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   2010
   
 

AL BARAKA BANKING GROUP POSTS US$ 634 MILLION IN OPERATING INCOME IN 2009 AND 4% GROWTH IN NET PROFIT BEFORE PROVISIONS & TAX

Manama, 24 Feb 2010: The Bahrain based leading Islamic banking group, Al Baraka Banking Group B.S.C (ABG) announced that it has achieved a good growth in its total operating profits of 8% and in its net profit before tax and provisions & tax of 4%, despite the fact that 2009 was one of the most difficult years for banks and financial institutions all over the world as a result of the repercussions of the global financial crisis. This growth reflects the significant improvements seen in all sources of income on the back of continued growth in assets by 21%, deposits and investment accounts by 24%, financing and investments by 17%, liquid assets by 21% and total equity by 12%, according to a statement issued today by the Group in which it revealed its financial results for the year 2009.

The results show that the Group's operating income in 2009 has increased to US$ 634 million, compared to US$ 586 million in 2008, reflecting an increase of US$ 48 million or 8% in 2009. The majority of the components of the profit registered noticeable increase especially the income from joint finance and investment activities, fees and commissions.  After deducting all the expenses which increased by 13% because of increased spending on updating the IT infrastructure and the launch of the new identity of ABG as well as expenses related to the opening of new branches and expansion into new markets, the net income before provisions and tax amounted to US$ 325 million in 2009, reflecting an increase of 4% over year 2008. After setting aside taxes and provisions which the Group allocated as a precautionary measure and prudent policy to guard against any possible untoward developments, ABG posted a net income of US$ 167 million in 2009 compared to US$ 201 million in 2008, a drop of 17% as a result of the reasons mentioned above. Net income attributable to equity shareholders of the parent reached US$ 91.8 million compared to US$ 113.7 million last year.

Similarly, all items of the balance sheet, especially those related to core financing and investment activities, showed significant growth during 2009. This reflects the sound and substantial financial resources of the group that enabled it to continue expand its finance and investment operations, pursue remunerative opportunities arising from the conditions that prevailed during last year, and at the same time build up liquidity and provisions required by the group's prudent policy. Total assets increased to US$ 13.2 billion at the end of 2009 compared to US$10.9 billion as at the end of 2008, an increase of 21%. This growth was a reflection of the increase in financing operations, mudaraba, musharaka, ijarah and investments which increased in total by 17% to reach US$ 9.4 billion in total in 2009.  On the other side, liquid assets increased by 21% to US$ 3.5 billion and  customer deposits and unrestricted investment accounts witnessed a significant increase of 24% in line with the growth in volume of assets to reach US$ 11 billion as at the end of 2009, indicating growing confidence and loyalty of customers in the group. As for total equity, it amounted to US$ 1.7 billion by the end of 2009, an increase of 12% compared to 2008.

The financial results of Al Baraka Banking Group in the fourth quarter of 2009 show that the Group achieved a net income of US$ 30.2 million as compared to US$ 40.9 million in the fourth quarter of 2008, reflecting a decrease of 26%. Net income attributable to equity shareholders of the parent reached US$ 16.6 million for the last quarter of 2009 compared to US$ 20.5 million for the same period last year. 

The Board of Directors recommended to the General Meeting distribution of dividends of 6% of the capital which equates to US$ 44.64 million, in addition to one bonus share for each 16 shares outstanding and paid, equating to US$ 46.5 after obtaining the approval of the Central Bank of Bahrain and other concerned regulatory bodies. 
 
Commenting on these results, Shaikh Saleh Abdulla Kamel, Chairman of Al Baraka Banking Group, said "the excellent financial results achieved by Al Baraka Banking Group in 2009, which was a difficult year in which many financial institutions suffered huge losses, were a true reflection of the balanced and ambitious strategies which were based on the substantial and varied resources possessed by the group. With such resources, ABG was able to implement its strategies on the ground in year 2009 by implementing programs and policies that took into account the precautionary and prudent measures necessitated by the current regional and global economic and financial conditions on one hand, and the need to continue expand our markets and provide innovative Islamic products and services to customers on the other. And as such, the Group has succeeded in meeting its Sharia and moral obligations towards developing the communities in which it operates, and at the same time maximize the value to its shareholders, owners, investors and depositors".

