Al Baraka Banking B S C : Consolidated Financial Statements 30 June 2021pdf

Al Baraka Banking Group B.S.C.

INTERIM CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

30 JUNE 2021 (REVIEWED)

Ernst & Young - Middle East	Tel: [phone]
P.O. Box 140	Fax: [phone]
East Tower - 10th floor	[e-mail]
Bahrain World Trade Center	www.ey.com/mena
Manama	C.R. no. 29977-1
Kingdom of Bahrain

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS TO THE SHAREHOLDERS OF

AL BARAKA BANKING GROUP B.S.C.

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of Al Baraka Banking Group B.S.C. (the "Bank") and its subsidiaries (together the "Group") as of 30 June 2021, comprising of the interim consolidated statement of financial position as at 30 June 2021, the related interim consolidated statement of income for the three-month and six-month period then ended and the related interim consolidated statements of cash flows, changes in equity and changes in off-balance sheet equity of investment accountholders for the six-month period then ended and other explanatory information. The Board of Directors is responsible for the preparation and presentation of the interim condensed consolidated financial statements in accordance with the basis of preparation and accounting policies disclosed in note 2. Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with the basis of preparation and accounting policies disclosed in note 2.

12 August 2021

Manama, Kingdom of Bahrain

A member firm of Ernst & Young Global Limited

Al Baraka Banking Group B.S.C.

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2021 (Reviewed)

			Reviewed	Audited
			30 June	31 December
		2021		2020
	Notes		US$ '000	US$ '000
ASSETS
Cash and balances with banks	3	5,432,623		5,361,444
Receivables	4	11,785,495		11,945,993
Mudaraba and Musharaka financing	5	3,739,934		2,854,658
Ijarah Muntahia Bittamleek	6	1,899,060		1,747,627
Investments	7	4,386,802		5,097,189
Property and equipment		518,783		478,572
Other assets	8	711,491		764,516
TOTAL ASSETS		28,474,188		28,249,999
LIABILITIES, EQUITY OF INVESTMENT ACCOUNTHOLDERS
AND EQUITY
LIABILITIES
Customer current and other accounts		7,348,235		7,508,344
Due to banks		1,498,362		1,907,206
Long term financing	9	418,498		319,364
Other liabilities	10	1,164,530		1,062,502
Total liabilities		10,429,625		10,797,416
EQUITY OF INVESTMENT ACCOUNTHOLDERS
Financial institutions		666,158		538,177
Non-financial institutions and individuals		15,245,262		14,692,012
Total equity of investment accountholders	11	15,911,420		15,230,189
EQUITY
Share capital	14	1,242,879		1,242,879
Treasury shares		(16,640)		(17,462)
Share premium		17,845		18,084
Reserves		183,846		183,121
Cumulative changes in fair value		36,035		32,940
Foreign currency translation reserve	14	(875,061)		(800,489)
Retained earnings		403,291		364,496
Equity attributable to parent's shareholders
	992,195		1,023,569
Perpetual tier 1 capital	15	400,000		400,000
Equity attributable to parent's shareholders and Sukuk
holders		1,392,195		1,423,569
Non-controlling interest		740,948		798,825
TOTAL EQUITY		2,133,143		2,222,394
TOTAL LIABILITIES, EQUITY OF INVESTMENT
ACCOUNTHOLDERS AND EQUITY		28,474,188		28,249,999
________________________		______________________
Abdullah Saleh Kamel			Mazin Manna
Chairman	Member of the Board and Group Chief Executive

Theattached notes 1 to 22 form part of these interim condensed consolidated financial statements. 2

Al Baraka Banking Group B.S.C.

INTERIM CONSOLIDATED STATEMENT OF INCOME

For the six months ended 30 June 2021 (Reviewed)

