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Eye of Dubai
Business & Money | Sunday 22 February, 2015 10:20 am |
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Al Baraka Banking Group Profits Raise by 7% to US$ 275 million in 2014, Fourth Quarter Profits Jump by 12% and Total Assets Exceeds US$ 23 billion

- The Bahrain based leading Islamic banking group, Al Baraka Banking Group B.S.C (ABG) announced that it has achieved a net income of US$ 275 million in 2014, an increase of 7% on the income achieved in 2013. The results of the fourth quarter of 2014 saw large improvements in both profits and businesses as net profits jumped by 12%. Similarly, balance sheet items witnessed notable increases as total assets increased by 12%, total finance and investments by 15%, customers accounts by 12% while total equity increased by 5% as at the end of December 2014 in comparison with the end of December 2013. The Group's results in year 2014 reflect the excellent ability of the Group to maintain its financial performance in a steady state of growth over the past eight years, even during the recent fluctuated political conditions regionally and economic developments globally. This in turn proves the soundness and robustness of the business strategies that the Group follows and which are based on unwavering professional commitment to the values of Islamic banking, supported by extensive experience in the markets in which the Group operates, diversification in income resources, extensive network of branches, as well as strong capital resources that enabled it to continue invest in opportunities generated by the current conditions.
Commenting on these results, HE Sheikh Saleh Abdullah Kamel, Chairman of Al Baraka Banking Group, said "The difficult economic and political conditions continued during 2014 regionally and globally, especially during the fourth quarter of 2014 with the sharp decline in oil prices and fluctuation in US currency, which were accompanied with fast developments in global banking regulatory and supervisory environment. Therefore we are very proud to see continuing growth in the revenue and business of Al Baraka Banking Group, especially during the fourth quarter of the year, and further elevation in its regional and global standing in spite of all those conditions. This embodied once again the success of the business model that we followed since the founding of the Group, a model that reflects the true values of Islamic banking and far- sighted business strategies, supported by outstanding management expertise capable of creatively translating these values and strategies to facts on the ground. These strategies not only enabled us to deal in a prudent manner with the regional and global developments and conditions, but also further expand our business while at the same time continue with our geographic expansion programs and build up the branch network of the Group as well as enhance our human and technical capabilities".
For his part, Mr. Abdulla Ammar Al Saudi, Deputy Chairman of ABG, said that "The economic and financial developments witnessed by year 2014 represented an extension for the global economic climate since the outbreak of the global crises during the last four month of 2008. In addition to this, the last year saw the slowdown in global economic growth, negative political developments in a number of countries in the region, and increased fears from the sharp decline in oil prices. This forced the financial institutions across the world to adopt conservative and cautious business strategies, especially in the light of restricted international banking regulations. In light of these developments and conditions, we consider the financial results achieved by the Group in 2014 as excellent by all standards and they reflect the success of the business strategies that we at the Board of Directors of the Group have put in place based on our points of strength, the opportunities generated in the markets in which we operate, based on a group of highest professional values, principles and standards that we embodied in all the programs, services and products that the Group offers".
Mr. Adnan Ahmed Yousif, Member of the Board of Directors and President & Chief Executive of Al Baraka Banking Group, said "The outstanding results achieved during 2014, embodies our determination to implement all the initiatives that we planned for launch early this year, defying all economic and political datum regionally and globally, and which generated difficult operating and technical conditions for banks in the region. The most important of these initiatives has been to continue improving the quality of products and services, introducing more innovative products, expanding the branch network of ABG subsidiary units, strengthening relationships with our partners, investors and customers, and entering new markets as well as modernizing and developing our human, operational, regulatory and technical infrastructures both at Group level and subsidiary banking units levels. All these initiatives have contributed to maximizing the returns to the shareholders and investors of the Group.
