Wednesday 10, May 2017 by Georgina Enzer

Al Baraka Banking Group releases Q1 results

The Bahrain based Islamic banking group, Al Baraka Banking Group B.S.C (ABG) achieved a total operating income of $249 million during the first quarter of 2017 and the total financing and investments recorded slight increases at the end of March 2017 compared to end of December 2016.

Al Baraka Banking Group has continued during the first quarter of 2017, the implementation of the business and markets expansion initiatives and diversification of income sources through its banking units located in 15 countries, and the operations and activities of the Group achieved a slight growth in total financing and investment activities, but operating income growth rates were affected by the financial and economic unstable conditions in some countries where the Group operates, forcing it to strengthen prudential provisions as part of the conservative policy pursued by Group, as well as those growth rates were affected by the decline in the local currencies in some countries where the Group operates against the US dollar. Therefore, net operating income, after deducting all operating expenses, reached $101 million during the first quarter of 2017 lower by 11 per cent when compared to $114 million during the same period last year. After deducting taxes and provisions, the net income attributable to equity holders of the parent reached $34 million during the first quarter of 2017 compared to $38 million during the same period last year, a slowdown of 10 per cent. While total net income of the Group reached $52 million during the first quarter of 2017.

"The Group and its banking units are in a privileged position because they follow conservative approach in expansion in markets where they operate. They were able to overcome all the adverse financial and economic developments and continued expansions of branches and financing products programmes, as well as serving further their communities,” said Abdulla Ammar Al Saudi, Vice Chairman of ABG.

The beginning of 2016 saw some kind of stability in the values of the local currencies of a number of countries in which the group operates, but there was a large state of instability in the values of these currencies during the second half of last year, which affected the results of the first quarter of 2017. The Group believes that the results of the three remaining quarters of this year will witness an improvement in revenues and income, God willing.

After excluding the effect of the decline in the exchange rates of the countries the Group operating in against the USD, the total operating income will show an increase of 10 per cent and the net income attributable to equity holders of the parent will show an increase of four per cent.

The total assets of the Group as at the end of March 2017 maintained its same level of December 2016 and reached $23.4 billion, where the growth rates of these assets were affected by the decline in value of local currencies in some countries where the Group operates against the US dollar, the currency of preparing the Group’s consolidated statements. 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 $17.7 billion as at the end of March 2017 compared to $17.5 billion at the end of December 2016, an increase of one per cent.

Customer accounts as at the end of March 2017 also maintained its December 2016's level and reached $19.1 billion, which indicates the continued customer confidence and loyalty in the Group.

Total equity reached around $2.0 billion at the end of March 2017, increasing by one per cent compared to end of December 2016 and equity attributable to parent’s shareholders reached $1.3 billion, increasing by one per cent compared to end of December 2016. As an indication of the strength of the capital base of the Group, the total equity to total assets ratio reached nine per cent.

HE Sheikh Saleh Abdullah Kamel, Chairman of Al Baraka Banking Group, said the Group continued its successful performance as evident by its ability to maintain its high quality of assets and strength of liquid assets, in addition to improve financial returns from all core businesses and at the same time keep up with its socially responsible Islamic banking model.

"The international and regional developments and conditions continued in the first quarter of 2017, which formed serious challenges for us, including the economic and financial instability in some main countries were we operate, in addition to the decline in oil prices and the 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 good profits and operational positions, but also to enhance our precautionary measures in the context of sound policies and strategies developed by the Group and are implemented by all units,” said Adnan Ahmed Yousif, Member of the Board of Directors and President & Chief Executive of Al Baraka Banking Group. “We are very pleased to see the contribution of all our banking units in the positive results of the Group, as evidenced by the excellent results recorded and the cash dividends distributed to their shareholders for their financial results for 2016. The Jordan Islamic Bank distributed 15 per cent cash dividends and 20 per cent bonus shares, Al Baraka Bank Syria 15 per cent cash dividends, Al Baraka Bank Algeria 30.11 per cent cash dividends, Al Baraka Bank Turkey five per cent cash dividends, Al Baraka Bank Egypt 15 per cent bonus shares and Al Baraka Bank Sudan 12 per cent cash dividends and 18 per cent bonus shares. We opened five new branches in the first quarter of 2017 to bring total branches to 702 branches with total staff of 12,593. This 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. In terms of Arabic and international geographical expansion, we completed all necessary procedures to launch our banking unit in Morocco, and we plan to start its activities during the second half of this year with our partners in the new bank the Moroccan Bank for Foreign Commerce of Africa (BMCE Bank), which is one of the oldest and largest private Moroccan banks, which was founded in 1959 and located in 22 countries. The new bank will be under the management of Al Baraka Banking Group and will operate within its network of subsidiary banking units, which are currently located in 15 countries. The entrance into the Moroccan market is a very important achievement, which is considered one of the major markets in the Maghreb and Africa, and will achieve greater diversity in building assets portfolios and revenue sources for the Group. Al Baraka Bank Algeria raised its social capital from DZD 10 billion to DZD 15 billion. The increase was made through a free distribution of five million new shares at a par value of DZD 1,000 for the shareholders, which are Al Baraka Banking Group with an authorised capital of $1.5 billion and the Agriculture and Rural Development Bank (Algeria) with a capital of DZD 54 billion. This increase will strongly contribute to the expansion of the Bank’s activities and business in the Algerian market. Al Baraka Bank of Algeria is considered one of the most liquid banks in the banking market. The stress tests conducted every six months and submitted to the concerned bodies in Algeria are further proof of the strength and soundness of the Bank.”

Al Baraka Turk Participation Bank also successfully concluded a syndicated Murabahah facility for an amount of $213 million with the participation of 12 international banks from eight countries from GCC, MENA and Europe participated in the facility. This issue comes after a series of similar successful issues since 2010 and also in large amounts. We are indeed delighted at the large success of the syndicated financing deal, despite the volatile financial markets and international economic situation, which endorses the reputation of Al Baraka Turk Participation Bank and its distinguished position in the Turkish market, based on the strength of its financial position and growing performance over the past many years, as well as the distinguished reputation and position of the parent company, Al Baraka Banking Group, regionally and internationally.

The social responsibility represents a core pillar in the business model of the Group. During the first quarter of 2017, the Group continued to implement its social responsibility programme based on linking the social responsibility programmes and activities of the units and the Group with the Global Goals for Sustainable Development, which was adopted by the United Nations General Assembly. These goals will concentrate on adding 50,000 jobs across the countries where we operate and providing finance and donations to a variety of educational institutions and children hospitals, cancer hospitals, diabetic hospitals, kidney dialysis units.

"We continued during the first quarter of 2017 to focus on providing training courses through Al Baraka Academy, which intends to organise many training workshops specialised in different fields of Islamic banking for staff during 2017 and next years. We also continued providing modern online training programmes for the employees of the Group and its units that are related to compliance, sanctions and KYC regulations and others. Besides we continued our efforts to embody the values and principles of our unified brand, which is based on the concept of partnership with customers, in all the products and services we offer,” said Yousif. "For the remaining part of 2017, we expect the fluctuations in regional and international markets will continue, which creates difficult business environment for international banks, but we will continue our precious policy and investment of our large financial and technical resources in addition to wide geographical network of the units of the Group towards maximising the returns for our shareholders and the investors in the Group."

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