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BBK records $34.48m profit for Q4

February 17, 2021
banking

Bahrain's BBK bank achieved a net profit attributable to the owners of BD13 million ($34.48 million) for the fourth quarter of 2020, compared to BD19.9 million during Q4 of 2019, a decrease of 34.7%.

The basic and diluted earnings per share reached 10 fils compared to 16 fils during the corresponding period of last year, said a statement.

Total comprehensive income attributable to the owners of the bank during Q4 2020 stood at BD56.6 million compared to BD44.2 million last year, with an increase of 28%. The increase in total comprehensive income is attributable to the increase in valuation of investment securities during the quarter as financial markets continued to recover from the drop experienced in the first half of 2020.

Net interest income dropped by 12% to BD20.5 million (BD23.3 million in the corresponding period of last year), mainly due to interest rate cuts during early 2020. Net fees and commission income dropped by 31.9% from BD9.1 million achieved during Q4 of 2019 to BD6.2 million in Q4 of 2020, mainly due to the impact of the concessionary measures taken in response to Covid-19 to support the domestic business community, as well as new regulatory caps on loan fees that came into effect around mid-2020.

Moreover, the bank’s net share of profit from associated companies and joint ventures decreased from BD0.4 million to a loss of BD2.3 million, as a result of the adverse impact of Covid-19 on the financial performance of the bank’s associated companies. During the year, the bank has taken vigorous measures to optimise operating costs, which in turn helped to effectively decrease operating costs by 5.6% to BD15.1 million from BD16 million level reported in the corresponding period of 2019, it said.

For the full financial year ending December 31, 2020, the bank achieved a net profit attributable to the owners of the bank of BD52 million compared to BD75.4 million in the year 2019, a decrease of 31%. The basic and diluted earnings per share reached to 39 fils compared to 56 fils for the previous year.

Total comprehensive income attributable to the owners of the bank for the year ended December 31, 2020 amounted to BD28.9 million compared to BD109.3 million reported in 2019, representing a decrease of 73.6%, driven by the decrease in valuation of investment securities due to Covid-19 impact on financial markets and lower net profit.

The deep cuts of global interest rates by central banks around the world resulted in a drop in net interest income from BD107.3 million to BD80.8 million, a decrease of 24.7%. Furthermore, net fees and commission income dropped from BD26.6 million to BD19.6 million, a drop of 26.3%, mainly due to the impact of concessionary measures taken in response to Covid-19 and due to the application of the new regulations on capping fees and charges. Moreover, the bank’s share of profit from associated companies and joint ventures decreased from BD6.8 million during 2019 to a loss of BD0.1 million during 2020. Operating costs registered a decrease of 4% to BD60.7 million compared to BD63.2 million reported last year. In addition, continuous investment in boosting the bank’s management of credit risk, active management of distressed exposures and step-up in remedial efforts resulted in a significant reduction in net provision charges from BD18.9 million during 2019 to BD5.6 million during 2020, a decrease of 70.4%.

Total shareholders’ equity (excluding non-controlling interests) as of end of December 2020 stood at BD511.8 million compared to BD543.9 million as of end of the financial year 2019. The decrease of 5.9% is mainly related to negative valuation of investment securities due to market volatility, dividend payment during the year, and the impact of concessionary measures taken in response to Covid-19 pandemic to support Bahraini citizens and companies.

Total assets stood at BD3,760.4 million at end of 2020 compared to BD3,865.0 million reported at end of 2019, registering a decrease of 2.7%. The investment securities portfolio registered a healthy increase of 9.4% to stand at BD957.3 million compared to BD875.0 million as of end of December 2019. Cash and balances at central banks registered a decrease of 31.9% from BD376.4 million as of end of December 2019 to BD256.5 million as of end of December 2020. Net loans and advances decreased by 6.9% to stand at BD1,555.8 million (2019: BD1,670.9 million). Customer deposits portfolio maintained its levels of around BD2,167.4 million (2019: BD2,169.5 million). The loans to customer deposits ratio remains at a comfortable level of 71.8% (2019: 77.0%).

Based on the positive financial results for the year, BBK Board of Directors recommended paying annual cash dividends of 20 fils per share and stock dividends of 10% per share equivalent to 1 share for every 10 shares for the shareholders registered with the bank on the record date and subject to the approval of the AGM and the regulatory authorities.

Board of Directors stated: “We would like to express our gratitude and appreciation to the governments of the Kingdom of Bahrain and the State of Kuwait for their wise leadership, direction and for the effective measures enacted to contain the Covid-19 pandemic and to support all parties. In BBK, we are committed to support such measures, and we are immensely proud of the role that BBK has played in maintaining services throughout the Covid-19 crisis without interruptions, whilst simultaneously prioritising the health and well-being of our employees and customers.

'The impact of the global pandemic is reflected in BBK’s financial results, which we view as satisfactory given market conditions. Despite all the challenges and the drop in profitability across the banking sector, there were positive outcomes to the pandemic. The crisis has led the bank to accelerate the implementation of its 2019-21 digitization strategy, by fast-tracking several technology projects to 2020, rather than 2021-2022, including the development and launch of BBKPlus mobile onboarding application. Other strategic initiatives during 2020 included the signing of a memorandum of understanding for BBK’s potential acquisition of specific assets of Ithmaar Holding BSC. The acquisition is subject to shareholder and regulatory approvals and completion of due diligence by both parties.”

Dr AbdulRahman Saif, BBK’s Group Chief Executive, said: “Despite the unprecedented challenges of 2020, we continued to deliver value to our customers and shareholders, support and develop our people, and enrich the societies in which we operate. A major accomplishment in 2020 has been our digitalization strategy, by which the pandemic has helped in accelerating the delivery of our products to meet our customers’ demands for digital services. Our new digital branch in City Center, featuring a range of self-service technologies, has received excellent feedback and we plan to open two more in 2021 to serve our clients.

'Other digital achievements include the launch of BBK BanKey, a platform offering various solutions for business and institutional clients, and the launch of our BBKPlus mobile onboarding app in addition to BBK mobile app that offers open banking services. All these achievements were made while extending support to our corporate and retail customers to enable them weather the impact of the pandemic. The support included loan repayment deferrals, interest waivers, discounted fees, and others including the support to individuals and business entities most affected by the pandemic. BBK’s management team extends its gratitude to our government for its generous support, wise leadership and management of the crisis and the effective measures it introduced.'

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