Bank of Bahrain and Kuwait reports $26.2mln net profit for third quarter

MANAMA: BBK has reported a net profit of BD9.9 million for the third quarter of 2020 compared with BD15.4m in the same period last year, a decrease of 35.7 per cent.

The basic and diluted earnings per share amounted to 7 fils compared with 12 fils during the corresponding period of last year.

Net interest income for the quarter dropped by 25.8pc to BD19.6m from BD26.4m in the same period last year.

Similarly, non-interest income (includes fees and commission income, and other income) dropped by 20.4pc from BD10.3m to BD8.2m, mainly due to the concessionary measures taken in response to Covid-19, as well as new regulations on capping fees and charges.

The bank’s share of profit from associated companies and joint ventures decreased from BD1.5m to a loss of BD0.3m, as a result of the pandemic’s impact on financial performance of associated companies.

BBK managed to decrease operating costs by 8.6pc to BD14.9m from BD16.3m reported in the same period last year and net provision requirements by 59pc to BD2.5m from BD6.1m reported last year.

Total comprehensive income amounted to BD19.9m during the quarter, compared to BD17.9m during the same period last year, representing an increase of 11.2pc.

The increase in total comprehensive income is due to the increase in valuation of investment securities during the quarter following a robust rebound in financial markets.

For the nine months ended 30th September, the bank achieved a net profit of BD39m compared with BD55.5m in the same period in the previous year, a decrease of 29.7pc.

The basic and diluted earnings per share stood at 29 fils at the end of the period compared with 44 fils for the same period of last year.

The sharp and rapid lowering of global interest rates resulted in a decrease in net interest income from BD84m to BD60.3m, a decrease of 28.2pc.

The bank’s share of profit from associated companies and joint ventures decreased by 65.6pc from BD6.4m to BD2.2m.

Furthermore, non-interest income (includes fees and commission income and other income) dropped from BD32.4m to BD29m, a drop of 10.5pc, largely due to the impact of Covid-19 and new regulations on capping fees and charges.

Operating expenses decreased 3.4pc to BD45.6m compared with BD47.2m for the same period last year.

Continuous investment in remedial management and active management of distressed exposures resulted in a significant reduction in net provision charges from BD19.6m to BD6.8m, a decrease of 65.3pc.

Total comprehensive loss for the nine months amounted to BD27.7m compared to total comprehensive income of BD65.1m reported for the corresponding period last year.

In addition to the drop in net profit, the other comprehensive income was negatively impacted by unrealised valuation losses on the investments securities due to turmoil in financial markets.

Total shareholders’ equity stood at BD455.1m as of end-September, compared with BD543.9m as of end 2019.

The drop of 16.3pc is mainly related to negative valuation of investment securities due to market volatility, dividend payment during the year, and the impact of concessionary measures taken in response to Covid-19 pandemic to support citizens and companies.

Total assets by end-September 2020 were BD3,704.5m compared with BD3,865m at 2019-end, a decrease of 4.2pc. This is mainly due to the decrease in cash and balances with central banks by 39.7pc to BD227m compared with BD376.4m as of end-2019.

The board of directors said, “The bank’s management is reviewing operations and financial position to preserve shareholders’ value, by adapting to the new environment and implementing plans aimed at minimising the adverse impact. We are confident that with the bank’s solid core indicators and the support of shareholders, loyalty of customers, and dedication of employees we will overcome this crisis.”

BBK Group chief executive Dr AbdulRahman Saif said, “the bank has undertaken balance sheet optimisation to enhance efficiency in use of liquidity and capital as evident from robust liquidity and capital levels. The drop in profitability was in line with the trend in the banking industry. The road to economic recovery is expected to be lengthy and challenging, but we are confident that the solid business model and commitment will continue to provide our shareholders with attractive value and contribute to the betterment of the societies in which we operate.”

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