WITH EXCELLENCE Annual Report 2016 Contents
Total Page：16
File Type：pdf, Size：1020Kb
Leading WITH EXCELLENCE Annual Report 2016 Contents Part I – 2016 review 2 Vision, mission and values 3 Financial highlights 4 Chairman’s introduction 5 Board of Directors’ report 10 Board of Directors 12 Chief Executive’s review 18 Executive management 20 Corporate social responsibility Part II – Reports and disclosures 24 Corporate Governance report 34 Remuneration report 39 Organisation information Part III – Financial information 43 Financial review 47 Independent auditors’ report to the shareholders Consolidated statements of: 50 • Financial position 51 • Profit or loss 52 • Other comprehensive income 53 • Changes in equity 54 • Cash flows 55 Notes to the consolidated financial statements 85 Basel III Pillar III disclosures Part IV – Minutes 96 Minutes of the Annual General Meeting 99 Minutes of the Extraordinary General Meeting Visit www.bbkonline.com/annualreport2016 to view the digital version of the 2016 Annual Report BBK is licensed by the Central Bank of Bahrain as a Conventional Retail Bank Designed and produced by Origin Communications Group H.M. King Hamad bin Isa Al Khalifa H.H. Sheikh Sabah Al Ahmed Al Sabah King of the Kingdom of Bahrain Amir of the State of Kuwait 1 Vision, mission and values Our vision BBK will be the premier regional financial services enterprise in providing superior products and services of high quality through innovation, technology and lifelong client relationships. Our values creative . passionate . pioneering . reliable Our mission The Bank will expand its overseas presence in more locations in which it chooses to operate in order to satisfy the diversified needs of clients. We believe clients are the driving force in everything we do. We will not compromise on our absolute commitment to providing the very best in client service. We believe our people are our number one asset, with the highest degree of competence, integrity and professionalism. We instil in our people the principles of entrepreneurship, decision-making and ownership through our commitment to training, development, delegation and performance-based reward systems. We are determined to utilise cutting-edge technology, which we recognise as most critical in supporting our short, medium and long-term business objectives. Our shareholders are the source of our financial strength and can expect continued growth and profitability. They are supportive and are confident of our vision of the future. 2 | BBK Annual Report 2016 Financial highlights Net interest income Total assets Net profit + % + % + % 18.0 1.5 6.0 Net interest income for the year Total assets increased Net profit increased was BD 85.8 million. to BD 3,703 million. to BD 56.4 million. 2012 2013 2014 2015 2016 Income statement highlights (BD millions) Net interest income 65.8 68.9 72.3 72.7 85.8 Other income 42.9 43.5 45.2 48.4 47.7 Operating expenses 50.6 54.4 46.2 49.8 53.1 Net profit 42.4 45.1 50.1 53.2 56.4 Cash dividend 10% 10% 20% 25% 30% Stock dividend 10% 10% 5% – – Financial statement highlights (BD millions) Total assets 3,108 3,231 3,501 3,646 3,703 Loans and advances 1,499 1,619 1,846 1,765 1,767 Investments 772 802 824 794 812 Customer deposits 2,205 2,353 2,471 2,643 2,494 Term borrowings 238 239 241 205 206 Total equity 290 333 359 361 474 Profitability Earnings per share (fils) 46 44 47 50 49 Cost/income 46.54% 48.41% 39.33% 41.14% 39.80% Return on average assets 1.46% 1.43% 1.49% 1.44% 1.51% Return on average equity 16.34% 14.56% 13.93% 14.79% 13.23% Profit per employee (BD) 38,789 45,232 48,826 52,169 54,136 Capital Capital adequacy 14.29% 15.33% 15.63% 14.87% 18.48% Equity/total assets 9.32% 10.31% 10.26% 9.89% 12.81% Debt/equity 82.18% 71.94% 67.05% 56.74% 43.46% Liquidity and business indicators Loans and advances/total assets 48.23% 50.10% 52.74% 48.40% 47.73% Loans and advances/customer deposits 67.98% 68.79% 74.72% 66.78% 70.86% Investments/total assets 24.85% 24.82% 23.53% 21.77% 21.93% Liquid assets/total assets 36.50% 33.25% 29.19% 32.04% 32.61% Net yield ratio 2.50% 2.39% 2.32% 2.12% 2.46% Number of employees 1,092 996 1,026 1,020 1,042 3 Chairman’s introduction Leading WITH STRATEGY Dear Shareholders It is my pleasure and privilege to introduce BBK’s annual report for the year ended 31 December 2016. This was the first year of our new three-year strategic cycle, and we can reflect with some satisfaction on what has been achieved – both in terms of results and in preparing for the future. The business environment has continued to be difficult at home and abroad, but BBK has maintained the consistent performance that has been our hallmark