BBK shines beating hitches

Manama: The Bank of Bahrain and Kuwait (BBK) was able to sustain growth trend despite difficult economic conditions in 2015.

The bank’s Chief Executive  Abdulkarim Ahmed Bucheery, while addressing its annual general meeting (AGM) yesterday, said, “Oil prices continued to be depressed, reducing the funding capabilities of regional governments, and the volatility of finance markets and exchange rates created difficulties at a global level.”

“Nevertheless, our strategic approach and direction proved equal to the circumstances. We maintained our record of year-on-year profit increases, achieved healthy balance sheet growth, and further strengthened our liquidity and funding position,” he added.

He added that the Central Bank of Bahrain’s selection of BBK as a D-SIB, coupled with the new Basel lll regulatory framework, makes capitalisation more challenging.

“Strong capital adequacy ratios are essential to maintain the normal growth in our balance sheet and bottom line, and we are evaluating various options to increase capital by about BD 100 million,” he added.

The decision to tap the bond market early for refinancing the US$ 500 million bond maturing in October helped the bank to sidestep the difficult market situation.

“The decision to opt for early re-financing of a $500m bond maturing in October proved very prudent and timely. Going to the market in March to raise $400m meant bearing duplicate funding costs, but eventually this was more than offset by the change in market sentiment and the increase in rates,” according to the bank’s board of directors’ report.

“The March issue was closed at 3.5 per cent. By the second half of the year the going rate had doubled and market appetite all but evaporated. The $100m differential between the maturing bond and new funding was more than covered by the growth in customer deposits,” the board added.

BBK achieved a net profit of BD 53.2 million for 2015, surpassing the previous year by BD 3.1 million, a 6.2 pc improvement. Net interest income rose marginally to BD 72.7 million, and shareholders’ equity rose by 0.4 per cent to BD 361 million.

The bank delivered consistent underlying performance in its core business, demonstrating the strength of its strategy and management team. The total balance sheet strengthened to BD 3,646m by the end of 2015, an increase of BD 146m over 2014. This was driven by further growth in customer deposits, which rose by BD172m or 7.0 pc. The bank’s capital adequacy ratio remained above the minimum regulatory requirement at 14.87 pc, with the ratio of liquid assets to total assets strengthening to 32.0 pc, from 29.2 pc in 2014.

The board has recommended a cash dividend of 25 fils per share. The bank said that the benefits of its strong position in the domestic market, coupled with excellent performance by its subsidiaries and good performance by its overseas operations, were very evident in the 2015 results.

The bank’s new three-year strategy consisting of three core elements namely: consolidating the bank’s position in Bahrain; growing fee-driven business (as opposed to lending activities); and optimising BBK’s international network by diversifying and expanding into new markets is expected to generate great results, according to its Chairman Murad Ali Murad.