BBK posts 4 pc increase in net profit to BD58.7m

Manama : BBK yesterday announced a net profit of BD58.7 million attributable to owners for the financial year ended 31st December 2017, which is 4.0 per cent higher than BD56.4m recorded in 2016. 

Earnings per share for the period was 48 fils, marginally lower than 2016 earnings of 49 fils per share, hurt mainly by the impact of annual distribution of BD7.1m on Perpetual Tier I capital securities and the changes to Treasury stocks level. 

The Board of Directors also recommended a distribution of 35-fils cash dividend per share. 

Commenting on the performance, Chief Executive, Reyadh Sater, said: “Our diversified investments over different geographical locations have always enabled the bank to cope with challenging business environments, and we shall continue exploring potential opportunities globally, and choose the ones that will support our operations and increase shareholders’ value. Though the bank implemented the International Financial Reporting Standard 9, well ahead of its implementation date of 1st January 2018, which resulted in greater need for early provisioning against credit risk, the Bank was yet fully able to absorb the impact, and report higher profits”.

Operating revenues stood at BD143.1m, providing an increase of 7.2pc compared to BD133.5m recorded during the previous year, which was driven by the growth in net interest income of 5.9pc to reach BD 90.9m (2016: BD 85.8m), and the growth in other income of 10.4pc, increasing to BD 46.6m (2016: BD 42.2m). 

The growth in net interest income was driven mainly by the restructuring of the Banks balance sheet to focus on more profitable segments such as retail and corporate, which resulted in reducing the thinly priced exposures and adequately controlling the cost of funding, as well as the impact of the increase in interest rates during the year. Other income growth was mainly due to better management of the Bank’s investment portfolio that resulted in higher dividends received on those investments as well as higher gain on the sale of some of the investments securities. 

During the year, the Bank invested in expanding its network and enhancing delivery channels through innovative means. These investments resulted in a marginal increase in total operating expenses of 1.6pc to stand at BD 54.0m (2016: BD 53.1m). The robust growth in operating revenues, coupled by a marginal increase in operating expense, resulted in improving the Bank’s cost-to-income ratio to 37.8pc from 39.8pc reported in 2016.  

The net provision charges for the year ended 31st December 2017 stood at BD 29.0m, compared to BD 22.6m during 2016. The increase is mainly due to higher provision requirements mandated by the implementation of IFRS 9. 

Total comprehensive income for 2017 stood at BD 65.0m compared to BD 67.3m for the year ended 2016. The movement is mainly due to the changes in fair value of investment securities. 

Three months period

BBK reported a net profit of BD 13.8m for the three months ended 31st December 2017, compared to BD13.9m for the corresponding period of 2016. Total revenues for the same period amounted to BD35.5m (2016: BD32.8m), while total operating expenses marginally decreased to BD14.4m (2016: BD14.7m). 

The net provision requirements for the final quarter of 2017 amounted to BD7.0m (2016: BD3.7m).

Core lending and investment activities remain robust with the loans portfolio standing at BD1,740.7m (December 2016: BD1,767.1m), and the investment securities portfolio standing at BD 749.0m (December 2016: BD 768.1m). 

Customer deposits increased by a healthy rate of 5.2pc reaching BD2,623.6m compared to BD2,493.7m as of end of December 2016, with a comfortable loans to customer deposits ratio of 66.4pc (December 2016: 70.9pc). 

The bank’s equity attributable to shareholders as of end of December 2017 stood at BD498.6m (2016: BD472.4m), 5.5pc higher than the prior year demonstrating BBK’s ability to add value to its shareholders, which reflected positively on the capital adequacy ratio which continues to stand well above the regulatory requirements.