BBK reports eight per cent increase in net profit for the 9M 2015.
Commenting on the Bank's performance and future outlook, Mr. Murad Ali Murad, Chairman of the Board of Directors said, "We are satisfied with our financial results for the nine months of the year. Our strong and stable financial footing has enabled us to stay committed to our customers while investing in targeted growth opportunities, delivering sustainable growth, managing risk, and improving long-term financial performance and returns for our shareholders."
The growth in net profits was mainly driven by a notable growth in fees and commission income by 10.8 per cent to reach BHD 23.2 million and a 9.2 per cent growth in FX and investment income to reach BHD 13.6 million, while Net interest income stood at BHD 52.7 million. Given the ongoing bank-wide effective cost management, operating expenses increased reasonably by 2.7 per cent to amount to BHD 36.5 million when compared to the corresponding period of last year, resulting in improved cost to income ratio from 41.3 per cent in September 2014 to 40.8 per cent as of 30 September 2015.
The bank continued to follow a prudent approach in assessing and providing provisions for certain impaired asset classes. As of end of third quarter of 2015, the bank has increased its provisions reserve including voluntarily general provisions by BHD 14.3 million (September 2014: BHD 13.1 million), to account for expected and unexpected deterioration in its assets quality portfolio.
The turbulence in the global stock markets caused by the Chinese market crash and its corresponding impact on the large-scale volatility in stock prices, resulted in reducing the investment revaluation reserve of most financial institutions. Accordingly, BBK reported a negative BHD 28.1 million revaluation reserve as of 30 September 2015 compared to reporting positive revaluation reserve of BHD 15.7 million in similar period last year. As a consequence, the bank's comprehensive income stood at a level of BHD 8.6 million, compared to BHD 51.8 million reported for the same period of last year.
For the three months ended 30 September 2015, the bank reported a growth in net profit of 7.5 per cent to reach BHD 10.9 million compared to BHD 10.2 million reported for the same period of last year. Net interest income amounted to BHD 17.7 million (2014: BHD 17.8 million), while other income, including fees and commission, FX and investment income has recorded a positive growth of 13.2 per cent compared to the same period of last year to reach BHD 11.9 million. Provision requirements for the third quarter of 2015 amounted to BHD 8.2 million, compared to BHD 5.9 million reported in similar quarter of last year.
Commenting on the bank's performance, Mr. A.Karim Bucheery, Chief Executive, said "Our successful strategic plan continues to drive and flourish BBK's sustainable growth and yields positive results year after year. I am very proud that we are moving forward in our journey, despite the challenging operating environment. We have managed to maintain a positive outlook situated to benefit from future growth and focus on customer centricity and service excellence. "
He also added, "Challenges have increased with the lower oil price, however we are fortunate that our strategy has situated us in a place that would enable us to avoid any drastic changes by creating a clear direction, solid foundation, and provides agility in a rapidly changing world. This year marks a new milestone in BBK's journey as we will begin our next strategic plan in 2016. Our strategy formulation process is thorough and rigorous. And we are confident that by the end of our next three years strategic plan, BBK will be even more superior to offer best quality to customers, more value-creating for shareholders, and better governed."
Maintaining its strong balance sheet and solid capital position, BBK's balance sheet witnessed a growth of 11.6 per cent to reach BHD 3,715 million as of end of September 2015, compared to BHD 3,331 million reported in the corresponding period of last year. As one of the key levers to fuel balance sheet growth and improve returns, non-trading investments securities increased by 6.0 per cent to amount to BHD 811 million (2014: BHD 765 million). Net loans and advances amounted to BHD 1,795 million as of end of the third quarter of 2015 (September 2014: BHD 1,822), while customer deposits leaped to reach BHD 2,566 million as of 30 September 2015, a 14.0 per cent increase when compared to BHD 2,250 million reported in similar period of last year.
BBK liquidity and funding position continues to be strong with liquid assets (Cash and balances with central banks, treasury bills, Financial assets at fair value through statement of income, and Deposits and due from banks and other financial institutions) to total assets standing at 26.7 per cent (September 2014: 18.3 per cent), loan to total deposit ratio at 63.3 per cent (September 2014: 70.7 per cent), and capital adequacy ratio remained at comfortable levels well above the regulatory minimum of 12.5 per cent.
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