The Bahrain based leading Islamic banking group, Al Baraka Banking Group B.S.C (ABG) announced a net profit of $143m for the first half of 2014. While balance sheet items increased moderately: total assets increased by 5%, total financing and investments by 5%, customer accounts by 5% and total equity by 3% at the end of June 2014 compared to the end of December 2013. These figures confirmed the Group’s continuation to achieve the distinguished results in accordance with successful strategies business programs applied relating to new products and services and expansion of customer base through increasing the number of branches.
On this occasion, H.E. Shaikh Saleh Abdulla Kamel, Chairman of Al Baraka Banking Group, stated, “We are pleased with the financial results achieved by the Group in the first half of 2014, given the slowdown in global economic growth and the continuation of a number of political and economic risks surrounding the countries in the region. Since the inception of the world crisis, the Group has followed an approach that is characterized by wisdom and hedge based on the continuation of cautious expansion and growth strategies and at the same time, building human, technical and material capabilities of the Group to face the various risks. It would not have been possible to realize all of these achievements, were it not for the long standing experience of the Group; and its stringent adherence to the Islamic banking model, which calls upon us to work on the development of land and serve the communities amongst which we operate, while being committed at all times to the highest ethical and professional standards.”
On his part, Mr. Abdulla Ammar Al Saudi, Deputy Chairman of ABG, said, “The financial and operating results we achieved during the first half of 2014 are very good by all standards and have surpassed the targets projected in our plans for the current year, despite the current international and regional banking situations and slowdown in economic growth in major countries. We would like to emphasize that our financing and investment policies and activities during the first half of this year were actively focused on investment opportunities arising from the current situation, whereby we capitalized on our substantial resources and extensive geographical network. However, our cautious and selective approach, together with the extreme caution exercised towards the markets and customers in implementing our financial and investment programs has created the desired results.”
Mr. Adnan Ahmed Yousif, Board Member and President & Chief Executive of Al Baraka Banking Group, said, “The financial results that we have achieved during the first half of the year 2014 are distinctive by all standards, especially when compared with the budgeted figures that we planned, where the actual profits earned for the first half of the year exceeded the budgeted profit for the same period. We estimated that our net income during the first half of 2014 will slowdown due to several reasons, most notably that the profits of the first half of the year 2013 for the Group include some of the extraordinary non-current profits. We will note from the analysis of financial statements that the profit of Group for the second quarter of 2014 improved significantly compared with the first quarter, which confirms our determination to compensate for the slowdown in income during the second half of the year.”
With regard to the Group’s plans to expand its branch network, the President & Chief Executive, Mr. Adnan Ahmed Yousif, stated, “Towards the end of 2013 and the half quarter of 2014, the subsidiary units of the Group continued their expansion plans by opening new branches, whereby there were 54 new branches in 2013 and 17 branches during the first half of 2014, which raised the total branch network of the Group to 496 branches, spreading over 15 countries and providing employment to over 10,000 employees. This reflects our determination to consolidate and expand our activities in the countries where we operate currently. Mr. Yousif further said, “It is worth mentioning here that the ambitious branch network expansion programs implemented by the Group would result this year, as it did the last year as well, in huge expenses related to the establishment of these branches and equip them with the necessary human and technical resources. However, the returns of these programs in terms of profits, income, growth and expansion will be great and very positive and will be seen in the forthcoming years.”
Mr. Yousif added, “Al Baraka also continued the study to expand in the rest of the Maghreb countries, especially Morocco, following the big opportunity offered by this country for Islamic banking, the issuance of the Islamic banking law, and its plans to attract Islamic financial institutions, taking into account the abundance of investment and financing opportunities as well as the attractive investment climate offered by the Moroccan market.” “We also look with great interest to the directions of the Indian authorities to open the country to the Islamic banking and encourage the entry of Islamic financial instruments, especially that the Indian market is a huge and diverse market and full of opportunities, as well as its close historical ties with GCC markets, which groomed for the successful partnerships between banks and financial institutions from both sides,” he concluded.
During the first half of 2014, Al Baraka Turk Participation Bank, has successfully completed an issuance of Islamic Sukuk worth $350m, which received a large acceptance, as the value of total subscriptions reached $750m, more than double the required amount. Tens of banks, financial institutions and investment funds from different main world financial centers participated in the Issue with 61% from Middle East, 31% from Europe and 8% from Asia. In terms of investor type, 80% of them were banks and financial institutions, 8% Funds, and 6% Hedge Funds”.
