MANAMA: National Bank of Bahrain achieved strong financial results for 2013 with the Net Profit increasing by 8.1 percent to reach BD 51.63 million (US$ 136.60 million) compared to BD 47.50 million (US$ 126.33 million) for the previous year, the Chairman of National Bank of Bahrain told shareholders.
“These strong results demonstrate successful implementation of the Bank’s business strategies in the interest of all our stakeholders. Return on Equity at 15.06 percent and Return on Assets at 1.90 percent remains strong by regional and international standards. The Bank is well capitalized with strong liquidity and a diversified asset portfolio,” Chairman Farouk Yousuf Khalil Almoayyed during the bank’s 57th AGM said.
The performance of the global economy is showing signs of improvement with modest recovery expected over the next two years. The growth story is shifting with the strengthening of the US economy, Euro area crawling out of recession while emerging markets have lost some of their lustre. The United States has seen several quarters of growth largely driven by private demand. The core economies of Europe show signs of recovery while the periphery economies are still struggling. Even though growth rates in emerging markets are expected to outperform the advanced economies, the rate of growth has considerably slowed down due to a combination of structural and cyclical factors accompanied by financial market strains.
The GCC economies continue to perform well, although headline growth for 2013 is expected to be lower than the achievement of the previous years, largely driven by benign oil prices while personal consumption is set to remain an important growth driver.
Bahrain’s economy has seen favourable trends emerging based on the data available for the first three quarters of 2013 with real GDP growth rate of 4.7 percent. However, growth has been driven by the oil sector with normalization of output levels in the Abu Sa’afah off shore oilfield which resulted in an impressive growth of 12.4 percent in oil sector. On the other hand, the non oil sector achieved a muted growth of 2.9 percent, to an extent the result of the unexpectedly lengthy process of approval for the 2013-14 state budget. The Economic Development Board predicts a pick-up in the non-oil sector activity in the last quarter resulting in an estimated real GDP growth of 4.8 percent for the year 2013.
Customer deposits continue to show steady growth and stands at BD 2,083.54 million (US$ 5,541.33 million) as at 31 December 2013. Total Earning Assets stood at BD 2,596.84 million (US$ 6,906.45 million) as at 31 December 2013 compared to BD 2,515.83 million (US$ 6,691.04 million) as at the previous year end, reflecting a growth of 3.2 percent. As quality lending opportunities were limited, the Bank invested surplus liquidity in investment grade securities and Treasury bills. Capital Adequacy continues to remain at a healthy level of 31.2 percent.
NBB’s plays an active role in the development of the Kingdom of Bahrain and continues to focus on domestic business opportunities. In meeting with this objective, the Bank took several initiatives during the year. The focus of the Domestic Banking group was to expand the distribution network and offer innovative products and services in line with customer requirements besides strengthening customer relationships. Additionally, the Bank made a strategic investment during the year by acquiring 25.8 % stake in Bahrain Islamic Bank to establish a footprint in the Islamic banking space. Regionally, the Bank’s strategy of selective expansion at Abu Dhabi and Riyadh is progressing as planned with Riyadh branch in particular achieving significant increase in business and profitability. Treasury’s concentration during the year was on efficient deployment of liquidity besides participating in several domestic and regional issues.
The prospects for 2014 appear cautiously optimistic with the wheels of economic growth turning positive although there are significant challenges facing the global economy. The Board of Directors take this opportunity to reaffirm their commitment to meet the expectations of all stakeholders while maintaining the highest standards of corporate governance in all its business dealings.
The Board is recommending the allocation of BD 2.57 million to the Donations and Contributions programme, representing 5 per cent of 2013 profits available for distribution. The cumulative allocation under the programme, since its inception in 1980, is now BD 34.34 million.
The Board recognizes that good governance is a vital ingredient in the success of any organization and is fully committed to protect the interest of all its stakeholders. The Bank is in compliance with the requirements of the Code of Corporate Governance issued by the Ministry of Industry and Commerce and the CBB’s Rulebook.
The Directors, on behalf of the shareholders, take this opportunity to express their gratitude and sincere appreciation to His Majesty King Hamad bin Isa Al Khalifa – the King of Bahrain, to His Royal Highness Shaikh Khalifa bin Salman Al Khalifa – the Prime Minister, to His Royal Highness Shaikh Salman bin Hamad Al Khalifa – the Crown Prince, Deputy Supreme Commander, and First Deputy Prime Minister, Government ministries and institutions – especially the Ministry of Finance and the Central Bank of Bahrain, for their guidance, kind consideration and support.
The Directors would like to thank Mr. Mohammed Mubarak Al Sulaiti and Dr. Abdulla Ahmed Mansoor Radhi, who left the Board, for their contribution and services during the tenure on the Board. The Directors would like to take this opportunity to welcome Khaled Omar Mohammed Alromaihi and Mir Zulfekar Ali as members of the Board of Directors and look forward to their contribution towards the continued success of the Bank.
The Directors also extend their thanks and appreciation to the staff of the Bank whose dedicated service and commitment has played a vital role in the achievements of the Bank over the years and to all our valued customers and friends for their continuous support and the confidence reposed by them in the National Bank of Bahrain.