Manama, 22 February 2017:
The Bahrain based leading Islamic banking group, Al Baraka Banking Group B.S.C (ABG) announced that it achieved a noticeable increase in total operating income of 7%, and net operating income before tax and provisions by 9% during 2016 as compared to 2015. The growth rates of the balance sheet items were affected by the devaluation of currencies of some countries where ABG units operate against the US dollar as the end of December 2016 in comparison with the end of December 2015. These results confirmed the sustainability power owned by the Group, thanks to its strong resources and diversified international presence that qualified the Group to continue its strong performance despite the economic and financial developments regionally and internationally.
Total operating income exceeded the level of one billion US dollars to reach US$ 1.08 billion in 2016 compared to US$ 1 billion in 2015, an increase of 7%. This improvement percentage will jump to 16% if the effects of the devaluation of currencies of some units’ countries are excluded. Net operating income increased by 9% (will jump to 18% in case of excluding of currencies devaluation effects) from US$ 464 million to US$ 507 million during the same period, despite the noticeable increase of 6% in operating expenses due to expansion in branch network. After deducting provisions, which were doubled by the Group as precautionary measures due to general economic and financial conditions in some countries where the units operate as well as the rest of the world, the Group was able to achieve total net income of US$ 268 million, down by 6% compared to 2015, while the net income attributable to equity holders of the parent reached US$ 152 million during 2016, slowing down by 7% compared to 2015 of US$ 163 million. Both the net income attributable to shareholders and total income will increase by 2% and 3% respectively if the effects of the decrease in local currencies of the countries of some units against the US dollar were excluded. ROE reached 13% in 2016.
These profits come in line with our expectations and estimate at the beginning of the year and reflect the Group’s ability to achieve the continued growth in revenues derived from diversified and sustainable resources and based on high-quality income-generating assets and wide network of clients, branches, relations and products.
With regard to the results of the fourth quarter of 2016 as compared to the results of the fourth quarter of 2015, total operating income increased by 9% to US$ 285 million and net operating income by 12% to US$ 145 million, while net income attributable to equity holders reached US$ 35 million and total net income reached US$ 64 million, down by 12% compared to the fourth quarter of 2015 as a result of doubling the provisions for the reasons mentioned earlier.
Al Baraka Banking Group has continued its strong financial performance during 2016, where its activities grew in all major business segments and its subsidiary banking units achieved a large increases in business and profitability with a diversity of sources of income in spite of regional and global economic and security conditions as shown by the growth indicators in terms of local currencies of the units.
The total assets of the Group as at the end of December 2016 decreased by 5% compared to December 2015 and reached US$ 23.4 billion. If the effects of the decrease in local currencies of the countries of some units against the US dollar were excluded, the total assets will record a large growth of 18% in December 2016 compared to December 2015. The Group maintained a large portion of these assets in the form of liquid assets in order to seize the financing opportunities and to face the fluctuations in the markets.
The Group’s finance and investments portfolio is considered high quality and distributed among wide segments and geographies. It is considered one of the best among the Islamic banks, where the percentage of non-performing finance (after netting the provisions) to total finance not exceeding 0.5% in 2016.
HE Sheikh Saleh Abdullah Kamel, Chairman of Al Baraka Banking Group, said "By the grace of God and thanks to strong performance of our banking units, the Group has been able to continue to play its role in the reconstruction of the land and serve the communities in which it operates by providing banking products and services that fulfilling the sustainable development needs of these communities, and at the same time achieving the financial sustainability and promoting its role in regional and global peripheral”.
For his part, Mr. Abdulla Ammar Al Saudi, Vice Chairman of ABG, said that "The Group and its banking units continue to devote a sustainable growth approach based on firm moral and economic pillars linked to the real economy of the communities in which they operate, which provides the stability and growth factors for the operational and profitability results of the Group.
Mr. Adnan Ahmed Yousif, Member of the Board of Directors and President & Chief Executive of Al Baraka Banking Group, said " 2016 saw the continuation of the difficult international and regional developments and conditions, including the slowdown of economic activities, the decline in oil prices, in addition to decline of currencies value of some of our units' countries against the US dollar, the currency of the Group's consolidated reports. But despite all these developments, we were able to maintain our strong profits and operational positions, and also to enhance our precautionary measures in the context of sound policies and strategies developed by the Group and are implemented by all units and at the same time implemented all our expansion plans in the existing markets and entering new markets. The performance of all our units was a very strong and proved to be able to adapt and even benefit from the economic and financial developments in their countries in promoting their activities and income, resulting in a collective participation in the outstanding results we have achieved. The profits achieved during 2016 were consistent with our expectations and our budget at the beginning of the year”.
With regard to the Group's plans to expand its branch network, the President & Chief Executive said that "Due to opening new branches and acquiring a bank by Al Baraka Bank Pakistan, total new branches of the units increased by 111 branches in 2016 to bring total branches to 697 branches with total staff of 12,644. This reflects the clear role of our units in creating rewarding jobs to citizens in their communities. In addition, this policy is one of main pillars of growth in businesses and profits in the Group. "
Mr. Adnan Added "One of our most prominent initiatives during 2016 was the successful acquisition of a Pakistani bank by Al Baraka Bank Pakistan Limited. This bank is considered one of the main Islamic banks in Pakistan. The merger resulted in creating strong financial institution with total assets of PKR 120 billion (US$ 1.2 billion) and total number of branches of 224 in more than 100 cities and towns and more than 2,500 employees. We hope that the positive effects of this step will be reflected on the Group’s results during the second half of 2017”.
