Al Baraka Banking Group Achieves 14% Growth in Net Profit in the Second Quarter of 2009 to Reach US$ 92 million
The Bahrain based leading Islamic banking group, Al Baraka Banking Group B.S.C. announced a net profit of US$ 49.02 million in the second quarter of 2009, reflecting an increase of 14% over the net profit of the first quarter of 2009. Hence, the net profits for the first half of 2009 reached US$ 92 million. On the other hand, total assets increased by 5.4%, liquid assets by 4.6%, finance and investment by 5.1%, deposits and unrestricted investment accounts by 6.4% and total equity by 1.7% as at the end of June 2009 compared to December 2008. These excellent results were achieved in spite of the extremely difficult situation caused by the adverse conditions currently prevailing in the regional and international financial markets and the global economic crisis. This reflects the strong financial resources and efficient marketing capabilities of the Group, and its success in exploiting the opportunities generated by the current situation, while at the same time continue strengthen its technical and capital capabilities and expand its geographic network in accordance with the set plans.
The growth in the operating assets of the Group led to achieving good profit results. Total operating profits increased to US$ 163.06 million in the second quarter of 2009 compared to US$ 139.23 million in the first quarter of 2009, reflecting an increase of 17.1% though it is 2.4% lower than the total operating profits of US$ 167.10 million achieved in the second quarter of 2008, before the outbreak of the global financial crisis. After deducting all operating expenses which increased as a result of continued spending on expanding its branch network, and modernizing the IT infrastructure of the units, as well as increased expenses associated with the launching of the new identity and building up of precautionary provisions for the subsidiary units, the net income of the Group amounted to US$ 49.02 million in the second quarter of 2009, an increase of 14% over the net income of US$ 42.96 million achieved in the first quarter of 2009, but 16.6% lower than the net income of the second quarter of 2008 before the outbreak of the global financial crisis.
As for the half yearly financial results of the Group, the total operating income amounted to US$ 302.30 million in the first half of 2009, compared to US$ 307.71 million in the first half of 2008, a slight decrease of 1.8%. The Group's net income amounted to US$ 92 million in the first half of 2009 compared to US$ 108 million in the first half of 2008, reflecting a drop of 14.8%. If we excluded profits of shares sold and the adverse effects of fluctuation in main currencies of the Group, the net income would increase by 8% compared to the first half of 2008. The net profit for the second quarter of 2009 decreased compared to the same period last year by 16.6% for the same reasons mentioned earlier. It is clear that this decline was not primarily caused by a decline in total income, which was maintained at an almost the same level, but rather by a rise in total expenses which, as mentioned earlier, increased significantly as a result of increased expenses associated with expanding the branch network which now has more than 283 branches in 12 countries. The increase in expenses was also caused by the continued modernization of the IT infrastructure of the Group and the building up of provisions for its subsidiary units as well as expenses associated with the launching of the new corporate identity of the Group in the second quarter of this year. The depreciation against the US dollar of the national currencies of some of the subsidiary units of the Group also contributed to the decline in the net income of the Group.
The total assets of the Group amounted to US$ 11.51 billion as at the end of June 2009, compared to US$ 10.92 billion as at the end of December 2008, reflecting an increase of 5.4%. This increase was the cause of a growth of 5.1% in the operating assets (financing and investments) to reach US$ 8.50 billion in total as at the end of June 2009. At the same time, the liquid assets were enhanced by 4.6% to reach US$ 3.03 billion in total as at the end of June 2009. Customer deposits and other accounts and unrestricted investment accounts witnessed a steady increase of 6.4% to rise from US$ 8.87 billion as at the end of December 2008 to US$ 9.44 billion as at the end of June 2009, which reflects an increasing level of customer confidence and loyalty to the Group. As for total equity, it amounted to US$1.58 billion as at the end of June 2009, reflecting an increase of 1.7%.
Commenting on these results, Sheikh Saleh Abdullah Kamel, Chairman of Al Baraka Banking Group, said that the outstanding financial results achieved by Al Baraka Banking Group in the first half of 2009 were the result of the implementation of carefully studied ambitious strategies that struck a balance between the adoption of prudent and conservative measures required by the prevailing regional and global economic and financial conditions on the one hand, and continuing our expansion in the different markets and in providing innovative Islamic products and services to our customers, on the other. The Group, as such and once more, re-affirms its commitment to the fulfilment of its religious and moral duty towards the development of the societies in which it operates, and at the same time maximizes value to the shareholders and owners of the Group. It would not have been possible to successfully implement these strategies were it not for the strong capital resources and long experience of the Group and its strict adherence to the Islamic banking model".
