Al Baraka Banking Group records a net profit of US$ 41 million

Manama: The Bahrain headquartered leading Islamic banking multinational, Al Baraka Banking Group BSC (ABG), which is traded at Bahrain Bourse and Nasdaq Dubai (under the trading code "BARKA"), today announced a net income attributable to shareholders of the parent company of US$ 26 million in the first quarter of 2021, compared to the US$ 24 million for the same period in 2020, an increase of 5%. The total net income was US$ 41 million, compared to the US$ 40 million, an increase of 2%. The basic and diluted earnings per share for the first quarter of 2021 was US Cents 2.11 compared to US Cents 1.97 for the same period of 2020.

During the first quarter of the year, the Group continued to focus on operational efficiency, which contributed to reducing operating expenses by 12% to reach US$ 136 million, compared to US$ 153 million during the same period last year.

The Group's net operating income decreased by 8% to US$ 93 million in the first quarter of 2021, compared to US$ 101 million in the same period last year.

The decline in the Group’s revenue reflects factors resulting from the economic and financial operating environment, such as devaluation of the currency in some countries where the Group operates and the drop in profit margins resulting from the decline in the USD interest rates and other currencies, as a result of monetary easing measures. In view of this, the Group and its subsidiaries continued to take precautionary measures, conservatively expanding financing and investment portfolios. The Group also continued to build provisions amounting to US$ 28 million in the first quarter of 2021, compared to US$ 40 million during the same period last year.

The equity attributable to the parent's shareholders and Sukuk holders amounted to US$ 1.39 billion by end of March 2021 compared to US$ 1.42 billion by the end of December 2020. This reflected a decline of 2% due to foreign currency translation reserve. Total equity reached to US$ 2.16 billion by end of March 2021, compared to the US$ 2.22 billion by end of December 2020, showing a decrease of 3%, due to the same reason.

Total assets of the Group showed a decrease of 1% by the end of March 2021 to reach US$ 28.00 billion, compared to US$ 28.25 billion by the end of December 2020. During the first quarter of the year 2021, the Group continued to focus on maintaining a large portion of these assets in the form of liquid assets.

Operating assets (financing and investments) amounted to US$ 21.48 billion as at the end of March 2021, compared to US$ 21.65 billion as at the end December 2020, registering a decrease of 1%. Customer accounts including due to banks and financial institutions as at the end of March 2021 reached US$ 24.11 billion, a decrease of 2%, when compared to the US$ 24.65 billion level at the end of December 2020, representing 86% of total assets.

It is worth noting that the growth of balance sheet items has been negatively affected by the devaluation of the currencies of some countries in which the Group  operates, as the total assets, operating assets and customer accounts would have otherwise achieved a growth of 3% respectively (impacting the Group's consolidated financial statements in US dollars).

Commenting on the Group’s performance and results during the first quarter of 2021, the Chairman of Al Baraka Banking Group, Mr. Abdullah Saleh Kamel, said, “The efforts of the Group and its subsidiary units have continued to enhance the financial performance and improve the efficiency of the Bank during the first quarter of this year. This is in addition to containing the repercussions of the outbreak of the Corona pandemic. We have taken a number of precautionary operational and financial initiatives, which have borne fruit as the Group continues to achieve good results during the first quarter of this year, and we ask the Almighty Lord to protect our societies and peoples”. The Chairman of the Board of Directors further praised the great efforts made by the members of the Board of Directors of the Group and the Executive Management of the Head Office and the banking units and related parties, which has resulted in the achievement of satisfactory results for the Group.

The member of the Board of Directors and Group Chief Executive Officer of Al Baraka Banking Group, Mr. Mazin Manna, said, "During the first quarter of this year, challenges in the Group's business environment continued. In addition to the challenges we faced in some countries in which we operate, which affected the investment and business environment and fluctuations in the currency of these countries, uncertainty continued to prevail around the world, especially with the continuing outbreak of the Coronavirus pandemic and the growing global efforts to increase the frequency of anti-virus vaccination. These factors have prompted the Group to continue to take a cautious approach in our operating countries. We were able to achieve good results during the first quarter of this year, thanks to the prudence of our business strategies, our diversified operational and profitability resources, in addition to the contribution of all our units towards achieving these results”.

Mr. Manna further added, “The Group continued to provide support to all its banking units and work with them side by side by providing technical and operational support in order to raise operational efficiency and maximize the return on investment. These efforts led to an improvement in the return on equity from 7.1% in the first quarter of 2020 to 7.5% in the first quarter of 2021, and improve its operational efficiency from 60% to 59% during the same period.

Mr. Manna stated, "During the first quarter of the year we continued to focus on implementing the digital transformation strategy at the level of the Group and the banking units. We have received encouraging response for Insha, Europe’s first fully digital Islamic banking service that meets the needs of a changing mindset of today’s consumer. We continue to make an impact in the field of open banking with Al Baraka API platform, which was chosen as “the Best API Platform” of the year by BirAPI Open Banking Solutions for its unparalleled user experience. We have also completed the Biometric Signature project, which allows us savings on time and money by digitizing the processes and providing customers with a safer and faster digital experience, while using their signatures on a tablet. All these digital services have been developed successfully by Al Baraka Turk. We have also launched Alneo, Turkey’s first AI Backed payment platform.”

It is worth noting that this press release, in addition to the financial statements are available on the website of the Bahrain Bourse and the Group website at: www.albaraka.com 

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About Al Baraka

Al Baraka Banking Group B.S.C. (“ABG”) is licensed as an Islamic wholesale bank by the Central Bank of Bahrain and is listed on Bahrain Bourse and Nasdaq Dubai. It is a leading international Islamic banking group providing its unique services in countries with a population totaling around one billion.

The Group has a wide geographical presence in the form of subsidiary banking units and representative offices in 17 countries, which in turn provide their services through around 700 branches. Al Baraka Banking Group has operations in Jordan, Egypt, Tunis, Bahrain, Sudan, Turkey, South Africa, Algeria, Pakistan, Lebanon, Saudi Arabia, Syria, Morocco and Germany, in addition to two branches in Iraq and representative offices in Indonesia and Libya.

ABG and its Units offer retail, corporate, treasury and investment banking services, strictly in accordance with the principles of the Islamic Shari'a. The authorized capital of ABG is US$ 2.5 billion.

S&P Global Ratings has updated the long-term rating on Al Baraka Banking Group B.S.C. to 'BB-' with a 'Stable' Outlook, while affirming the 'B' short-term rating of the bank.

ABG has also been rated BBB+ (long term) / A3 (short term) by Islamic International Rating Agency (IIRA). IIRA has also rated ABG on the national scale at A+ (bh) / A2 (bh) with a fiduciary score of 81-85, the highest level amongst Islamic Financial Institutions in the region.

© Press Release 2021