Annual Report 2012 - Al Baraka Investment and Development

president & chief executiVe’s report
(continued)
Al BARAKA tüRK pARtiCipAtion BAnK
Founded 1985
The Turkish economy grew by only 2.8% in 2012, compared
with 9.0% in 2011, reflecting poor trading conditions with the
eurozone countries. The budget deficit widened to an estimated
-2.0% of GDP from -1.4% the year before, but remains relatively
healthy. The current account deficit however, although still large,
declined to -6.2% of GDP from the -10.3% to which it had risen
in 2011. The rate of inflation was an estimated 8.9%, down
from 10.4% and slowing steadily in the last few months of the
year. The government’s medium term programme for 2013-15
envisages a tighter fiscal policy, which should help to bring the
current account deficit down. The Central Bank has meanwhile
taken measures to ease monetary policy by lowering the upper
band of its interest rates.
Despite self-imposed restrictions on balance sheet growth as it
sought to preserve its strong capital base given the uncertain
environment, Al Baraka Turkey continued to maintain its record
of growth in 2012, particularly in the second half of the year.
Over the year, its total assets in US dollar terms expanded by
a healthy 25% to $6.91 billion. Most of the growth was seen in
its financings and investments portfolios, which rose by 30%.
Growth in the financings portfolio largely reflected the traditional
Murabaha business in absolute terms, with strong growth in the
Ijara Muntahia Bittamleek portfolio followed by moderate growth
in Musharaka. Total non-trading investments also rose slightly
over the year. The asset growth was fuelled by a 24% increase
in customer deposits including equity of IAH, in addition to total
owners’ equity which grew by 29%.
The total operating income for the year increased by 27%
in Turkish Lira and 18% in US dollar terms, while operating
expenses grew by 39% and 30% respectively, with expansion
costs reflected across the board. Of the total operating income,
total income from jointly financed accounts and investments
grew by 17% to $362 million. After distribution to the IAH of
34 Annual Report 2012
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their share of the income, amounting to $284 million – a 24%
rise on the previous year - the bank’s share as fund owner and
as Mudarib of $78 million was 1% below that of the previous
year. However, its income from its own sales and investments
increased by 28% and that, together with fees and commissions
(letter of credit and guarantee issuance) and other operating
income, resulted in an operating income of $361 million, 18%
higher than the year before, so that net operating income was
7% up at $169 million. After accounting for provisions – once
again lower than the previous year - and in spite of increased
taxation charge, the net profit realised was $109 million, 14%
above that of 2011.
The opening of 15 new branches over the year brought the branch
network up to a total of 137 branches, one of which – in Erbil,
the fourth largest city in Iraq – is the first overseas branch to be
opened by the bank. It also installed a further 15 ATMs to bring
its countrywide ATM network up to 149.
Al Baraka Turkey’s range of products and services continues to
expand as it seeks to meet changing customer needs. Participation
accounts (denominated in Lira, US dollars and euros) are offered
with a variety of different profit rates in relation to different
maturities. Its current accounts enable easy utility payment
either in branch or via its Internet and telephone banking services
(to which it has recently added a mobile banking service). Its
Albaraka WorldCard Shari’a compliant credit cards span a variety
of classes, including a card especially for the use of Hajj and Umrah
pilgrims, providing electronic access to their bank accounts whilst
on Pilgrimage. Similarly, its ATM range addresses the needs of
different customer (personal, professional and business) types.
Other products include export credit agency programmes and
precious metals credits and trading accounts. As an authorised
agent and member of the Turkish private pension system, it offers
customers a variety of non-interest bearing pension funds as well
as Shari’a compliant life insurance.
Al Baraka Turkey intends to maintain its steady expansion, including
20 new branches a year over the next 4 years.
(All figures in US Dollars unless otherwise stated)