Message from Chairman

On behalf of the Board of Directors', I am delighted to present audited financial statements for the year ended 31 December 2019.

Amid challenging and uncertain macro -economic factors and increasing regulatory requirements, the Bank emerged resilient and achieved a Net profit of US$ 28.7 million for the year ended 31 December 2019, as compared to a net profit of US$15 million last year 2018, which is an increase of 92%, year on year.

Net profit for the quarter ended 31 December 2019 was US$18 million, as compared to USS 2.9 million for the same period, last year 2018.This spurt in net results of fourth quarter 2019, was mainly due to write back of provisions, despite maintaining adequate provision for expected credit losses under IFRS.

Interest income was US$ 44.2 million for the year ended 31 December 2019, with a marginal growth of 3.2% over US$ 42.9 million in 2018. However, interest expenses for 2019 increased to US$ 17.4 million from US$ 14 million in 2018, thus witnessed an increase in cost of funding by 23.6%, which reduced the net Interest income for the year ended 31December 2019 to US$ 26.8 million compared to US$ 28.8 million in previous year, resulting in a reduction of 6.8%.

Fee and commission income for the year ended 2019 was US$ 3.6 million, as compared to US$ 4.9 million in 2018, due to contraction In volume of trade finance business.

As for Other operating income, the Bank made significant gains on sale of investment securities and foreign exchange in current year.

Therefore, operating income achieved for 2019 was US$ 33 million, compared to US$ 34.3 million in 2018. Resulting in an overall reduction of 4.1% in current year.

However, the Bank performed phenomenally well, in collection of past dues, which enabled to reversal of provision of credit losses ,after maintaining 100% provision coverage for other non-performing facilities and creating adequate levels of provision for expected credit loss under IFRS.

Operating expenses for 2019, resulted in a reasonable savings of 6.3% compared to previous year 2018, which reduced the Cost to income ratio marginally to 38.5% in 2019, compared to 39% in 2018.

Total assets grew by 4% in 2019, over 2018 figures, although Loans portfolio contracted in 2019 to 8% of total assets, investment securities increased in 2019 and stood at 20.4% of total assets, as against 18.6% in 2018.

The Bank achieved a Return on average equity of 9.1% for the year ended 2019, as compared to 4.9% for last year 2018.Bank's Capital adequacy and liquidity, liquid assets to total assets ratios grew stronger to 51% and 70% respectively.

In recognition of the importance and support of its valued shareholders, the Board of directors are pleased to propose a dividend of US$ 3 per share, amounting to US$ 15 million, representing 6% of paid up share capital for the year 2019, after due appropriation of US$ 2.9 million from Net profit for the year 2019, towards transfer to Statutory reserve. This Proposed dividend for the year 2019, is subject to regulatory and shareholders' approval in Annual general meeting.

Outlook for 2020 is positive and encouraging, given our strong capital and the concerted effort of management to dynamically address to the changes in regulatory requirements and other market challenges, to better position and sustain a year on year growth to our shareholders.

Finally, I would like to thank all the members of the Board, the Shareholders, the Ministry of Industry, Commerce and Tourism in the Kingdom of Bahrain, Central Bank of Bahrain and all Correspondent Banks and our Customers for their continued support, cooperation and guidance.

I also extend my appreciation and thanks to all the employees for their professionalism and commitment for the Bank has continued growth and progress.

Mr. Moraja Gaith Solaiman

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