Manama: Bahrain-based Islamic banking major, Al Baraka Banking Group B.S.C (ABG), reported operating income of US$ 789 million in the first nine months of 2016 compared to US$ 738 million during the same period of 2015, an increase of 7%. The Group said its net operating income was up by 8% during the first nine months of 2016 to US$ 362 million as compared to the US$ 333 million during the same period in 2015, despite the noticeable increase of 6% in operating expenses due to expansion in branch network.
After substantial increase in general provisions, which the Group strengthened them as precautionary measures due to general economic and financial conditions in some countries where the units operate as well as the rest of the world, the Group was able to achieve a net income attributable to equity holders of the Parent of US$ 116 million during the first nine months of 2016, slowing down by 3.8% compared to the same period in 2015 of US$ 121 million. The Group’s total net income reached US$ 204 million, down by 4.8% compared to the total net income achieved during the first nine months of 2015, which was US$ 214 million.
These profits come in line with our expectations and estimate at the beginning of the year and reflect the Group’s ability to achieve the continued growth in revenues derived from diversified and sustainable resources and based on high-quality income-generating assets and wide network of clients, branches, relations and products. These profits will also show a growth if the fluctuation effects in the prices of the local currencies of the countries of some units against the US dollar were excluded.
Al Baraka Banking Group has continued its strong financial performance during the first nine months of the year 2016, where its activities grew in all major business segments and its subsidiary banking units achieved a large increase in business and profitability with a diversity of sources of income in spite of regional and global economic and security conditions. Profit growth rate was affected during the first nine months of this year by the increase in operating expenses as a result of the expansion of the new branches in addition to increasing the financial and regulatory hedging provisions and the decrease in value of currencies of countries where some of the units operate against the US dollar as previously mentioned.
With regards to the third quarter results of 2016 in comparison with third quarter results of 2015, total operating income increased by 6% to reach US$ 251 million in comparison with US$ 236 million for the same period last year, net operating income increased largely by 19% to reach US$ 126 million in comparison with 105 million last year, while the net income attributable to equity holders of the parent reached US$ 35 million, down by 3.8% from US$ 36 million last year, and net profits slowed down by 4.6% to reach US$ 61 million from US$ 64 million reported last year.
The total assets of the Group as at the end of September 2016 increased by 1% compared to December 2015 and reached US$ 24.9 billion. The growth rate was affected by the decline of currencies of some countries in which its units operate against the US dollar, the currency in which the Group’s consolidated accounts are reported. 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$ 19.1 billion as at the end of September 2016 compared to US$ 18.4 billion at the end of December 2015, an increase of 4%.
Customer accounts as at the end of September 2016 also increased compared to December 2015’s level by 1% and reached US$ 20.5 billion, which indicates the continued customer confidence and loyalty in the Group and growing customer base and expansion in the branch network.
Total equity reached US$ 2.2 billion at the end of September 2016, up by 3% compared to the end of December 2015.
HE Sheikh Saleh Abdullah Kamel, Chairman of Al Baraka Banking Group, said that the financial and economic challenges continued regionally and internationally during the first nine months of 2016, which created challenging environment for ABG and its banking units, but despite this, thanks to God, the Group achieved good profitability growth rates and at the same time maintained its high quality of assets and strength of liquid assets, in addition to improve financial returns from all core businesses and all this within its socially responsible Islamic banking model.
“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,” Abdulla Ammar Al Saudi, Vice Chairman of ABG, said.
