The Bahrain based leading Islamic banking group, Al Baraka Banking Group B.S.C (ABG) announced that its achieved a substantial increase in total operating income of 16%, and net profits before tax and provisions by 13% during the first quarter of 2016 as compared to the same period in 2015.
Total operating income reached US$ 276 million in the first quarter of 2016 compared to US$ 238 million during the same period of 2015, an increase of 16%. Net operating income increased by 13% from US$ 101 million to US$ 114 million during the same period, despite the large increase of 18% in operating expenses due to expansion in branch network.
After deducting taxes, which rose compared with last year due to some recoveries relating to past periods which were not repeated this year, as well as provisions due to the precautionary measures taken due to general economic conditions, the Group was able to achieve a net income attributable to equity holders of the parent of US$ 38 million which was lower than the profit achieved during the first quarter of 2015 amounting of US$ 40 million by 5%. Moreover, the Group was able to achieve a total net income of US$ 69 million, the same level of total net income achieved during the first quarter of 2015. The profits growth rate was affected also by the decline in economic activity in some countries in which the Group operates as a result of lower oil prices, as well as the appreciation of the dollar value against their currencies.
The total assets of the Group as at the end of March 2016 maintained its same level of December 2015 and reached US$ 24.5 billion. 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, as liquidity ratio (liquid assets to total assets ratio) reached 23% at the end of March 2016.
Operating assets (financing and investments) amounted to US$ 18.6 billion as at the end of March 2016 compared to US$ 18.4 billion at the end of December 2015, an increase of 2%. As a clear indication of the high quality of the assets, the non-performing financings / total financings ratio reached 3.2%.
Customer accounts as at the end of March 2016 also maintained its December 2015’s level and reached US$ 19.9 billion, which indicates the continued customer confidence and loyalty in the Group and growing customer base and expansion in the branch network.
Total equity reached around US$ 2.1 billion at the end of March 2016. As an indication of the strength of the capital base of the Group, the capital adequacy ratio reached 14.55% at the end of December 2015.
HE Sheikh Saleh Abdullah Kamel, Chairman of Al Baraka Banking Group, said the Group continued its successful performance as evident by its ability to maintain its high quality of assets and strength of liquid assets, in addition to improve financial returns from all core businesses and at the same time keep up with its socially responsible Islamic banking model.
For his part, Mr. Abdulla Ammar Al Saudi, Vice Chairman of ABG, said that "The Group and its subordinate units are in a privileged position to take advantage of the large market opportunities generated by the need to finance development programs. They were able to overcome all the adverse financial and economic developments and continued expansion of branches and financing products programs, as well as serving further their communities.
Mr. Adnan Ahmed Yousif, Member of the Board of Directors and President & Chief Executive of Al Baraka Banking Group, said "The international and regional developments and conditions continued in the first quarter of 2016, which formed serious challenges for us, including the slowdown of economic activities due to the decline in oil prices and government tax measures in some countries, 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 not only to maintain our strong profits and operational positions, but also to enhance our precautionary measures in the context of sound policies and strategies developed by the Group and are implemented by all units. We are very pleased to see the contribution of all our banking units in the positive results of the Group”.
With regard to the Group's plans to expand its branch network, the President & Chief Executive said that "We opened 20 new branches in the first quarter of 2016 to bring total branches to 607 branches with total staff of 11,458 at the end of December 2015. 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. "
In terms of Arabic and international geographical expansion, and after obtaining the official approval to establish a banking unit in Morocco, we are working now to complete the establishment procedures, and we hope to launch it soon. The entry of the Group to Morocco market is considered a very important achievement, because it represents one of the main markets in the Arab Maghreb and Africa, and will achieve a higher diversification in assets and income sources for the Group.
After the re-affirmation of the Group’s investment grade credit rating at 'BBB+/A3' with stable outlook by Dagong Global Credit Rating Company Limited and Islamic International Rating Agency (IIRA) at the end of last year, the IIRA assigned investment grade credit ratings for both Al Baraka Bank Sudan and Al Baraka Bank Lebanon during the first quarter of 2016.
The social responsibility represents a core pillar in the business model of the Group. During the first quarter of 2016, the Group continued to implement its social responsibility program based on linking the social responsibility programs and activities of the units and the Group with the Global Goals for Sustainable Development, which was adopted by the United Nation's General Assembly. These goals will concentrate on adding 50,000 jobs across the countries where we operate and providing finance and donations to a variety of educational institutions and children hospitals, cancer hospitals, diabetic hospitals, kidney dialysis units.
In the context of enhancing and strengthening its regional and international position, five units of ABG won Islamic Finance News Awards 2015 as the Best Islamic Banks in their countries. Al Baraka Bank Egypt won the award as the Best Islamic Bank in Egypt, Al Baraka Bank Lebanon won the award as the Best Islamic Bank in Lebanon, Al Baraka Bank Sudan won the award as the Best Islamic Bank in Sudan, Jordan Islamic Bank won the award as the Best Islamic Bank in Jordan, and Al Baraka Bank South Africa won the award as the Best Islamic Bank in South Africa.
Mr. Adnan added: “We continued during the first quarter of 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.
The President & Chief Executive of the Group added, "For the remaining part of 2016, 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 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 planned results for the Group.
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$ 2.1 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 600 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.