Al Baraka Islamic Bank Net Operating Rises by 48.9% in the First Half of 2011 and Maintains its Credit Rating
Al Baraka Islamic Bank BSC (e), a subsidiary banking unit of Al Baraka Banking Group (BSC), announced that it ccontinued to achieve excellent results during the first half of 2011 in spite of the developments witnessed by the Kingdom of Bahrain over the past few months, which reflects the soundness of the Bank's business strategy and financial position on one hand and the steadily improving economic conditions in the kingdom on the other. The Bank announced that its total operating income had increase by 57.97% and net operating income by 48.94% in the first half of 2011 compared to the first half of 2010, while total assets increased by 8.46%, loan and investment portfolio by 13.78% and total deposits by 9% as at the end of June 2011 compared to the end of December 2010.
The Bank's financial statements for the first half of 2011 showed a net income of BD 1.28 million during the first half of 2011 compared to a loss of BD 96 thousand during the first half of 2010. This reflects an improvement in the total income of the bank which amounted to BD 8.4 million compared to BD 5.32 million during the first half of 2010, an increase of 57.97%. After deducting operating expenses, net operating income amounted to BD 954 thousand, an increase of 48.94% over the first half of 2010. The improvement in the bank's profits reflects an increase the bank's business both in Bahrain and Pakistan, improvement in the quality of income-generating assets as evidenced by a decline in the volume of non- performing assets and a higher income from foreign trade financing and arrangement of new financing deals.
The financial accounts of the Bank for the first half of 2011 show a marked improvement in the total assets of the bank which increased by 8.46% to BD 550.6 million as at the end of June 2011 due to increased business operations in Bahrain and Pakistan, which had a positive impact on all key items of the balance sheet. Deposits and restricted investment accounts increased by 9 % to BD 466.50 million, while the financing and investments portfolio had increased by 13.78% to reach BD 438.0 million as at the end of June 2011 as a result of arranging new financing deals and increased foreign trade finance and consumer finance. The total shareholders' equity amounted to BD 70.3 million as at the end of June 2011, reflecting an increase of 1.32%.
As for the results of the second quarter of 2011, net income amounted to BD 601 thousand compared to BD 131 thousand for the same period in 2010, a significant increase of 359%. The improvement was the result of a 48.1% increase in total operating income, which amounted to BD 3.83 million, in the second quarter of 2011 compared to the same period of 2010.
Meanwhile, the international well-known rating agency Capital Intelligence re-affirmed in early August 2011 the credit rating of Al Baraka Islamic Bank as it maintained its BB + rating for long-term foreign currency obligations and A3 for short-term foreign currency obligations with a stable outlook. According to the Agency, this rating reflects the good quality of the bank's assets, its strong capital base, adequate liquidity and high capital adequacy ratio as well as the strong support that the parent company, Al Baraka Banking Group, affords to the bank.
Commenting on these results, Chairman of the Board of Directors of Al Baraka Islamic Bank Mr. Khalid Rashid Al Zayani said that "Despite the continuing difficult international and regional economic and financial conditions in the first half of 2011, we have continued to achieve good financial results and we were able to achieve satisfactory returns to our shareholders as a result of a steady and clear improvement in the performance of the Bahraini economy, which had quickly returned to normalcy thanks to the sound economic policies of the government. These results also reflect the soundness of the financial position of the Bank, expansion of its operations in Bahrain and Pakistan in line with the flexible and diverse business strategies that it had launched last year and which included a number of initiatives in the area of product diversification, expansion of branch network, enhancement of foreign trade financing and other initiatives that have had good impact on the results of the Bank during the first half of 2011."
For his part, Mr. Adnan Ahmed Yousif, Vice Chairman of Al Baraka Islamic Bank and Chief Executive of Al Baraka Banking Group, said that "the series of initiatives taken by Al Baraka Islamic Bank since the beginning of the year had clear positive effects on the Bank's performance during the first half of 2011. The conversion of the Bank's branches in Pakistan to an independent Islamic commercial bank following the merger with Emirates Global Islamic Bank in Pakistan had an evident positive effect on the operations of Al Baraka Islamic Bank. As a result of the merger and thanks to the bank's long experience in this market and the strong support that the parent company, Al Baraka Banking Group, affords to it, Al Baraka Islamic Bank was able to continue to expand and grow its operations in Pakistan in spite of the difficult economic conditions prevailing there. In Bahrain, we continued our concerted efforts to diversify our sources of income, open more branches, strengthen our capital resources and continue build the human and technical resources of the bank. All these factors had helped in achieving the good results of the Bank during the first half of 2011."