Commenting on the Group’s financial results of 2009, Mr.  Abdulla Ammar Al Saudi, Deputy Chairman of ABG stressed that "the group, by successfully weathering an extremely difficult year and achieving excellent financial results, was once again able to demonstrate the depth of its expertise and the high competence of its executive management team as well as the soundness of its financial resources and marketing capabilities. Therefore, we owe it to them, to extend our thanks and appreciation to the executive management at head office and the executive management teams at the subsidiary banks for the great efforts they exerted in the consolidation of their strategies and resources and capitalizing upon the growing opportunities in their markets, especially that they have a long experience in such markets that enabled them to participate effectively in serving the community and their individual and corporate customers".

On his part, Mr. Adnan Ahmed Yousif, President and Chief Executive of Al Baraka Banking Group, said that "the financial results achieved by the Group in 2009 can be considered as excellent and satisfactory by all standards if we take into account the difficult economic and financial conditions that prevailed in the region and the world as a whole. Such results were not possible to achieve were it not for the flexible and ambitious strategies of the group, which were based on a number of objectives, programs and initiatives that aimed to achieve strong growth in earnings and operations taking advantage of the Group's depth of geographical presence, thorough knowledge of the Islamic markets and banking products, financial strength and a wide branch network which is the largest amongst Islamic banking institutions. These strategies, at the same time, dealt with the repercussions of the global crisis with prudence and realism”.
 
Mr. Adnan Yousif added that “Year 2009 witnessed many outstanding achievements and initiatives that translated these strategies to real successes on the ground in reaffirmation of our determination to continue with our expansion and modernization plans.  This once more proves the ability of Al Baraka Banking Group to overcome the effects of such adverse developments and achieve good positive results”.
 
Mr. Yousif added that “year 2009 witnessed the launch of our commercial bank in Syria through a very successful IPO which was oversubscribed by more than 4 times. The capital of Al Baraka Bank Syria is Syrian pounds (SYP) 5 billion (US$ 100 million). We intend that the bank would soon commence operations and start opening branches in all major cities in Syria to offer all types of Islamic banking products".
 

Mr. Adnan Ahmed Yousif added that "In view of our full confidence in the soundness of our financial position and our leading status in the regional and international financial markets, we launched during the second quarter of last year the new identity of the group in highly publicized launch activities at head office and the subsidiary units of the group. The new identity requires us to adopt a set of policies and high ethical and professional standards with regard to the offering of innovative and highly efficient Sharia-compliant services and products. To achieve this, we put in place a number of programs and plans which are currently being implemented to embody the theme of the new identity of the Group in being a partner bank to our customers, investors, and all our stakeholders".
 
“Year 2009 also saw the Group increase its stake in the capital of a number of its subsidiary units such as Jordan, South Africa and Turkey, reflecting the Group's confidence in its subsidiary units and its determination to strengthen their capital base. Our banking units in Turkey, Jordan, Egypt and South Africa continued their expansion plans by opening new branches which had a positive and direct impact on the growth of their deposit base and financing operations. We expect to increase the number of branches at all our banking units to more than 350 branches in the next three years, compared to about 289 branches at present".
Mr. Adnan Ahmed Yousif added “We have simultaneously concentrated on developing our human resources - for we believe these to be our most valued assets - and our operations and business infrastructure across the Group in addition to upgrading our Information Technology systems. We have also upgraded our risk management procedures and policies across the Group besides enhancing our financial consolidation and strategic planning applications to help monitor the performance of the Group even more efficiently. This in addition to implementing Mysis Islamic Equation core banking systems in our subsidiaries Bahrain, South Africa, Lebanon, Egypt and Pakistan in order to upgrade our product delivery channels besides strengthening our internal controls and other procedures. Moreover, we have agreed with Path Solutions to implement iMAL core banking system in our subsidiaries in Sudan, Algeria and Syria during 2010. All these initiatives will continue well into 2010, and will serve to make us more competitive in terms of the quality of our customer service.”
In addition to strengthening relations with our partners, investors and customers, we have focused over the past period on consolidating and modernizing our human resources and the operating, regulatory and technical infrastructures, risk management policies and governance at Group level and the subsidiary banking unit levels. We are pleased that a number of our banking units has received prestigious international awards as a result their business excellence and achievements.
 