Mr. Yousif added “What give us greater confidence in the Group's performance and integrity of the financial conditions that all units of the Group contributed to the growth of profits and business, coincided with a marked improvement in the quality of the Group's assets, where the percentage of non-performing financings, after accounting for provisions, to total financings did not exceed 0.6% in 2014, which will disappear completely if we take into account the provisions with mortgages available as these far outweigh the size of that financings. "
With regard to the Group's plans to expand its branch network, the President & Chief Executive said that "the subsidiary units of the Group, especially in Turkey, Jordan, Jordan, Egypt, Algeria and Tunis continued opening new branches, where the new branches opened since the beginning of the year reached 70 branches with total branches reaching 549 branches employing 10,853 employees at present, which is a very large addition and put the Group as one of the largest Islamic banking Groups, which has branches around the world, and this was reflected positively and directly in growth in the deposit base and funding, and we expect to add more new branches during this year".
“We also continue our study of the expansion in a number of countries, particularly Morocco, China and India, where these countries are experiencing a large opening to Islamic banking and efforts to attract Islamic financial institutions, and at the same time their markets enjoy huge business and financing opportunities, steady growth and attractive investment environment".

We finished during 2014 the re-engineering of all operations and activities of Al Baraka Bank Turkey to keep pace with the new strategic directions for the Bank in the Turkish market, which will be reflected positively on the implementation of these directions. At the same time the Bank has concluded successfully the issuance of Islamic Sukuk worth US$ 350 million in the form of Sukuk Al Wakala-Murabaha. Given the large orders received by the Issue, the value of total subscriptions reached US$ 750 million, more than double the required amount. Al Baraka Bank Pakistan also issued Islamic Sukuk worth two billion Pakistani rupees (US$ 19.5 million), which is the first of its kind in Pakistan. We are indeed delighted at the large success of the Islamic Sukuk of both Turkey and Pakistan given the prevailed fluctuated financial markets and world economic conditions. Our banking units in Jordan and South Africa also plan to issue Islamic Sukuk during the year 2015.
During 2014, Al Baraka Banking Group and five of its subsidiary banking units received the "Best Islamic Financial Institution" Award of 2014, as part of the annual awards that the Global Finance magazine, which is specialized in banking and finance, awards to international banks and financial institutions. Al Baraka Banking Group received the Best Islamic Financial Institution in Middle East / Africa Award, Al Baraka Bank Lebanon received the Best Islamic Financial Institution in Lebanon Award, Jordan Islamic Bank received the Best Islamic Financial Institution in Jordan Award as well as Best Islamic Retail Bank in Jordan Award, Al Baraka Bank Limited received the Best Islamic Financial Institution in South Africa Award, Al Baraka Islamic Bank Bahrain received the Best Islamic Financial Institution in Bahrain Award and Banque Al Baraka D'Algerie received the Best Islamic Financial Institution in Algeria Award. ABG and its banking units received these awards for their prominent role in the Islamic banking sector, their ability to achieve consistent growth in the future and meeting professional standards in terms of the quality of products and services offered to clients, as well as for their originality and innovation in services and customer service, continued development and innovation in banking operations and other important criteria such as strategic relationships, geographic reach, profitability and robustness of financial position.
We also continued during 2014 to modernize the institutional, human and technical infrastructure of the Group through 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. Also keen to attract more human resources leadership experience and high efficiency to fill the new positions that are developed to keep pace with the expansion of the Group's business.
In order to gain different perspectives on the credit rating by international rating agencies, ABG appointed International Islamic Rating Agency (IIRA) and Dagong Global Credit Rating Company Limited (Dagong) to carry out a credit rating exercise for the ABG Group. These rating agencies have been approved by the Central Bank of Bahrain as External Credit Assessment Institutions. Recently, the two rating agencies jointly issued an investment grade rating of BBB+ / A3 to the ABG Group and a national scale rating of A+ / A2 and said that the Group had a strong financial position, good asset quality, high corporate and Sharia governance standards, and conservative risk management practices backed by a sound and prudent business strategy and accompanied by a well-experienced and competent management team, and it had shown consistent results since inception as well as excellent resilience during the crises of the past few years.
