Al Baraka Bank 9-month net income hits $132 million

Al Baraka Banking Group BSC (ABG), a Bahrain-based leading Islamic banking group, achieved a net income of $132 million during the first nine months of the year, it said in a statement on Sunday,

Total net income attributable to shareholders of the parent reached $84 million and total operating income $677 million for the same period. Total assets increased to exceed $25 billion at the end of September 2019 compared to end of December 2018.

The third quarter of 2019 witnessed a continued improvement in the Group’s income as compared to the second quarter of the year, as total operating income increased by 4 percent to reach $235 million, net operating income by 1 percent to reach $98 million. However, the Group’s adherence to its conservative approach to set aside hedging provisions for all its units resulted in a 14 percent decrease in net income attributable to shareholders during the third quarter to reach $28 million compared to the second quarter of the year.

The increase in total income reflects the improvement in the performance of all Al Baraka’s units during the third quarter despite the unstable economic and financial conditions witnessed by some of the countries where the units operate such as Turkey, Sudan, Algeria, and Syria.

As for the Al Baraka’s results for the nine months of the year 2019 as a whole, they are still partially affected by the decrease in the Group’s results during the first quarter of the year. Total operating income reached $677 million during the first nine months of 2019, decreasing by 16 percent compared to $808 million for the same period in 2018.

After deducting operating expenses, provisions and taxes, total net income reached $132 million during the first nine months of 2019, a decline of 19 percent compared to $163 million for the same period in the previous year. Net income attributable to the shareholders of the Group was $84 million, a decrease of 15 percent compared to $98 million for the same period in the previous year

The growth of business of units and the semi-stability of local currencies of the countries of these units against the US dollar during the first quarter of 2019 were reflected positively on the balance sheet items, the bank said. Therefore, the consolidated balance sheet of the Group reached at $25.3 billion at the end of September 2019, an increase of 6 percent compared to $23.8 billion at 31 December 2018. The Group maintained a large portion of these assets in the form of liquid assets.

Operating assets (financing and investments) amounted to $19.3 billion as at the end of September 2019 compared to $17.9 billion at 31 December 2018, increasing by 8 percent. Customer accounts – including due to banks and financial institutions as at the end of September 2019 – reached $21.5 billion, an increase of 10 percent compared to $19.6 billion level as at end of December 2018. It represents 85 percent of total assets, which indicates the continued customer confidence and loyalty in the Group and growing customer base.

Total equity reached $2.2 billion at the end of September 2019 compared to $2.3 billion at the end of December 2018, decreasing by 2 percent.

Total operating income for the third quarter of 2019 reached $235 million compared to $296 million for the same period last year, representing a decrease of 21 percent.

Net operating income for the quarter reached $98 million, showing a decrease of 45 percent compared to $178 million for the same period last year. Total Group net income for the quarter reached $36 million compared to $42 million for the same period last year, representing 12 percent decrease.

Net income attributable to the parent for the quarter increased by 15 percent to reach $28 million compared to $24 million for the same period last year. Basic and diluted earnings per share for the quarter reached $2.24 compared to $1.94 for the same period last year.

“The Group’s results during the third quarter of 2019 indicate a good improvement in financial and operational performance. All our banking units in 17 countries have continued to achieve good results, but we are aware of the geopolitical and economic challenges they face.” Sheikh Saleh Abdullah Kamel, Al Baraka chairman, said.

“We believe that these challenges can be overcome by continuing to adhere to the sound approach of Islamic banking in delivering products and services of real social and economic value to their communities.”

For his part, Abdulla Ammar Al Saudi, Vice Chairman of the banking group, said, “The results achieved by the Group and its units during the first nine months of 2019 confirm that they own sound fundamentals in terms of the healthy financial conditions, technical and human resources,”

They also confirm that the Group and its units have “long experience in its local markets, which can achieve sustainable growth in business and revenues, but are sometimes affected by geopolitical and financial developments surrounding these markets.” Al Saudi added.

