MANAMA: The Bahrain based global Islamic banking major, Al Baraka Banking Group’s (ABG) high moral and communities oriented business approach has paid off in the first half of the year.
“The Group and its banking units continue to devote a sustainable growth approach based on firm moral and economic pillars linked to the real economy of the communities in which they operate, which provides the stability and growth factors for the operational and profitability results of the Group,” Mr. Abdulla Ammar Al Saudi, Vice Chairman of ABG, said.
The total assets were up 5%, financing and investments by 7%, deposits by 4% and total shareholders’ equity by 23% at the end of June 2017 compared to end of December 2016. As for the results of the first half of 2017 as a whole, it was affected by the results of the first quarter of this year. Net operating income decreased by 7% to US$ 219 million and net income attributable to shareholders of the parent decreased by 14% to US$ 70 million in the first half of 2017 compared to the first half of 2016 of US$ 81 million, while total net income was US$ 113 million during the first half of 2017 showing a decline by 21% comparing to the same period last year of US$ 143 million.
The results of the second quarter of 2017 showed a significant improvement in profitability compared to the results of the first quarter of 2017, where net operating income increased by 17% and net income by 19% compared to the first quarter of 2017.
The results of the second quarter of 2017, however, showed an increase in total operating income by 3% to reach US$ 256 million compared to the first quarter of the same year. After deducting all operating expenses, the net operating income, reached US$ 118 million during the second quarter of 2017 compared to US$ 101 million during the first quarter of 2017, recording a large increase of 17%. After deducting taxes and provisions, the net income attributable to equity holders of the parent reached US$ 36 million during the second quarter of 2017 compared to US$ 34 million during the first quarter of 2017, an increase of 5%. While total net income of the Group went up significantly by 19% to reach US$ 61 million during the second quarter of 2017 compared to US$ 52 million in the first quarter of 2017.
In comparing the results of the second quarter of 2017 with the same period last year, it showed a decline in the net income attributable to the parent by 18% to reach US$ 36 million compared to US$ 44 million and total net income showed a decline of 17% to reach US$ 61 million comparing to US$ 74 million.
During the first half of 2017, Al Baraka Banking Group continued the implementation of the business and markets expansion initiatives and diversification of income sources through its banking units located in 15 countries. The operations and activities of the Group achieved a noticeable growth across the board in financial and investment activities.
The Group had reported earlier, that the second half of 2016 saw a general decline in currencies value in some countries where its units operate, against the US dollar, which had affected the results of the first quarter of 2017. However, the Group expects that the results of the remaining part of the year will witness an improvement in revenues and income, God willing. The results were affected also by the financial and economic instability in some countries where the Group operates, forcing it to strengthen prudential provisions as part of the conservative policy pursued by the Group.
The consolidated balance sheet recorded a healthy increase at the end of June 2017 compared to end of December 2016 and the total assets of the Group grew by 5% reaching US$ 24.7 billion. The Group had maintained a large portion of its assets in the form of liquid assets in order to tap 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 2017 compared to US$ 17.5 billion at the end of December 2016, a good increase of 7%.
Customer accounts as at the end of June 2017 were up 4% reaching US$ 20 billion compared to the end of December 2016’s level which represents 81% of total assets, thanks to the continued customer confidence and loyalty in the Group and growing customer base and expansion in the branch network. The total equity was up 23% to US$ 2.5 billion at the end of June 2017, compared to the end of December 2016. This also includes the issuance of US$ 400 million Additional Tier 1 Perpetual Sukuk by ABG during May 2017. The total equity to total assets ratio reached 10% at the end of June 2017, an indication of the overall capital base strength of the Group.