Al Baraka Banking Group B.S.C (ABG) announced a net profit of $143 million for the first half of 2014. While balance sheet items increased moderately: total assets increased by five per cent, total financing and investments by five per cent, customer accounts by five per cent and total equity by three per cent 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."
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 that 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".
During the first half of 2014, Al Baraka Turk Participation Bank, has successfully completed an issuance of Islamic Sukuk worth $350 million, which received a large acceptance, as the value of total subscriptions reached $750 million, 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 per cent from Middle East, 31 per cent from Europe and eight per cent from Asia. In terms of investor type, 80 per cent of them were banks and financial institutions, eight per cent Funds, and six per cent 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 $445 million in the first half of 2014, which is lower by six per cent compared to the first half of 2013 of $472 million. After deducting all operating expenses which increased by three per cent, 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 $143 million for the first half of 2014, up by two per cent 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 two per cent as compared to the same period last year.
The total assets of the Group amounted to $22.1 billion as at the end of June 2014, up by five per cent compared to the end of the year 2013. The earning assets (financing and investments) amounted to $16.1 billion as at the end of June 2014 compared to $15.4 billion at the end of December 2013, an increase of five per cent. Customer accounts increased by five per cent from $17.7 billion as at the end of December 2013 to $18.6 billion as at the end of June 2014. Total shareholders' equity amounted to around $2.0 billion as at the end of June 2014, up by three per cent 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 nine per cent to reach $232 million, while net operating income increased by a large percentage of 31 per cent to reach $110 million, and net income increased by 15 per cent to $76 million. When comparing the net income of the second quarter with the same period last year, it shows an increase of three per cent, while the income attributable to the shareholders of the parent increased by four per cent to reach $43.8 million during the second quarter of 2014.