Mr. Mohammed Isa Al Mutaweh, member of the Board of Directors and Chief Executive Officer of Al Baraka Islamic Bank, said "During the first half of 2011, we have continued our efforts in expanding our business operations in Bahrain and Pakistan by building sustainable business relations with major industrial and commercial companies in Bahrain with a view to providing them with products and services that meet their banking and finance needs, as well as enhancing our relations with government and quasi- government institutions and with banks and financial institutions. At the same time, we expanded our branch and ATM networks both in Bahrain and Pakistan.
We also focused on improving the work environment, enhancing and developing our relations with customers and launching many financing and savings products. We turned much of our attention to the development of the Bank's human resources and the hiring of skilled recruits to help the Bank in the implementation of its new business strategies. Furthermore, we introduced new IT systems to enable the Bank provide the most advanced banking services to its customers and increase its operational efficiency.
Based on all these steps, we embarked upon a number of major initiatives in the area of finance and investment. We arranged a number of major finance transactions in which banks inside and outside the region had participated. We also sought to diversify our investment and savings products in Bahrain in concurrence with expanding our branch and ATM networks.
As for our local branch network, we have in June 2011 celebrated the opening of the bank's sixth branch in the Kingdom of Bahrain in Al Ramly Mall, Aali. Furthermore, we also started working on a plan to open two more branches next year, which highlights our determination to enhance our financing and deposit market share, considering that the bank has a range of highly successful financial and deposit products designed for individuals and companies which include many attractive features that best meet the needs of customers in strict compliance with Islamic Sharia."
Mr. Al Mutaweh added that â€œAs for the ATM network, work is in progress to add five more ATM machines during next year, to bring the total number of ATMs to 16. The focus will be on installing stand- alone ATMs that are not part of branches of the Bank, with particular emphasis on drive-by ATMs. As of the end of 2010, we also started working on implementing the Bank's plan to launch e-banking services which include providing Internet banking and telephone banking services. These services are expected to be available to customers by the middle of this year."
He added that "We are delighted by the reaffirmation of the credit ratings of the bank by Capital Intelligence, thanks to our substantial capital, technical and human resources and the fact that Al Baraka Islamic Bank is one of the most well-established Islamic banks in the Kingdom of Bahrain and the region and has accumulated extensive experience and understanding of the needs of the markets and customers, as well as the fact that we belong to a leading and strong banking group, and all these factors will enable us achieve good performance in year 2011."
Concluding their statements, Mr. Khalid Rashid Al Zayani, Chairman of the Board of Directors of the Bank, Mr. Adnan Ahmed Yousif, Vice Chairman of the Board and Mr. Mohammed Isa Al Mutaweh, Chief Executive Officer of the Bank expressed their sincere thanks to the Ministry of Industry and Commerce and the Central Bank of Bahrain for the cooperation and assistance they extended to the Bank. They also expressed their thanks to all of the investors and customers for their continuing support and custom and to the employees of the Bank for their loyalty and hard work.
Al Baraka Islamic Bank is one the subsidiary banking units of Al Baraka Banking Group. Al Baraka Banking Group (ABG) is a Bahrain Joint Stock Company listed on Bahrain Bours and Nasdaq Dubai stock exchanges. It is a leading international Islamic bank with Standard and Poors investment grade long term counterparty credit rating of BBB- / A-3 (Short Term) with a Negative Outlook. ABG offers retail, corporate and investment banking and treasury services strictly in accordance with the principles of the Islamic Shari'a. The authorised capital of ABG is US$1.5 billion, while total shareholders' equity amounts to about US$1.8 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 400 branches. These banking Units are Jordan Islamic Bank, Al Baraka Islamic Bank, Al Baraka Bank Pakistan Limited; Banque Al Baraka D'Algerie, Al Baraka Bank Sudan; Al Baraka Bank Limited, South Africa; Al Baraka Bank Lebanon; Al Baraka Bank Tunisia; Al Baraka Bank Egypt; AlBaraka Turk Participation Bank, Al Baraka Bank Syria and representative offices in Indonesia and Libya (under formation).