Adnan Ahmed Yousif, chief executive of Al Baraka, said:  “Despite the unfavourable geopolitical developments in some countries where our units operate during the first nine months of 2019, we were able to improve our performance and businesses during the third quarter within the targeted budget set at the beginning of the year.

“We also continued 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.”

With regard to the Group’s plans to expand its branch network, Yousif said, “The Group’s units have continued their careful and well-planned expansion programmes, where the number of new branches opened by these units has reached 6 branches during the nine months of 2019. This brings the total number of branches to 703 at the end of September 2019.

“The total staff of the Group’s branches reached 12,695, 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.”

As a new acknowledgment of the Group’s international standing, the Islamic International Rating Agency (IIRA) reaffirmed the international scale credit ratings assigned to Al Baraka Banking Group at BBB+ / A3 (long term / short term) and maintained the Outlook on its assigned ratings at “Stable”.

It also raised the Group’s fiduciary score to higher level of “81-85”, the highest among the Islamic Financial Institutions in the region. This reflects the strong fiduciary standards in the Group. The Agency commended the wide geographic diversification of the Group with most jurisdictions possessing a low economic correlation, thereby improving the overall risk metrics. In addition, IIRA commended the stable and cost effective sources of liquidity of the constituent Units of the Group, which is seen as a strength. Besides, the Group’s strong risk management framework as well as robust corporate governance practices are positives for the Group.

In a unique initiative that enhance the close link between the Group’s Sustainability and Social Responsibility program and the United Nations Sustainable Development Goals 2030, the Group signed officially the new Principles for Responsible Banking to became the first bank in the West Asia region to sign these principles, which were developed through an innovative global partnership between banks and the UN Environment Programme Finance Initiative (UNEP FI).

Al Baraka Banking Group’s commitment to the Principles for Responsible Banking follows a period of increased collaboration between the bank and the UNEP Regional Office for West Asia, after entering into a strategic partnership that was formalized with the signing of a memorandum of understanding earlier in May 2019. As part of Al Baraka Goals (2016-2020), Al Baraka pledged US$197 million for 2019-2020 in support of renewable energy and energy efficiency projects in the bank’s operating countries, including; Jordan, Bahrain, Syria, Iraq, and Saudi Arabia from the West Asia region.

For the seventh successive year, the Group and a number of its units succeeded in winning the “World’s Best Islamic Financial Institution” Award for 2019, in various categories. The Awards were announced at the Annual Awards ceremony that the Global Finance magazine customarily holds for international banks and financial institutions during the annual joint meeting of IMF and World Bank in Washington.

Al Baraka Banking Group was announced as the winner of the “Best Islamic Financial Institution in South Africa Award” in the regional winners’ category. Banque Al Baraka D’Algerie S.P.A., Al Baraka Bank Lebanon and Jordan Islamic Bank, which are ABG subsidiary banking units, were announced as winners in the “World’s Best Islamic Financial Institution 2019” – Country category, in Algeria, Lebanon and Jordan, respectively. The winning of these awards were based on financial and professional criteria set by the magazine’s Award Committee, which included their prominent role and contribution in the development of the Islamic banking sector, for their ability to achieve consistent growth, the quality of products and services offered to clients, as well as for their originality and innovation in services and customer care, continued development and innovation in banking operations and other important criteria such as strategic relationships, geographic reach, profitability and robustness of financial position.

On other important matters, Yousif stated, “During the first nine months of 2019, we continued to focus on the implementation of the digital transformation strategy, both at the Group level and at our banking units, and we intend to launch a number of initiatives which will highlight the leading role of the Group in embodying this transformation.  We also continued to focus on expanding our Shari’a-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.  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”.

The President & Chief Executive of ABG concluded his statement by praising the tireless efforts of the executive management at the Group Head Office, the executive management teams of the banking units of Al Baraka Banking Group and related parties that were instrumental in achieving these satisfactory results for the Group.

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