On his part, Mr. Abdulla Ammar Al Saudi, Deputy Chairman of Al Baraka Banking Group said that "the financial and operational results achieved by the Group in the first half of 2009 were very good if we were to consider the conditions prevailing in the regional and international financial markets which were adversely impacted by the global economic crisis. We are pleased that the plans that we put in place to deal with this situation and exploit the opportunities that may arise under the current circumstances, have achieved the results that we hoped for. We must not forget that the timely efforts by the senior management of the Group to coordinate the plans and programs of the subsidiary units of the Group to ensure that the units work within common and unified strategies have proved to be effective in such difficult situations, and as a result of this we have seen more business flowing between the subsidiary units. There is no doubt that the efforts of the executive management at the Head Office and the executive management teams in the subsidiary units of the Group played an instrumental role in achieving these results, backed by the long experience that the Group has in the markets in which the units operate, the substantial capital resources available to the units and the wide geographic network of the Group.
On his part, Mr. Adnan Ahmed Yousif, President & Chief Executive of Al Baraka Banking Group said that "the financial results that we achieved in the second quarter of 2009, and the first half as a whole, confirm as amounts and key indicators our success in dealing with the current banking and financial situation. We prepared ourselves early for the repercussions of the crisis by
developing balanced business strategies that enabled us maintain cautious expansion in providing finance and investment services and products through our subsidiary units on the one hand, and continue with the implementation of our investment spending programs in the areas of expanding our branch network and modernizing the IT infrastructure and human resources on the other. Such strategies also required us take the necessary prudent measures to address the adverse developments arising from the financial crises by strengthening our liquid assets and the building up of reserves. Praise to Allah, we were able to implement these strategies successfully, and as a result we are now at the forefront of Islamic banking institutions that are able to continue achieve growth and profits".
Mr. Adnan Ahmed Yousif added that "As a manifestation of our full confidence in the soundness of our financial conditions and our leading position in the regional and global financial markets, we launched during the second quarter of this year the new corporate identity of the Group in highly publicized launch activities organized by the main office and 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 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".
The President & Chief Executive of the Group said that the second quarter of this year also saw the taking of concrete steps towards satisfying the legal requirements and providing the necessary infrastructure in terms of human resources and logistics for the launch of the new Al Baraka Bank Syria with a capital of US$ 100 million. In this connection, Bemo Saudi Fransi Finance was appointed to manage the IPO of the new bank to which promoters and shareholders will subscribe in a public offering. The new bank will offer Islamic
banking services and products to its individual and corporate customers through a network of branches that will cover all major cities in Syria".
"We also continued during the second quarter of this year our efforts to expand the branch networks of our subsidiary units as we now have more than 283 branches in twelve countries. Furthermore, we worked on strengthening our relations with our partners, investors and customers, and strived to enter new markets, as well as modernize and further develop our human resources and the operating, regulatory and technical infrastructure at Group level and the subsidiary banking unit levels.
In connection with Group's plans for geographic expansion, the President & Chief Executive said that the subsidiary units of the Group intended to open 59 new branches in Egypt, Algeria, Sudan, Turkey and Pakistan. We also plan to procure new IT systems that will provide us with the means to continue our full compliance with the regulatory requirements of the Central Bank of Bahrain concerning Basle II.
In concluding his statement, the President & Chief Executive of Al Baraka Banking Group praised the great efforts exerted by the Executive Management at Head Office and the executive management teams at the subsidiary banking units of the Group and other concerned parties that led to achieving the results planned and budgeted by the Group.
Item Growth (%)
Growth in gross operating income (compared with Q1 2009) 17.1%
Growth in net income (compared with Q1 2009) 14%
Growth in total assets (compared with end of December 2008) 5.4%
Growth in finance and investment (compared with end of December 2008) 5.1%
Growth in total deposits and unrestricted investment accounts (compared with end of December 2008) 6.4%
Growth in total equity (compared with end of December 2008) 1.7%
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$1.58 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 283 branches. These banking Units are Jordan Islamic Bank, Jordan; Albaraka Islamic Bank, Bahrain; Albaraka Islamic Bank, Pakistan; Banque Albaraka D'Algerie, Algeria; Al baraka Bank Sudan, Sudan; Albaraka Bank Limited, South Africa; Albaraka Bank Lebanon, Lebanon; Bank Et-Tamweel Al-Tunisi Al-Saudi, Tunisia; the Egyptian Saudi Finance Bank, Egypt; Albaraka Turk Participation Bank, Turkey; Albaraka Bank Syria (under formation) and a representative office in Indonesia.
For further information, please contact:
Al Baraka Banking Group
Corporate Communications Department
Tel: +973-17-541122 â€“ Ext: 227
Email: [email protected]