BBK result07 & Fitch affirmed

RNS Number:2948N
BBK (B.S.C.)
05 February 2008




 BBK reports a net profit of BD30.04 million, core earnings impacted by higher
  provisions.Following Moody's, Fitch also reaffirms its strong credit rating

The Board of Directors of BBK met on Sunday 3rd February 2008 to review and
approve the Bank's financial results for 2007. Mr. Murad Ali Murad, Chairman of
the Board of Directors, announced that the bank made a net profit of BD30.04
million for the year, which was 8.4% lower than the last year. While the bank's
core operating performance improved significantly during the year, the net
results were impacted by exceptional provisions made against certain financial
assets. Given the adverse conditions in the global financial markets, the bank
has provided prudently against such assets using conservative assumptions for
valuations.

The performance of the bank for the year was impacted by high exceptional
provisions of BD23.2 million, offset to a certain extent by extraordinary income
of BD6.5 million on sale of acquired property as approved by the Board earlier
in its meeting in October 2006. If these are excluded for the purpose of
comparison, the core net profit for the year at BD46.7 million washigher by BD
13.9 million, or 42% compared to the last year.

The robust growth in core earnings was mainly driven by 20% growth in net
interest income, as the underlying volumes increased. The net interest margins
improved marginally, despite competitive pressure and bank's prudent policies on
credit, interest and liquidity risk. The bank's core non-interest income at                                 
BD30.5 million, adjusted for income on sale of property, grew impressively by
37% compared to last year. The improvement was across the business activities,
with foreign exchange, investment income, commercial fee income and card related
income all showing a good growth.

The operating expenses for the year increased by BD4.0 million, mainly on
account of investments being made under the strategic plan in building
capabilities, developing new businesses and on development of bank's human
resources. However, the core cost to income ratio at just under 38% further
improved as compared to the last year.

The bank's balance sheet grew impressively to BD 2,093 million, an increase of
BD400 million or 24% when compared to December 2006. This reflected a strong
underlying business growth driven by increases in customer assets and deposits.
Net loans and advances increased to BD1,127 million, a growth of 20%, while
customer deposits increased by 25% to reach BD1,269 million. During the year,
the bank has successfully concluded the issuance of subordinated debt amounting
to USD275 million under its US$ 1 billion EMTN program launched in 2006 and
raised new share capital of BD50 million through rights issue to support its
business needs.

Based on the above results, the Board of Directors has decided to recommend a
cash dividend of 27fils per share, along with 1 bonus share for every 20 shares
held.

Commenting on the Bank's results, Mr. A.Karim Bucheery, acting General Manager,
said, "Notwithstanding the exceptional provisions we had to make during 2007, we
are satisfied with the improvements in the bank's core profitability, with most
business indicators showing an encouraging trend. The bank has made good
progress in implementing its current corporate strategy, the results of which
are beginning to flow through."

"While the underlying performance of the bank has been good, the turmoil in the
global financial market has impacted certain financial assets. As a matter of
prudence, the bank has decided to conservatively provide against those assets,
which had adversely impacted the financial results of the bank for the year", he
added.

Credit rating agency Fitch has recently affirmed BBK's credit rating at
Long-term Issuer Default rating (IDR) 'A-' (A minus) with stable Outlook,
Short-term IDR 'F2', Individual 'C', Support '1' and Support Rating Floor 'A-'
(A minus). This follows Moody's maintaining the credit rating of the bank in
their credit analysis update report issued in December '07. In affirming the
ratings of the bank, Fitch has taken into account BBK's good domestic franchise,
satisfactory profitability, improving asset quality and adequate liquidity and
capitalization, as well as extremely high probability of financial support the
bank would receive, if needed.

Commenting on the Fitch Rating's report, Mr. Bucheery said "We are pleased that
Fitch has affirmed BBK's credit ratings, given the current global financial
markets environment. The bank has a solid domestic franchise and is well
capitalized to support its business growth".

Mr. Bucheery thanked the Bank's shareholders and the Board of Directors for
their continuous support, customers for their patronage and the employees for
their commitment and hard work.

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related to this announcement: 

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