We also continued in 2014 activating the role of the Group's Steering Committee for Social Responsibility, which ensures the continuity of the social responsibility program of the Group and updating it according to the latest well-known research and strategies in the world, which will furthering the objectives of the Sharia, as well as the management and supervision of the implementation of the social responsibility program of the Group at the level of the Group as a whole, as one of the leading program at Islamic banking and finance industry level. We have started activating part of the terms of this program by connecting the purposes of financing provided through our units by creating employment opportunities in their countries and they amended their financing application forms to achieve this purpose. "
During 2014, Al Baraka Banking Group launched its collaboration with the World Bank to begin a research partnership that would be beneficial to the global Islamic banking industry. The partnership's first initiative, part of a planned series of research projects, will be a study examining the risk-management challenges facing Islamic banks, with a particular focus on Musharaka and Mudaraba under the profit-and-loss-sharing system.
The financial statements of the Group for 2014 showed that the continued expansion in business reflected positively on income, with total operating income reaching US$ 918 million in 2014, an increase of 1% over 2013. After deducting all operating expenses, which increased by 7%, net operating income reached US$ 396 million in year 2014 compared to US$ 420 million in 2013. The increase in operating expenses was due to expansion in branch network and enhancement in technical and human infrastructure. The net income amounted to US$ 275 million in 2014 compared to US$ 258 million in 2013, which reflects a noticeable improvement of 7%. This increase reflects the large improvement in the Group's performance and assets quality and lower requirements for provisions. The net income attributable to ABG shareholders increased by 5% to reach US$ 152 million during 2014 comparing with US$ 145 million in 2013.
The total assets of the Group amounted to US$ 23.5 billion as at the end of December 2014, an increase of 12% over the comparative figure as at the end of 2013. Operating assets (financing and investments) amounted to US$ 17.6 billion as at the end of December 2014 compared to US$ 15.4 billion at the end of December 2013, an increase of 15%. Customer accounts have witnessed a good increase of 12% from US$ 17.7 billion at the end of December 2013 to US$ 19.9 billion at the end of December 2014, which indicates the continued customer confidence and loyalty in the Group and growing customer base and expansion in the branch network. Total equity reached around US$ 2.1 billion at the end of 2014, representing an increase of 5% over 2013.
The results of the last quarter of 2014 saw very large improvements, where net income amounted to US$ 68 million, compared to US$ 61 million for the same period of last year, a remarkable increase of 12% which reflects the strong performance of the Group during this quarter. The net income attributable to ABG shareholders increased by 13% to reach US$ 36 million during the last quarter of 2014 comparing with US$ 32 million in the last quarter of 2013.

The President & Chief Executive of ABG concluded his statement by praising the tireless efforts of the executive management at Group Head Office, the executive management teams of the banking units of Al Baraka Banking Group and related parties that played an instrumental role in achieving these excellent results for the Group.
On this occasion, Sheikh Saleh Abdulla Kamel, Chairman of Al Baraka Banking Group, Mr. Abdulla Ammar Al Saudi, Deputy Chairman, Mr. Abdulla Saleh Kamel, Deputy Chairman, and Mr. Adnan Ahmed Yousif, ABG 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 the Group banks operate and to all investors and customers for their continued support. They also thanked all the employees of the Group for their loyalty, hard work and dedication which stand behind the successes and achievements of the Group.
Al Baraka Banking Group (B.S.C) is licensed as an Islamic wholesale bank by the 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 one billion. It is jointly rated BBB+ (long term) / A3 (short term) on the international scale and A+ (bh) (long term) / A2 (bh) (short term) on the national scale with a Stable outlook by Islamic International Rating Agency & Dagong Global Credit Rating Company Limited, and 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 US$ 1.5 billion, while total equity is at about US$ 2 billion.

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 550 branches. Al Baraka currently has a strong presence in Turkey, Jordan, Egypt, Algeria, Tunisia, Sudan, Bahrain, Pakistan, South Africa, Lebanon, Syria, Iraq and Saudi Arabia, including two representative offices in Indonesia and Libya.
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