Record Net Profit of BD 42.82 million (US$ 113.89 million)
Dividend of 35 % recommended

At the National Bank of Bahrain’s Board of Directors meeting held on Thursday, 21 January 2010, chaired by the Bank’s Deputy Chairman, Mr. Farouk Yousuf Khalil Almoayyed, the Board reviewed and approved the Bank’s financial results for the year 2009.

The Bank achieved a Net Profit of BD 42.82 million (US 113.89 million) in 2009, an increase of 23.3% compared to BD 34.74 million (US$ 92.39 million) recorded in 2008. For the fourth quarter of 2009, the Bank recorded a Net Profit of BD 5.87 million (US$ 15.61 million) compared to a loss of BD 0.32 million (US$ 0.85 million) for the corresponding period of the previous year.

The Bank’s Chairman Mr. Abdulla Ali Kanoo commented that against the backdrop of the global financial crisis and a challenging regional environment, the Bank achieved realistic growth during the year in line with its long-term objective of delivering consistent returns without compromising on risk. He thanked the Bank’s clients for their valued business relationship and the confidence reposed by them in the Bank. He expressed his appreciation for the Bank’s executive management team’s efforts in a difficult market environment and thanked the employees for their dedicated service, commitment and all round efforts.

Commenting on the financial results, Mr. Farouk Yousuf Khalil Almoayyed, Deputy Chairman stated “The Bank’s strategy of focusing on the domestic market has been rewarding with increased levels of business and profitability. We are committed to supporting domestic growth and improve our market share in active sectors of the national economy as the country expands with continued infrastructure investments as part of Vision 2030.”

Mr. Abdul Razak A Hassan Al Qassim, the Bank’s Chief Executive Officer & Director said: “We are pleased to report that our strategy of positioning NBB’s balance sheet to focus on core commercial banking activities has been rewarding over the years. We have stayed focused on the basics of banking and by sticking to our values and culture, we have shown resilience throughout this difficult period proving our ability to consistently meet our strategic priorities. We manage the quality of our asset base carefully and our liquidity and capital strength have provided us with a competitive advantage. These results reflect the improvement in credit spreads, success of our strategy of mobilising core cost effective deposits and revenue diversification, while efficiently managing operating expenses. Although there was no deterioration in the Bank’s credit portfolio quality, the Bank on its own initiative decided to increase the level of general loan loss provisions in line with our prudent approach to risk taking into account the difficulties in the overall external credit environment.”

The total Balance Sheet of the Bank stood at BD 2,117.75 million (US$ 5,632.32 million) in diversified and acceptable rated assets. Loans and Advances showed a growth of 5.1% to reach BD 1,151.42 million (US$ 3,062.30 million) as at 31st December 2009. Customer deposits at BD 1,480.39 million (US$ 3,937.21 million) reflect the stability and range of products designed to suit the Bank’s retail and corporate clientele. Capital Adequacy Ratio remains very strong at 22.30%. Liquidity continues to be comfortable with liquid assets (Cash and balances with central banks, Treasury bills and placement with financial institutions) representing 21.4 % of the total assets.

Net Interest Income increased by 6.4% to BD 49.02 million (US$ 130.36 million) mainly on account of growth in loans & investments and efficient balance sheet management, despite lower yield on surplus liquidity due to falling interest rates worldwide.

Other Income at BD 23.26 million (US$ 61.87 million) showed an increase of 40.1% over the previous year largely on account of increased business volumes from core banking, higher foreign exchange income and profit on sale of available for sale investments.

Operating expenses increased from BD 24.01 million (US$ 63.86 million) in 2008 to BD 25.78 million (US$ 68.55 million) in 2009 mainly on account of staff expenses due to annual salary adjustments, performance related rewards and additions to the Bank’s human resources to meet expanding business needs while other operating costs, associated with system upgrades to improve operational efficiency and customer service increased marginally. As a result of efficient cost management while generating higher revenues, the operating efficiency ratio improved from 38.32 % in 2008 to 35.67% in 2009.

Based on the above results, the Board of Directors has decided to recommend to the Shareholders’ General Assembly, the following appropriations:

Total Shareholders’ Equity before 2009 appropriations stands at BD 241.37 million (US$ 641.94 million). The appropriations to Donations and Contributions will bring the total allocation under the programme to BD 24.52 million (US$ 65.21 million) since its inception in 1980. During the year, the Bank disbursed BD 1.43 million (US$ 3.80 million) for several worthy causes in the Kingdom of Bahrain. In this regard, Mr. Almoayyed stated, “The Bank considers it an honour and a privilege to serve the community at large and contribute to the welfare of citizens in the Kingdom of Bahrain”.

Looking ahead, Mr. Qassim said: “We look forward positively to the opportunities that are available in Bahrain, considering its position as the gateway to the northern Gulf and the potential benefits from the economic integration of a GCC wide single market. Our strategy is to align NBB with those opportunities to achieve sustainable growth through diversification and enhancement of our presence in active segments of the domestic market, with selective expansion in regional markets. We do not underestimate the challenges and will engage and deepen our relationship with clients to win market share and enhance our competitive positioning. We believe the strength of our franchise, sound fundamentals and market image as the leading provider of financial services in the Kingdom will enable us to achieve this goal.”