The Bahrain based leading Islamic banking group, Al Baraka Banking Group B.S.C (ABG) announced that its achieved a noticeable increase in total operating income of 7%, and net profits before tax and provisions by 4% during the first half of 2016 as compared to the same period in 2015. Similarly, balance sheet items witnessed moderate increases as total assets increased by 2%, total finance and investments by 4%, deposits by 1% while total equity increased by 2% as at the end of June 2016 comparison with the end of December 2015. These excellent results confirmed the Group’s ability to continue its strong performance despite the economic and financial fluctuations regionally and internationally.
Total operating income reached US$ 538 million in the first half of 2016 compared to US$ 502 million during the same period of 2015, an increase of 7%. Net operating income increased by 4% from US$ 228 million to US$ 236 million during the same period, despite the large increase of 10% 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, which the Group strengthened them as precautionary measures due to general economic and financial conditions in some countries where the units operate, the Group was able to achieve a total net income of US$ 143 million, down by 4.9% compared to the total net income achieved during the first half of 2015. These profits come in line with our expectations and estimates at the beginning of the year and according to the budget, which was approved by the Board of Directors in 2015. However, these profits will show a growth if the fluctuation effects in the prices of the local currencies of the countries of some units against the US dollar were excluded, where the increase would amount to 2%
Al Baraka Banking Group has continued its strong financial performance during the first half of the year 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. Profit growth rate was affected during the first half of this year by the increase in operating expenses as a result of the expansion of the new branches in addition to increasing the financial and regulatory hedging provisions and the decrease in value of currencies of countries where some of the units operate against the US dollar as previously mentioned.
The total assets of the Group as at the end of June 2016 increased by 2% compared to December 2015 and reached US$ 25 billion. The growth rate was affected by the decline of currencies of some countries in which its units operate against the US dollar, the currency in which the Group's consolidated accounts are reported. 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 22% at the end of June 2016.
Operating assets (financing and investments) amounted to US$ 19.1 billion as at the end of June 2016 compared to US$ 18.4 billion at the end of December 2015, an increase of 4%. As a clear indication of the high quality of the assets, the non-performing financings / total financings and investments ratio reached 3.4% and 1.1% as a net of provisions and without taking into account the collaterals taken against them.
Customer accounts as at the end of June 2016 also increased compared to December 2015's level by 1% and reached US$ 20.4 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 June 2016. As an indication of the strength of the capital base of the Group, the capital adequacy ratio reached 14.02% at the end of March 2016.
HE Shaikh Saleh Abdullah Kamel, Chairman of Al Baraka Banking Group, said that the first half of 2016 was full with financial and economic challenges, but despite this, 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 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 "The international and regional developments and conditions continued in the first half 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, 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. 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 the first half of 2016 were consistent with our expectations and our budget at the beginning of the year. However, these profits will show a growth rate if the fluctuation effects in the prices of the local currencies of the countries of some units against the US dollar were excluded.
With regard to the Group's plans to expand its branch network, the President & Chief Executive said that "We opened 24 new branches in the first half of 2016 to bring total branches to 611 branches with total staff of 11,642. 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 at the beginning of 2016.
During last May, ABG launched its social responsibility report for 2015 with the participation and the presence of Mr. Amin El Sharkawi, the UN RR and UNDP RR in Bahrain. The report showed that Al Baraka employed about US$ 2 billion to support and finance a number of social responsibility programs such as the Al Baraka Philanthropic Program, Al Baraka Economic Opportunities and Social Investments Program, Al Baraka Qard-Hasan Program and Al Baraka Time Commitment Program through its network of banking banks across the world. The Group announced at the inauguration ceremony the priorities of the Group for Social Responsibility in next five years (2016-2020), which are to create more than 51,000 jobs by 2020 through the funding of a number of companies and projects in the countries where it operates, in addition to providing funding and support by more than US$ 434 million for healthcare projects and initiatives and US$ 191 million for projects and activities related to education. Al Baraka targets are linked to the goals of the United Nations Global Sustainable Development 2030.
The Group also held at the beginning of the month of Ramadan Al Baraka Symposium on the Islamic Economics in its thirty-seventh edition in Jeddah, which focused on the sales, Musharaka and return to the conversations in the application of stop selling to non-owned commodities, and in different form from the previous years. The Symposium also witnessed the honoring of the President of the Islamic Development Bank Dr. Ahmad Mohamed Ali an appreciation for the great role he has played throughout his presidency period of the Bank
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.
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 700 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.