 As for his expectations with regard to the performance of the Group in 2010, Mr. Adnan Ahmed Yousif stressed that the group would continue during 2010 to build upon the successes achieved during the past years and focus its efforts on achieving quantitative and qualitative targets set in the five-year strategic plan, under the guidance of the Board of Directors of the group.

We plan in 2010 to convert the 29 branches of Al Baraka Islamic Bank in Pakistan into a locally incorporated commercial bank.  We have already received the initial approval of the Central Bank of Pakistan to this step and the Bank is presently in the process of finalizing the regulatory and operational procedures for the completion of this step soon.

We also intend in 2010 to open more branches to our banking units in almost all of our Units and also continue to expand the network that links our banking Units with the new IT system.
 
The chief executive of the group said that "In accordance with our new strategic plan, we have many plans and initiatives that we intend to implement during 2010.  These will include launching new innovative products and services in the markets, expanding our market presence into new geographical areas such as Indonesia and enhancing the standing of ABG in the international markets.  All of these plans will be implemented, God willing, successfully considering that we are the only Islamic banking group that has such diversity of geographical presence and excellent knowledge of the markets".

The President & Chief Executive of ABG concluded his statement by praising the hard work of the executive management at Group Head Office, the executive management of the banking units of Al Baraka Banking Group and related parties who played an instrumental role in achieving these excellent results for the Group".
 
On this occasion, Shaikh Saleh Kamel, Chairman of Al Baraka Banking Group, Mr. Abdulla Ammar Al Saudi, Deputy Chairman and Mr. Adnan Ahmed Yousif, President and Chief Executive and all members of the Board of Directors of ABG expressed their sincere thanks to the Ministry of Industry and Commerce, Central Bank of Bahrain, Bahrain Stock Exchange and Nasdaq Dubai for the cooperation and assistance they extended to the Group since it was established.  They also extended their thanks to all the central banks in the countries in which Group banks operate and to all investors and customers for their continuing support and custom.  They also thanked all the employees of the Group for their loyalty, hard work and dedication which stand behind the successes and achievements of the Group

Al Baraka Banking Group is a Bahrain Joint Stock Company listed on Bahrain and NASDAQ Dubai stock exchanges. It is a leading international Islamic bank with Standard & Poor’s long and short-term credit ratings of BBB- and A-3 respectively. Al Baraka Banking Group offers retail, corporate and investment banking and treasury services strictly in accordance with the principles of the Islamic Shari'a. The authorised capital of Al Baraka Banking Group is US$1.5 billion, while total equity amounts to about US$1.7 billion. The Group has a wide geographical presence in the form of subsidiary banking Units and representative offices in twelve countries, which in turn provide their services through more than 289 branches. These banking Units are Jordan Islamic Bank, Jordan; Al Baraka Islamic Bank, Bahrain; Al Baraka Islamic Bank, Pakistan; Banque Al Baraka D'Algerie, Algeria; Al Baraka Bank Sudan, Sudan; Al Baraka Bank Limited, South Africa; Al Baraka Bank Lebanon, Lebanon; Al Baraka Bank Tunisia, Tunisia; the Egyptian Saudi Finance Bank, Egypt; Al Baraka Turk Participation Bank, Turkey; AlBaraka Bank Syria and a representative office in Indonesia.

  

Item

Growth (%)*

  Growth in total assets

21%

  Growth in total finance and investments

17%

  Growth in total deposits and unrestricted  investment accounts

24%

  Growth in shareholders equity

12%

  Growth in total operating income

8%

  Growth in net income

(17%)

* As compared to end of 2008


 

For further information, please contact:

Corporate Communications Department
Al Baraka Banking Group B.S.C
Tel:  +973-17-541122 – Ext: 227
Fax: +973-17-536533
Website: www.albaraka.com
Email:     info@albaraka.com 
             maljowesir@albaraka.com            
 

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