The President & Chief Executive advised that the Group, during the past months, has been working on modernizing the institutional, human and technical infrastructure of the Group, by developing the regulations, applications and practices of corporate governance, social responsibility, governance, compliance, AML, training, risk management and FATCA regulations in according with latest international standards.
The President & Chief Executive of the Group added, “In accordance with our strategic plans, we have many plans and initiatives that we intend to implement during 2014. These will include launching new and innovative products and services in our operating markets as Al Baraka Islamic Bank, Bahrain has recently launched a number of new products and promotional campaigns for both individual and corporate customers. We will also continue improving the internal operating environment technically and professionally, enhancing the unified culture related to the Group’s corporate identity, increasing inter-unit business amongst Al Baraka Units, as well as enhancing the standing of ABG in the international markets as a whole. We once again stress on our determination to continue to invest our substantial financial resources and expertise and the wide geographic network of the units of the Group towards maximizing the returns for our shareholders and the investors in the Group.”
The President & Chief Executive of ABG concluded his statement by praising the tireless efforts of the executive management at the Group’s Head Office, the executive management teams of the banking units of Al Baraka Banking Group and related parties that were instrumental in achieving these excellent results for the Group.
According to the financial statements of the Group, total operating profit amounted to $445m in the first half of 2014, which is lower by 6% compared to the first half of 2013 of $472m. After deducting all operating expenses which increased by 3%, due basically to the growth in expenses related to expansion in opening new branches during the end of 2013 and first half of 2014, the net income of the Group reached $143m for the first half of 2014, up by 2% compared to the first half of 2013, due basically to lower provision requirements on the background of the improvement in the assets quality of the Group. The net income attributable to the shareholders of the parent reached to $81 during the first half of 2014, which increased by 2% as compared to the same period last year.
The total assets of the Group amounted to $22.1bn as at the end of June 2014, up by 5% compared to the end of the year 2013. The earning assets (financing and investments) amounted to $16.1bn as at the end of June 2014 compared to $15.4bn at the end of December 2013, an increase of 5%. Customer accounts increased by 5% from $17.7bn as at the end of December 2013 to $18.6bn as at the end of June 2014. Total shareholders’ equity amounted to $around 2.0bn as at the end of June 2014, up by 3% compared to December 2013.
With regard to the results of the second quarter of the year 2014 compared with the results of the first quarter of the same year, total operating income increased by 9% to reach $232m, while net operating income increased by a large percentage of 31% to reach $110m, and net income increased by 15% to $76m. When comparing the net income of the second quarter with the same period last year, it shows an increase of 3%, while the income attributable to the shareholders of the parent increased by 4% to reach $43.8m during the second quarter of 2014.
On this occasion, H.E. Sheikh Saleh Abdulla Kamel, Chairman of Al Baraka Banking Group, Mr. Abdulla Ammar Al Saudi, Vice Chairman, Mr. Abdulla Saleh Kamel, Vice Chairman, and Mr. Adnan Ahmed Yousif, President & Chief Executive and all Members of the Board of Directors of ABG expressed their sincere thanks to the Ministry of Industry and Commerce, Central Bank of Bahrain, Bahrain Bourse and Nasdaq Dubai for the cooperation and assistance they extended to the Group since it was established. They also extended their thanks to all the Central Banks in the countries in which Group’s banks operate and to all the investors and customers for their continued support. The Board also thanked all the employees of the Group for their loyalty, hard work and dedication, all of which have contributed to the successes and achievements of the Group.
Al Baraka Banking Group is a Bahrain Joint Stock Company licensed as an Islamic wholesale bank by Central Bank of Bahrain, 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 onebn and is rated 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 Al Baraka is $1.5bn, while total equity is at about $2bn.
The Group has a wide geographical presence in the form of subsidiary banking Units and representative offices in fifteen countries, which in turn provide their services through over 485 branches. Al Baraka currently has a strong presence in Jordan, Tunisia, Sudan, Turkey, Bahrain, Egypt, Algeria, Pakistan, South Africa, Lebanon, Syria, Iraq and Saudi Arabia, including two representative offices in Indonesia and Libya.
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