Net Income attributable to Al Baraka Banking Group's shareholders increase by 2% to US$ 98 million in first nine months of 2018
7 November 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 nine months of 2018 showed good increases in income, with total operating income increased by 10%, net operating income by 26% and net income attributable of shareholders by 2% compared to the same period last year.
During the first nine months 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 10% to reach US$ 808 million during the first nine months of 2018 compared to the same period last year of US$ 735 million. While net operating income increased by 26% to US$ 401 million during the same period after deducting all operating expenses compared to US$ 318 million for the same period last year. Net income attributable to the Group's shareholders increased by 2% to US$ 98 million compared to US$ 97 for the same period of last year. Total net income achieved a good growth of 6% to reach US$ 163 million during the first nine months of 2018 compared to US$ 154 million for the same period last year. Basic and diluted earning per share for the 9 months ending 30 September 2018 was US Cents 6.69 compared to US Cents 7.83.
The achievement of these distinguished results, which was coincided with difficult regional and global conditions, reflects the Group's determination, through its banking units in 16 countries, to continue to implement business expansion strategies, enhance market share in their local markets, expand its branch network and strengthen its customer relationships by offering high quality and competitive products and services. The operations of these units have witnessed remarkable growth in all financial and investment activities and diversification of sources of income and most of them witnessed good increases in profitability results. Therefore, we expect to achieve good profitability results during the year 2018.
However, the growth rates of assets were affected by the decline in value of local currencies some countries where the Group's units operate, especially in Turkey and Sudan, against the US dollar, the currency of reporting the Group's consolidated statements. Therefore, the consolidated balance sheet items of Al Baraka Banking Group reached at US$ 23.3 billion at the end of September 2018, a decrease of 8% compared to its level of US$ 25.5 billion as of end of December 2017. 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$ 17.8 billion as at the end of September 2018 compared to US$ 19.1 billion at end of December 2017, a decrease of 7%. Customer accounts and due to banks as at the end of September 2018 reached US$ 19.2 billion, a decrease of 7% compared to its level of US$ 20.7 billion at end of December 2017, and represents 82% of total assets, which indicates the continued customer confidence and loyalty in the Group and growing customer base.
Total equity reached US$ 2.2 billion at the end of September 2018 compared to US$ 2.5 billion at end of December 2017, decreasing by 13% due to impact of currency devaluation as well as distribution of cash dividends for 2017.
With respect to the Group's results for the third quarter of 2018, total operating income increased by 28% to reach US$ 296 million compared to US$ 231 million for the same period last year. Net operating income increased remarkably by 80% to reach US$ 178 million compared to US$ 99 million for the same period last year. Net income attributable to shareholders decreased by 11% to reach US$ 24 million in the third quarter compared to US$ 27 million for the same period last year, while total net income remained almost same as last year for the same period at US$ 42 million. Basic and diluted earnings per share reached US$ Cents 1.94 for the 3 months ended 30 September 2018 comparing to US$ Cents 2.17 for the same period last year.
HE Sheikh Saleh Abdullah Kamel, Chairman of Al Baraka Banking Group, said "The results of the Group for the first nine months of 2018 are considered excellent, taken into account the regional and international conditions prevailed during this period, especially that the Group was able to achieve these results while at the same time maintaining the high quality of its assets and the soundness of liquidity besides improving the financial returns from all main 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 prevailed during the first nine months of the year."
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 continued in the first nine months of 2018, forming serious challenges for us, including the 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. Despite all these developments, we were able not only to maintain our strong profits and operational positions, but also to enhance our precautionary measures in the context of sound policies and strategies developed by the Group and implemented by our 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 good profitability results this year.
With regard to the Group's plans to expand its branch network, the President & Chief Executive said that "The Group's units have resumed their ambitious expansion programs, where the number of new branches opened by these units has reached 14 branches during the first nine months of 2018, bringing the total number of branches to 689 at the end of September 2018. The total staff of the Group's branches reached 12,837, 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.
Given the conditions underwent by the Turkish economy during the past months we are pleased to see the success of our unit, Al Baraka Turk Participation Bank in the issuance of a TL 250 million lease certificate (sukuk) through its subsidiary, Bereket Varlık Kiralama Sirketi. While the targeted amount of the issuance was TL 200 million, the demand for the certificates, which have a maturity of 98 days, was 1.68 times oversubscribed and the issuance was closed at TL 250 million. This success reflects the ongoing trust that has been nurtured between our local investor community and the Bank over the last 34 years.
Al Baraka Turk launched recently also the "insha" project in Germany to provide digital banking services in Europe. In the first phase insha will provide basic banking services such as opening bank account, account management, debit card, payment and wire transfers. Albaraka Turk is planning to include all fundamental offers of participation banking in the second phase and aim to propagate participation banking both in digital and traditional channels throughout Europe.
For the sixth successive year, ABG and four of its subsidiary banking units received the "Best Islamic Financial Institution" Award of 2018, as part of the annual awards that the Global Finance magazine, which is specialized in banking and finance, awards to international banks and financial institutions. Al Baraka Banking Group received the "Best Islamic Financial Institution in Africa Award, Al Baraka Islamic Bank Bahrain received the "Best Islamic Financial Institution in Bahrain" Award, Jordan Islamic Bank received the "Best Islamic Financial Institution in Jordan" Award, Al Baraka Bank Algeria received the "Best Islamic Financial Institution in Algeria, and Al Baraka Bank Tunisia received the "Best Islamic Financial Institution in Tunis" Award. The winning of these awards is a result of their prominent role in the Islamic banking sector and their ability to achieve consistent growth in the future.
During the first nine months 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.
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 BBB+ (long term) / A3 (short term) by Islamic International Rating Agency and BB (long term) / B (short term) by Standard & Poor's.
ABG and its Units offer 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 689 branches. Al Baraka Banking Group has operations in Jordan, Egypt Tunis, Bahrain, Sudan, Turkey, South Africa, Algeria, Pakistan, Lebanon, Saudi Arabia, Syria and Morocco, in addition to one branch in Iraq and two representative offices in Indonesia and Libya.