The other strategic initiative we have completed, which is not less important than its predecessor, is the issuance of approval by the concerned authorities in Morocco to grant the Group a license to establish a new bank in Morocco. The new bank will be established in partnership with the Moroccan Bank for Foreign Commerce of Africa (BMCE Bank), which is one of the oldest and largest private Moroccan banks, which was founded in 1959 and located in 22 countries. The new bank will be under the management of Al Baraka Banking Group and will operate within its network of subsidiary banking units, which are currently located in 15 countries. The entrance into the Moroccan market is a very important achievement, which is considered one of the major markets in the Maghreb and Africa, and will achieve greater diversity in building assets portfolios and revenue sources for the Group. We hope that this step will be the gateway for us for further expansion in the African markets in future”.
Our strategic initiatives that we have undertaken during 2016 in Morocco and Pakistan, as well as the large expansion of the branch network emphasize the Group’s intention to continue to implement business strategies aiming at enhancing its leading role regionally and globally in spite of the challenges of the financial and economic circumstances.
Toward the end of the last year, ABG was granted another certificate on tis financial position strength, as Dagong Global Credit Rating Company Limited (Dagong) and Islamic International Rating Agency (IIRA) together reaffirmed the international investment grade credit rating of Al Baraka Banking Group (ABG) at 'BBB+/A3' (Triple B Plus / A Three). In addition, IIRA has reaffirmed ABG's national scale rating at 'A+(bh)/A2(bh)' (Single A Plus / A Two). The ratings reflect the comprehensive analysis of the Groups repayment environment, wealth creation capability, repayment sources and repayment capability.
For the fourth successive year, ABG and six of its subsidiary banking units received the "Best Islamic Financial Institution" Award of 2016, as part of the annual awards that the Global Finance magazine, which is specialized in banking and finance, awards to international banks and financial institutions. Al Baraka Banking Group received the Best Islamic Financial Institution in Middle East / North Africa Award, Al Baraka Islamic Bank received the Best Islamic Financial Institution in Bahrain Award, Jordan Islamic Bank received the Best Islamic Financial Institution in Jordan Award, Al Baraka Bank South Africa received the Best Islamic Financial Institution in South Africa Award, Al Baraka Bank Algeria received the Best Islamic Financial Institution in Algeria Award, Al Baraka Bank Tunisia received the Best Islamic Financial Institution in Tunis Award and Al Baraka Bank Lebanon received the Best Islamic Financial Institution in Lebanon.
During the month of August, Al Baraka Banking Group joined the United Nations Global Compact in order to enhance its role in global social responsibility programs and plans. The United Nations Global Compact is built on the premise that companies have an important role to play in improving our world first and foremost by doing business responsibly and then by pursuing the exciting opportunities to provide solutions to our greatest global challenges. The United Nations Global Compact has become the largest global network of sustainable companies with 8,800 businesses in 165 countries committed to uphold the United Nations values and principles in how they operate. The initiative's activities are anchored in Local Networks based in more than 80 countries.
As an international recognition of the leading role and social responsibility SR programs of BG, the Supreme Committee for the Oman Social Responsibility International Conference 2016 imitated Mr. Adnan Ahmed Yousif, President & Chief Executive of Al Baraka Banking Group the title of "High Commissioner to preach the United Nations Sustainable Development Goals 2030," also honored him the Gold Award for Sustainable Development in recognition of the his large role in the service and social responsibility programs both nationally and internationally.
Mr. Adnan added: "We continued in 2016 to focus on providing modern online training programs for the employees of the Group and its units that are related to compliance, sanctions and KYC regulations and others. Besides we continued our efforts to embody the values and principles of our unified brand, which is based on the concept of partnership with customers, in all the products and services we offer as well as enhancing governance, compliance and risk management frameworks’.
The President & Chief Executive of the Group added, "For 2017, we expect the fluctuations in regional and international markets will continue, which creates difficult business environment for international banks, but we will continue our precious policy and investment of our large financial and technical resources in addition to wide geographical network of the units of the Group towards maximizing the returns for our shareholders and the investors in the Group".
The President & Chief Executive of ABG concluded his statement by praising the tireless efforts of the executive management at Group’s Head Office, the executive management teams of the banking units of Al Baraka Banking Group and related parties and led to achieving the excellent results.
Al Baraka Banking Group (B.S.C) is licensed as an Islamic wholesale bank by the Central Bank of Bahrain, listed on Bahrain Bourse and Nasdaq Dubai stock exchanges. It is a leading international Islamic banking group providing its unique services in countries with a population totaling around one billion. It is jointly rated BBB+ (long term) / A3 (short term) on the international scale and A+ (bh) (long term) / A2 (bh) (short term) on the national by Islamic International Rating Agency & Dagong Global Credit Rating Company Limited, and by Standard & Poor's at BB+ (long term) / B (short term).
Al Baraka offers retail, corporate, treasury and investment banking services, strictly in accordance with the principles of the Islamic Shari'a. The authorized capital of Al Baraka is US$ 1.5 billion, while total equity is at about US$ 2 billion. The Group has a wide geographical presence in the form of subsidiary banking units and representative offices in fifteen countries, which in turn provide their services through over 697 branches. Al Baraka currently has a strong presence in Turkey, Jordan, Egypt, Algeria, Tunisia, Sudan, Bahrain, Pakistan, South Africa, Lebanon, Syria, Iraq and Saudi Arabia, including two representative offices in Indonesia and Libya.
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© Press Release 2017