for so long, as detailed in this report. I take this opportunity to extend our thanks and appreciation to His Majesty King Hamad bin Isa Al Khalifa, the King of the Kingdom of Bahrain, and His Highness Sheikh Sabah Al Ahmad Al Sabah, the Amir of the State of Kuwait. I also extend thanks to their respective governments and regulatory authorities for their support and guidance. I thank the Board of Directors and all stakeholders for their outstanding contributions during the year. I have every confidence that their counsel and expertise will be equally valuable in realising the vision for growth contained in our new 2016-18 strategic cycle. Murad Ali Murad Chairman 4 | BBK Annual Report 2016 Board of Directors’ report The Board of Directors is honoured to Oil producers have been increasing output, present the 45th annual report and and falling demand adds to the pressure on consolidated financial statements of price. The expected 6.0-6.5 percent growth BBK and its subsidiaries (the Group) rate in China almost looks like a recession for the year ended 31 December 2016. after a protracted period of double-digit Operating environment growth. In time, we will also feel the effects Both regionally and worldwide, economic of Brexit, as will the UK, the EU, and many conditions have been uncertain to say the other countries, depending on what kind of least, and there are few prospects of agreement they can arrange. This all adds immediate improvement. Nevertheless, BBK to uncertainties, locally and globally. has performed well, particularly considering As for our own planned new venture, an the prevailing circumstances. investment company in the UK, we believe The current macro-economic cycle could London will continue as a major financial last another two to three years, and with it centre, regardless of the outcome. will come structural changes in the A year of achievement economy of Bahrain and the rest of the Gulf. Against this domestic and global We are already seeing reductions in background of difficulty and uncertainty, subsidies and will begin to pay more for BBK returned a very commendable services provided by governments in the across-the-board performance. region. For example, value added tax is expected to be introduced in 2018 and From an internal perspective, our transition other taxes may also be levied – a further of management leadership has been smooth. illustration of the structural changes that are Abdulkarim Bucheery retired as Chief taking place. Executive in March 2016, succeeded by Reyadh Sater, a highly experienced member Bahrain’s government will also continue to of BBK’s executive team with many years of rely on national debt. A considerable distinguished service. And close to the number of various kinds and tenors of year-end, we reorganised and refined BBK’s bonds have been issued, all very successful structure, establishing two main business even though Bahrain no longer has an groups – Wholesale and Retail – and investment-grade rating. Low interest rates appointing two Deputy Chief Executives. globally have helped to contain yield, other than at the short end of the market such as The success of the transition is evident from three to six-month treasury bills, so overall our results for the year, and is probably the Capital adequacy ratio costs have been at an acceptable level. number one highlight of our performance and achievements over the period. The GCC contribution to Bahrain has helped to keep economic activity at a reasonable The second highlight is our very successful level, with much of the funds going to perpetual bond issue. We tapped difficult market conditions and raised a BD 86 million % infrastructural projects such as roads, 18.48 housing, hospitals and airport expansion. addition to our Tier 1 capital, improving our The BD 86 million addition to We believe that GDP growth will be lower capital adequacy ratio from 14.87 percent BBK’s Tier 1 capital improved than last year’s 3.0 percent, still a fair to around 18.48 percent. This was a very the Bank’s capital adequacy ratio achievement in the circumstances, but with satisfactory result as the increase in capital from 14.87 percent to around the GCC contribution now having largely run helps us fund the Bank’s ambitious strategy 18.48 percent. its course, next year could be very different. of expansion and diversification, while also boosting capital adequacy as per In an international context, Bahrain has Basel III requirements. fared relatively well, avoiding the drastic action that other countries have had to take. Shareholders’ equity We are fortunate to have been able to manage reasonably well with limited resources.