National Bank of Bahrain (NBB) has reported a 12.5% decrease in its net profit attributable to equity shareholders to BD14 million ($37.1 million) for the third quarter ended 30 September 2020, compared to BD16 million ($42.4 million) in the same period of 2019.
The decrease in net profit was predominantly attributable to the worldwide Covid-19 pandemic resulting in higher precautionary provisioning requirement.
Basic and diluted earnings per share for the third quarter decreased by 11.1% to 8 fils compared with 9 fils in the same period of 2019.
Operating income increased by 20.8% in the third quarter to BD33.7 million ($89.4 million) compared with BD27.9 million ($74 million) in the prior year period.
Operating profit at BD16.6 million ($44 million) was in line with the prior year level of BD16.8 million ($44.6 million), demonstrating the resilience of NBB’s core activities during the Covid-19 pandemic.
Total comprehensive income attributable to NBB’s equity shareholders for the quarter decreased by 14.1% to BD16.4 million ($43.5 million) compared with BD 19.1 million ($50.7 million) in 2019. The reduction is attributable to the decline in the net profit following the increased precautionary provisions.
NBB has reported a 23% decrease in its net profit attributable to equity shareholders to BD43.1 million ($114.3 million) for the nine months period ended 30 September 2020, compared to BD56.0 million ($148.5 million) in 2019. Creation of precautionary provisions, lower margins, lower income from associate equity valuations and lower received dividends were all factors impacting the net profit in 2020 following the Covid-19 pandemic.
Basic and diluted earnings per share during the period decreased by 24.2% to 25 fils compared with 33 fils in 2019.
Operating income increased by 18.0% y-o-y to BD108.2 million ($287 million) compared with BD91.7 million ($243.2 million) in the prior year period. Operating profit at BD56 million ($148.5 million) was down by 5.2% from the 2019 level of BD59.1 million ($156.8 million).
Total comprehensive income attributable to NBB’s equity shareholders for the period decreased by 71.4% to BD18.2 million ($48.3 million) compared with BD 63.6 million ($168.7 million) in 2019. Other comprehensive income includes the mark-to-market movements during a year and hence include temporary fair value fluctuations on the Bahrain Sovereign bond and equity portfolios.
The group’s total equity attributable to owners decreased by 8.1% to BD489.2 million ($1,297.6 million) compared with BD532.3 million ($1,415.7 million) recorded as of 31 December 2019. The decrease was due to the 2019 cash dividend payout, the reduction in the mark-to-market on Bahrain Sovereign 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, the bank said.
The group’s total assets increased by 32.1% to BD4,219.4 million ($11,192 million) compared to BD3,194.5 million ($8,496 million) recorded on 31 December 2019. The increase was attributable 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 nine months of 2020.
Farouk Yousuf Khalil Al Moayyed, Chairman of NBB, said: “We are very pleased with our overall financial results for the third quarter of the year, which demonstrate positive growth despite the effects of the pandemic on the global economic environment. 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 integration serves to highlight a strong liquid balance sheet to protect both banks, while further enabling BISB to capitalise on NBB’s resources and gain wider market access and enhanced product delivery once the markets rebound.
"We also committed to supporting our individual and business customers during these difficult times, in line with the Central Bank of Bahrain and the loan deferral initiatives commencing in September of this year and lasting throughout the last quarter of 2020. We are also extremely proud to be one of the first financial institutions in the Kingdom to transact using the Sukuk-based Murabaha facility service offered by the Bahrain Bourse in the second quarter of this year, enabling us to diversify our services and offerings to reach a larger segment of the market. We did see some drop in the group’s results during the second and third quarters of 2020 which is expected, considering the impact of the pandemic on the economy, which affected our margins," he said.
"The temporary suspension of economic activity across the GCC also forced us to postpone investment opportunities in the region. But, despite the challenging market conditions, our balance sheets and ratios have remained robust and will continue to safe-guard the Group whilst measures are kept in place for business continuity. I am pleased to say that the NBB Group has had a strong year thus far and exceeded expectations, and we will continue to move forward with our growth plans to reach new levels of banking excellence.”
Jean-Christophe Durand, Chief Executive Officer of NBB, added: “The group’s financial performance during the third quarter of the year has been positive despite the unstable market conditions witnessed not only across the kingdom, but also the world, and which have impacted all banks and companies directly or indirectly. These results come despite the drop in market rates which have had a significant impact on profit growth and margins.
"Our strong positioning in the market enabled us to provide enhanced assistance to our customers during these unusual times by establishing a web chat service, currently available on the NBB website and on WhatsApp, to ensure all customer needs are instantly met in line with our brand promise of staying close to our customers," he said.
"As the nation’s bank, we made it our mission to help stimulate the kingdom’s economy through various initiatives; be it through further loan and mortgage payment deferments for individuals and small companies, in line with CBB directives, or actively offering restructuring to SMEs post the 6-month deferral period. We have also extended our support to the latest awareness campaign to be launched by the Director Development Programme for Women (DDPW), a first of its kind in the Kingdom to focus on the importance of Environmental, Social and Governance (ESG) reporting.
"In the same spirit, we actively contributed to the national ‘Feena Khair’ fund and to the Capital Governorate’s ‘Together We Care’ campaign which benefited 4,000 migrant workers through food provision and sustenance supplies. Furthermore, no effort was spared to protect the health and safety of our staff and customers, and a number of proactive measures were put in place to ensure their wellbeing while maintaining business continuity. This was demonstrated thorough the successful launch of the ‘Tap & Go’ service across the Kingdom as part of our role to uphold the necessary health and safety measures during the Covid-19 Pandemic by reinforcing social distancing and minimal contact measures across our range of products and services.
"And as such, it gives me great pleasure to add that NBB has been recognised internationally by Forbes in a case study drafted by Mark D Nevins, a contributor at Forbes, and co-written by Mohamed Matar, General Manager at EMIC Training, where the bank’s efforts towards its human capital were commended and showcased as best practice. This has been a challenging period for every company and individual and we are proud of what we have accomplished which come as a result of our commitment to the nation, to our people and to customer excellence,” said Durand. - TradeArabia News Service