		Three months ended		Six months ended
		30 June		30 June		30 June		30 June
		2021	2020	2021	2020
	Notes	US$ '000		US$ '000		US$ '000		US$ '000
INCOME
Net income from jointly financed
contracts and investments		316,487	322,533	636,670	668,361
Return on equity of investment accountholders
before Group's share as a Mudarib		(260,843)		(268,795)		(525,780)		(572,936)
Group's share as a Mudarib		85,314		96,796		173,007		205,493
Return on equity of investment accountholders		(175,529)	(171,999)	(352,773)	(367,443)
Group's share of income from equity of
investment accountholders
(as a Mudarib and Rabalmal)		140,958	150,534	283,897	300,918
Mudarib share for managing off-balance sheet
equity of investment accountholders		5,898	5,805	6,043	7,903
Net income from self financed
contracts and investments		25,113	57,816	76,902	124,986
Fees and commission income		39,998	31,061	87,132	64,694
Other operating income	16	58,883	62,526	53,698	72,300
		270,850	307,742	507,672	570,801
Profit on long term financing		(6,084)	(9,914)	(13,805)	(18,090)
TOTAL OPERATING INCOME		264,766	297,828	493,867	552,711
OPERATING EXPENSES
Staff expenses		76,644	70,203	148,582	159,667
Depreciation and amortisation		17,079	9,771	36,562	19,717
Other operating expenses		43,226	44,703	87,447	98,738
TOTAL OPERATING EXPENSES		136,949	124,677	272,591	278,122
NET INCOME FOR THE PERIOD BEFORE
NET ALLOWANCE FOR EXPECTED CREDIT
LOSSES / IMPAIRMENT AND TAXATION		127,817	173,151	221,276	274,589
Net allowance for expected credit losses /
impairment	17	(56,180)	(86,174)	(83,706)	(126,670)
NET INCOME FOR THE
PERIOD BEFORE TAXATION		71,637	86,977	137,570	147,919
Taxation		(18,835)	(36,666)	(43,788)	(57,544)
NET INCOME FOR THE PERIOD		52,802	50,311	93,782	90,375
Attributable to:
Equity holders of the parent		27,077	22,736	52,662	47,087
Non-controlling interest		25,725	27,575	41,120	43,288
		52,802	50,311	93,782	90,375
Basic and diluted earnings
per share - US cents	13	0.94	0.57	2.89	2.54

_________________________	___________________________
Abdullah Saleh Kamel	Mazin Manna
Chairman	Member of the Board and Group Chief Executive

Theattached notes 1 to 22 form part of these interim condensed consolidated financial statements. 3

Al Baraka Banking Group B.S.C.

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2021 (Reviewed)

	Six months ended
	30 June		30 June
	2021	2020
	US$ '000		US$ '000
OPERATING ACTIVITIES
Net income for the period before taxation	137,570	147,919
Adjustments for:
Depreciation and amortisation	36,562	19,717
Depreciation on Ijarah Muntahia Bittamleek	14,600	100,384
Unrealised gain on equity and debt-type instruments at fair value
through statement of income	(1,188)	(6,677)
Gain on disposal of property and equipment	(7,954)	(24,772)
Gain on disposal of investment in real estate	(323)	(2,954)
Gain on disposal of equity-type instruments at fair value through equity	(2,563)	(881)
Loss / (gain) on disposal of equity and debt-type instruments at fair value
through statement of income	85	(263)
Net allowance for expected credit losses / impairment	83,706	126,670
Income from associates	(4,159)	(4,410)
Modification loss net of government assistance	-	(6,370)
Operating profit before changes in operating assets and liabilities	256,336	348,363
Net changes in operating assets and liabilities:
Reserves with central banks	(65,608)	592,535
Receivables	78,484	(435,184)
Mudaraba and Musharaka financing	(886,536)	1,056,098
Ijarah Muntahia Bittamleek	(155,668)	(41,380)
Other assets	41,820	(84,902)
Customer current and other accounts	(160,111)	68,948
Due to banks	(129,670)	(56,739)
Other liabilities	(141,168)	207,707
Equity of investment accountholders	677,038	(239,055)
Taxation paid	(90,884)	(68,171)
Net cash (used in) / from operating activities	(575,967)	1,348,220
INVESTING ACTIVITIES
Net purchase of investments	720,957	(1,481,767)
Net purchase of property and equipment	(56,350)	22,530
Net movement in associates	1,986	1,478
Net disposal of investment in associates	3,352	2,673
Net cash from / (used in) investing activities	669,945	(1,455,086)
FINANCING ACTIVITIES
Dividends paid to equity holders of the parent	-	(24,858)
Net movement in treasury shares	(122)	358
Profit distributed on perpetual tier 1 capital	(15,750)	(15,750)
Profit distributed on perpetual tier 1 capital issued by subsidiaries	3,603	3,626
Long term financing	99,134	55,591
Net change in non-controlling interest	(24,363)	(19,415)
Net cash from / (used in) financing activities	62,502	(448)
Foreign currency translation adjustments	(150,852)	(182,332)
NET CHANGE IN CASH AND CASH EQUIVALENTS	5,628	(289,646)
Cash and cash equivalents at 1 January	2,778,177	2,926,185
CASH AND CASH EQUIVALENTS AT 30 JUNE (note 20)	2,783,805	2,636,539

Theattached notes 1 to 22 form part of these interim condensed consolidated financial statements. 4