, the opportunities generated in the markets in which we operate and our strong commitment to adhering to the highest professional values, principles and standards that we embodied in all the programs, services and products that the Group offers".

Mr. Adnan Ahmed Yousif, Member of the Board of Directors and President & Chief Executive of Al Baraka Banking Group , said "the excellent results that we achieved in 2010 were the outcome of a number of initiatives that we had launched during the past year, including continually improving the quality of our products and services, introducing more innovative products, expanding the branch network of ABG subsidiary units which has now nearly reached 370 branches in thirteen countries, strengthening relationships with our partners, investors and customers, and entering new markets as well as modernizing and developing our human, operational, regulatory and technical infrastructures both at Group level and subsidiary banking units levels. All these initiatives have contributed to maximizing the returns to the shareholders and investors of the Group. We were able to implement such initiatives because of the wide range of expertise we posses in the markets in which our units operate and the Group's substantial financial and technical resources and the wide geographic network of the subsidiary units of the Group".

Mr. Yousif said that year 2010 had witnessed the launch of our commercial bank in Syria, Al Baraka Bank Syria, and we have already taken steps to open five branches for the Bank. The Bank offers various innovative Islamic commercial banking services, and we trust that this will have a positive impact on the Group's business in 2011.

Mr. Yousif added that "Year 2010 also witnessed the inauguration of the new head office building of Al Baraka Turk Participation Bank, which has an iconic modern design and houses all the facilities needed to provide the highest level of service to customers. The Bank also succeeded in obtaining the biggest Islamic financing deal during last year which amounted to US$ 240 million and was oversubscribed by approximately two and a half times. This deal reflects the strong financial position and excellent reputation of the Bank as well as the confidence that international investors and financiers have in the Group".

Mr. Adnan Ahmed Yousif said that "During 2010, we completed the launch of the new corporate identity of the ABG. Following its implementation by Sudan, Egypt and Jordan, all of our Group subsidiary banks now bear the logo and identity of the Group. The new identity, in line with the philosophy on which it is based, requires us to adopt a set of policies and high ethical and professional standards with regard to the offering of innovative and highly efficient Sharia-compliant services and products".

"By the grace of Allah, we also completed on 29 October 2010 the conversion of our branches in Pakistan to a local commercial bank through a merger with Emirates Global Islamic Bank - Pakistan under the name of Al Baraka Bank (Pakistan) Limited. The merger led to the emergence of a bank that has assets in excess of US$ 710 million and a network of 89 branches that covers all major cities and regions in Pakistan. This step comes as part of the Group's strategy to strengthen its presence and operations in promising Islamic markets".

"In 2010 we also obtained approval for opening a representative office in Libya. We believe that it is quite essential for the Group to have a presence in this very important market, especially after the steps taken by the Central Bank of Libya to encourage Islamic banking there".

"Furthermore, our banking units in Turkey, Jordan, Egypt, Algeria, Lebanon, Syria and Bahrain continued to open new branches and this had direct positive impact on growing their deposit base and financing portfolios. We expect the number of branches of ABG banking units to exceed 500 over the next three years, compared with about 370 branches at present".

The President & Chief Executive of ABG concluded his statement by praising the tireless efforts of the executive management at Group Head Office, the executive management teams of the banking units of Al Baraka Banking Group and related parties that played an instrumental role in achieving these excellent results for the Group.

On this occasion, Sheikh Saleh Abdulla Kamel, Chairman of Al Baraka Banking Group , Mr. Abdulla Ammar Al Saudi, Deputy Chairman and Mr. Adnan Ahmed Yousif, ABG President & Chief Executive and all Members of the Board of Directors of ABG expressed their sincere thanks to the Ministry of Industry and Commerce, Central Bank of Bahrain, Bahrain Bourse and Nasdaq Dubai for the cooperation and assistance they extended to the Group since it was established. They also extended their thanks to all the Central Banks in the countries in which Group banks operate and to all investors and customers for their continued support. They also thanked all the employees of the Group for their loyalty, hard work and dedication which stand behind the successes and achievements of the Group.

Al Baraka Banking Group is a Bahrain Joint Stock Company listed on Bahrain Bourse and Nasdaq Dubai. It is a leading international Islamic bank with Standard and Poors long term and short-term credit ratings of BBB- stable and A3 respectively. ABG offers retail, corporate and investment banking and treasury services strictly in accordance with the principles of the Islamic Shari'a. The authorized capital of ABG is US$1.5 billion, while total equity amounts to about US$1.8 billion.

The Group has a wide geographical presence in the form of subsidiary banking Units and representative offices in thirteen countries, which in turn provide their services through more than 370 branches. These banking Units are Jordan Islamic Bank, Al Baraka Islamic Bank - Bahrain, Al Baraka Bank Pakistan Limited, Al Baraka Bank Algeria, Al Baraka Bank Sudan, Al Baraka Bank Ltd - South Africa, Al Baraka Bank Lebanon, Al Baraka Bank Tunis, Al Baraka Bank Egypt, Al Baraka Turk Participation Bank, Al Baraka Bank Syria, representative offices in Indonesia and in Libya (under formation).

Performance indicators in 2010

December 2010 compared to December 2009

Growth (%)

Growth in operating income

4%

Growth in net income

15%

Growth in net income attributable to equity shareholders of the parent

15%

Growth in total assets

21%

Growth in total shareholders equity

5%

Growth in financing and investments

21%

Growth in customer deposits including URIA

23%


Performance indicators for the last quarter of 2010:

Last quarter of 2010 compared to last quarter of 2009

Growth (%)

Growth in total operating income

8%

Growth in net operating income

6%

Growth in net income

51%

Growth in net income attributable to equity shareholders of the parent

33%


-Ends-

© Press Release 2011


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