Bahraini banks buck global trend with impressive rise in profits
Profits at Bahrain’s locally incorporated banks more than doubled during 2003, compared with 2002.
The central bank, the Bahrain Monetary Agency (BMA), noted that the 29 Bahrain-incorporated commercial, investment and offshore banks, both conventional and Islamic, posted aggregate net profits of $714.8m for 2003. This was an increase of 134% over 2002’s profits of $305.6m. Commercial banks represented 24% of 2003 profits, while the share of offshore banks and investment banks was 48.5% and 27.5% respectively.
“We are delighted by the continued good performance of Bahrain’s banks despite the challenging global economic and financial environment,” said Khalid Abdulla Al Bassam, deputy governor of the BMA. Bahrain is keen to promote its expertise as a financial centre and the BMA recently launched a roadshow for its proposed $250 international sukuk (Islamic bond) issue.
Profits of conventional offshore banking units (OBUs) rose significantly by 218% to $331.4m in 2003, from $104m for 2002. This surge was mainly due to the return to traditional levels of profitability of Arab Banking Corporation (ABC) and strong increases in profits of the Gulf International Bank (GIB) and Ahli United Bank (AUB). Assets of conventional OBUs stood at nearly US$54bn at 2003-end, compared with $50.3bn at 2002-end.
Profits at conventional investment banks also rose dramatically to $116m from $4.9m in 2002. This increase was due mainly to the return to profitability of two major investment banks, Investcorp and TAIB Bank, both of which posted losses in 2002.
Bahrain’s Islamic banking industry continued to perform well, with an overall surge of 35.5% in net profits to $113.8m for 2003, compared with $84m in 2002.
Profits at Islamic investment banks rose 23% to $80.3m in 2003, while profits at Islamic commercial banks doubled to $18.4m and profits at Islamic OBUs grew by 59% to $15.1m.
The most profitable bank in Bahrain in 2003 was Arab Banking Corporation, with net profits of $119.7m compared with a $41m loss the previous year. This was followed by its traditional rival, Gulf International Bank, on $106.1m and Investcorp, which posted a $47.3m profit following a $8.4m loss in 2002.
Among the domestic commercial banks, the most profitable in 2003 were Bank of Bahrain & Kuwait, which posted profits of BD23.3m ($61.3m), and National Bank of Bahrain, with BD22.4m.
