Net Income attributable to Al Baraka Banking Group's shareholders increase by 7% to US$ 74 million in first half of 2018
The financial results of Al Baraka Banking Group BSC (ABG), the leading Islamic banking group based in the Kingdom of Bahrain, for the first half of 2018 showed good increases in income, with total operating income increased by 1%, net income by 8% and net income attributable of shareholders by 7% compared to the same period last year.
During the first half of 2018, the fluctuations of local currencies in a number of Arab and ME countries where ABG units operate against the US dollar continued, which affected the reported growth figures of both income and balance sheet items in terms of US dollar. However, due to prudent policies in selecting high-quality assets, rationalizing expenses, increasing spending efficiency, and offering more innovative products and services through our banking subsidiaries, the Group was able to achieve good profits results, where total operating income increased by 1% to reach US$ 512 million during the first half of 2018 compared to US$ 504 million for the same period last year. While net operating income increased by 1% to US$ 222 million during the same period after deducting all operating expenses compared to US$ 219 million for the same period last year. Net income attributable to the Group's shareholders increased by 7% to US$ 74 million compared to US$ 70 million for the same period of last year. Total net income achieved a good growth of 8% to reach US$ 122 million during the first half of 2018 compared to US$ 113 million for the same period last year. Basic and diluted earnings per share for the first half of 2018 was US Cents 4.75 compared to US Cents 5.66 for the same period last year.
Thanks to the ambitious business strategies of the Group's banking units spreading in 16 countries, their strong presence in their markets, the expansion of their extensive network of branches and their distinguished relationships with customers, Al Baraka Banking Group has been able during the first half of 2018 to continue to implement business and markets expansion initiatives and diversification of income sources which their operations in their countries achieved a noticeable growth in all financial and investment activities, and most of them reported good increases, as we expect to achieve excellent profitability results during this year.
However, the growth rates of assets were affected by the decline in value of local currencies against the US dollar, the currency of reporting the Group's consolidated statements. Therefore, the consolidated balance sheet items of Al Baraka Banking Group decreased to US$ 24.6 billion at the end of June 2018, a decrease of 3% compared to its level as in December 2017 of US$ 25.5 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.
Operating assets (financing and investments) amounted to US$ 18.7 billion as at the end of June 2018 compared to US$ 19.1 billion in December 2017, a marginal decrease of 2%. Customer accounts as at the end of June 2018 reached US$20.3 billion, a marginal decrease of 2% compared to its level of US$ 20.7 billion as end of December 2017.
Total equity reached US$ 2.3 billion at the end of June 2018 compared to US$ 2.5 billion in December 2017, decreasing by 9% due to distribution of cash dividends for 2017 and the decline in value of local currencies against the US dollar.
With respect to the Group's results for the second quarter of 2018, net operating income increased by 8% to reach US$ 127 million compared to US$ 118 million for the same period last year. Net income attributable to shareholders increased 10% to US$ 39 million in the second quarter compared to US$ 36 million for the same period last year, while total net income increased 5% from US$ 61 million to US$ 65 million during the same period. Basic and diluted earnings per share for the second quarter of 2018 was US Cents 1.91 compared to US Cents 2.90 for the same period last year.
HE Sheikh Saleh Abdullah Kamel, Chairman of Al Baraka Banking Group, said "Al Baraka Banking Group continues to strengthen its socially responsible business model through greater access to Islamic banking forms that are more capable of serving its communities while preserving the quality of its assets, solidity of liquid balances and improving financial returns from all major activities."
For his part, Mr. Abdulla Ammar Al Saudi, Vice Chairman of ABG, said that "Al Baraka Banking Group and its subsidiaries are increasingly proving their roots in the markets in which they operate, enabling them to capitalize on opportunities generated in retail and wholesale markets, as well as large projects associated with development programs despite unstable global economic conditions."
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 2018, which formed serious challenges for us, including the international economic fluctuations, regional security tensions, 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. We are very pleased to see the contribution of all our banking units in the positive results of the Group and we expect achieving excellent profitability results this year."
With regard to the Group's plans to expand its branch network, the President & Chief Executive said that "the total number of branches of our units reached 686 branches at the end of June 2018, increasing by 11 branches compared to December 2017, due to opening new branches by our units. The total staff of the Group's branches reached 12,756, which 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. "
We are also pleased to commend the success of our unit in Turkey, Al Baraka Bank Turkey in launching a digital banking by the Bank and it is ready to launch its first digital bank in Germany next month, which represents a qualitative leap in the banking services offered by the Bank to customers of all categories. We will be rolling out this move in several other countries where our banking units are located, God willing.
The social responsibility represents a core pillar in the business model of the Group. Within this context, a delegation from the Group, headed by the President and Chief Executive Officer and in partnership with the United Nations Office in Bahrain, participated in the Sustainable Development Goals Business Forum which was held on the sidelines of the High Level Political Forum for Sustainable Development Goals, held during the month of July at the United Nations in New York. In this forum, the Group reviewed its experience in linking the Al Baraka Sustainability and Social Responsibility Program to the goals of sustainable development of the United Nations and the Group's achievements in this field.
During the first half of 2018, we continued to focus on expanding Sharia-compliant investment and banking products base through our banking units and creating greater synergy between them in the areas of compliance, AML / CFT, FATCA, CRS, and other international legislation to strengthen the Group's position in addressing the challenges of de-risking procedures by international correspondent banks. We have also continued to provide modern training programs through Al Baraka Academy, and online to all employees of the Group and its banking units, which are related to compliance legislation, sanctions, KYC and others.
In the field of IT, we have completed the study of the transition to a new core banking system that is more sophisticated and responsive to the needs of the expansion of the Group. During the next months, we will implement this system in five banking units of the Group, followed by the rest of the units.
In conjunction with the 25th strategy meeting of Al Baraka Banking Group, which was held at the end of last June in Cairo, we celebrated with pride and pleasure the opening of the new headquarters of Al Baraka Bank Egypt, which hosted the two-day event. The new head office of Al Baraka Bank Egypt is a milestone in the full of achievements march of the Bank and its vital contribution to support the Group's success in all areas. The new headquarters, which is equipped by state-of-the-art technology facilities and large human resources, will enhance the Bank's ability to provide the best banking services to its customers and its role in the Egyptian economy.
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 satisfactory results for the Group.
Al Baraka Banking Group B.S.C. ("ABG") is licensed as an Islamic wholesale bank by the Central Bank of Bahrain and is 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 rated A+ (bh) (long term) / A2 (bh) (short term) on the national scale by Islamic International Rating Agency 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 ABG is US$ 2.5 billion.
The Group has a wide geographical presence in the form of subsidiary banking units and representative offices in 16 countries, which in turn provide their services through over 686 branches. Al Baraka currently has a strong presence in Turkey, Jordan, Egypt, Algeria, Tunisia, Sudan, Bahrain, Pakistan, South Africa, Lebanon, Syria, Saudi Arabia and Morocco, in addition to one branch in Iraq and two representative offices in Indonesia and Libya.