Al Baraka Banking Group records a 34% growth in net income 

Published 15 Nov 2021 via bizbahrain–Al Baraka Banking Group B.S.C (The Group), the leading Islamic banking multinational, which is headquartered in Bahrain and traded on the Bahrain Bourse and Nasdaq Dubai (under the trading code “BARKA”), announced its financial results for the third quarter of 2021.

Q3 2021 Business Performance: The Group announced Net Income of US$ 37 millionattributable to shareholders of the parent company, for the third quarter of 2021, compared to US$ 20 million for the same period last year, a surge of 85%. The basic and diluted Earnings per Share for the third quarter of 2021 was US Cents 3.04, compared to US Cents 1.62 for the same period of 2020.

The Group’s Total Net Income recorded during the third quarter of 2021 was US$ 53 million, compared to US$ 42 million for the same period of 2020, registering an increase of 25%. This was due partially to the lower provisioning levels allocated during the period, owing to the gradually improving macro-economic conditions in most of the countries of the Group’s operations. Indeed, the Net Allowances for expected credit losses for the third quarter of 2021 reduced by 65% to US$ 32 million from US$ 91 million during the same period last year.

The Total Operating Income decreased by 20% to reach US$ 230 million during the third quarter of 2021 compared to US$ 287 million during the same period last year, due to the impact of devaluation of local currencies against the US dollar in some countries of the Group’s operations in addition to the higher cost of funding, resulting
from significant increases in base rates in some markets.

Financial Results for the Nine Months Ended September 30, 2021: The Group achieved a Net Income attributable to equity holders of the parent company of US$ 89 million for the first nine months of 2021, up from US$ 67 million for the same period in 2020, a growth of 34%.

The basic and diluted Earnings per Share for the first nine months of 2021 was US Cents 6.09 compared to US Cents 4.15 for the same period of 2020. Meanwhile, the Group’s Total Net Income was US$ 146 million during the first nine months of 2021, up from US$ 132 million in the same period of 2020, registering a growth of 11%. The increase in Net Income was predominantly a result of a strong expense discipline and lower provisions, supported by improvements in economic conditions.

The Net Allowances for expected credit losses for the nine months ended September 2021 declined by 47% to US$ 115 million from US$ 217 million in the same period of last year; while the annualized Return on Average Equity for the nine months ended September 2021 rose to 8.9% from 7.9% for the same period of the previous year. Similarly, the annualized Return on Average Shareholders’ Equity for the nine months ended September 2021 increased to 8.4% from 6.2% for the same period of the previous year.

Total Operating Income of the Group was US$ 724 million during the first nine months of 2021, compared to US$ 839 million in the same period of 2020, a 14% decrease. As explained above for the Q3 results, the decline in Total Operating Income resulted mainly from the devaluation of local currencies against the US dollar in some
countries of our operations in addition to the higher costs of funding.

Balance Sheet: The equity attributable to the parent company’s shareholders and Sukuk holders at the end of September 2021 amounted to US$ 1.41 billion, compared to US$ 1.42 billion at the end of December 2020, registering a decline of 1%.Meanwhile, total equity reached US$ 2.14 billion at the end of September 2021, compared to US$ 2.22 billion at the end of December 2020, showing a decrease of 4% mainly caused by foreign currency translation reserves.

As for Assets, the Total Assets of the Group showed an increase of 1% by the end of September 2021, amounting to US$ 28.64 billion, compared to US$ 28.25 billion at the end of December 2020. Likewise, Customer Accounts (which include Equity of Investment Account Holders, Customer Current and other Accounts and Due to Banks)
increased by 2% from US$ 24.4 billion in December 2020 to US$ 24.9 billion at the end of September 2021. During the first nine months of the year 2021, the Group continued to focus on maintaining a large portion of liquid assets, given the prevailing uncertain economic conditions.

Commenting on the Group’s performance during the first nine months of 2021, Mr. Abdullah Saleh Kamel, Chairman of the Board of Directors of the Group, said, “We have continued to achieve good results during the period, despite the unstable economic and financial conditions globally. This achievement was made possible by our diverse resources and operating network, which enabled us to contain the repercussions of the pandemic on our operations and improve our performance and efficiency”.

Mr. Mazin Manna, member of the Board of Directors and Group Chief Executive Officer of the Group said, “Our operating and financial results continued to show improvement at both the Group and the Unit levels. We have greatly enhanced our operating efficiency through stringent discipline towards control of expenses. Our profitability has also improved due to better performance of some units and lower provisioning, owing to the gradually improving, albeit unstable, outlook and environment”.

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