NBB shows growth in operating income
MANAMA: National Bank of Bahrain (NBB) has reported a 27.3 per cent decrease in net profit to BD29.1 million ($77.2m) for the first half ended June 2020, compared with BD40m ($106.1m) last year.
The decrease in net profit was predominantly due to the worldwide Covid-19 pandemic resulting in higher precautionary provisioning requirements, lower margins, lower income from associate equity valuations and lower dividends following reduced distributions due to the ongoing epidemic.
Basic and diluted earnings per share during the year decreased by 29.2pc to 17 fils compared with 24 fils in 2019.
Operating income rose by 16.8pc year-on-year (YoY) to BD74.5m compared with BD63.8m in the prior year period. Operating profit at BD39m was down by 7.8pc YoY, demonstrating the resilience of core activities during the pandemic.
Total comprehensive income for the period decreased by 96pc to BD1.8m compared with BD44.5m in 2019, other comprehensive income includes the mark-to-market movements during a year and hence include temporary fair value fluctuations on the sovereign bond and equity portfolios.
The group’s total equity decreased by 10.8pc to BD474.9m compared with BD532.3m as of end-December 2019.
The decrease was due to the 2019 cash dividend payout, the reduction in the mark-to-market on investment securities classified as fair value through other comprehensive income as well as due to absorbing the cost of deferring loan repayments since March in relation to supporting customers during the first six months of the pandemic.
Total assets increased by 39.3pc to BD4,450.3m compared to BD3,194.5m recorded on December 31, 2019.
The increase was due to the consolidation of Bahrain Islamic Bank (BisB) following the acquisition in January 2020 as well as strong demand for NBB loan products during the first six months of this year.
NBB chairman Farouk Almoayyed said, “Our overall financial results for the first half of the year demonstrate our strong position despite the effects of the pandemic on the socio-economic landscape. The NBB Group witnessed a strong first quarter following the acquisition of majority stake in BisB, a strategic move that will result in synergies and a stronger positioning for both banks through enhanced revenue, and shared costs relating to new technology enhancements.”
The drop in results in the second quarter was due to the impact of the pandemic on the market and economy.
“The overall postponement of economic activity across the GCC also forced us to postpone investment opportunities. Despite the challenging market conditions, our balance sheet and ratios have remained above the required levels and will continue to shield the group whilst measures are kept in place for business continuity,” he added.
NBB chief executive Jean-Christophe Durand said the drop in market rates and the group’s precautionary forward-looking provisioning were two major factors contributing to the performance drop during the first half of the year.
“However, the group continued to show solid growth in operating income, recording a 16.8pc increase. NBB was also able to demonstrate volume growth on a standalone basis, which was further enhanced by the BisB consolidation and synergies. The liquidity and equity position also remain solid and strong, having withstood the recent volatilities,” he added.
Source: http://www.gdnonline.com/Details/838874/NBB-shows-growth-in-operating-income
