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Chairman’s report LOCAL MARKET After some difficult initial months, Bahrain’s economy has seen a return to growth and looks set to accelerate in 2012. Although the year was marked by its share of ups and downs, it was also filled with a strong desire to move forward with public investment and renewed private sector activity having a positive effect on the country’s economic health. Bahrain has over the past few years built and maintained its position as one of the region’s leading financial centers – an integral element of its economic diversification program. Public spending focused on the development of infrastructure, will boost the economy. At the beginning of the year Bahrain announced plans to spend more than USD 13 billion over 2011 and 2012. In 2011, the causeway linking Qatar, set to host soccer’s 2022 World Cup, and Bahrain was given the green light. The country also unveiled an ambitious new strategy to invest in its vital oil and gas sector and stepped up its oil exploration program by drilling 25 new wells whilst the Housing Ministry was given the go ahead to build new cities across Bahrain. Additionally, the first phase of a multi-million dollar inter-change in Isa Town was completed in May. During the second half of 2011, the biggest public sector pay rise in Bahrain’s history was announced as part of a USD 530 million package. The increase meant a maximum of 36.5% extra in civil servants’ wage package, and 37.5% for pensioners. The government’s stimulus spending, plus financial support from the Gulf Cooperation Council (GCC) would contribute to economic expansion in the years to follow. The GCC has pledged USD 10 billion over 10 years to support Bahrain’s economic and social development policies, including the building of houses. The economy is expected to have expanded between 2% and 3% in 2011. This muted growth has been attributed to an uncertain global economic outlook, as well as the effect of social unrest in Bahrain and elsewhere in the Middle East earlier this year. However, despite the slowdown, unemployment remains low at below 4%. As indicated by the significant amount of public investments that are being carried out, the government is aware of the importance of keeping the economy moving in an uncertain global climate. FINANCIAL PERFORMANCE At BMI Bank, we continue to maintain an excellent Capital Adequacy Ratio of over 19% with strong liquidity and a portfolio of unique and innovative products and services. Although our financial results for 2011 reflect a loss of BD 3.4 million, the last two quarters have registered net profits. During the year, we continued to remain prudent in both our lending practices as well as in our approach to provisioning, which we believe positions us well for 2012. Following the successful implementation of our new stateof-the-art core banking system in the previous year, we continued to work towards stabilizing and deriving value out of it during 2011. The full year impact of the depreciation as well as other related costs associated with the implementation has been reflected in our financial results for 2011. Net interest income for 2011 decreased slightly by 6.2% to BD 13.6 million from BD 14.5 million in 2010. Non-interest income for the year increased from BD 3.3 million to BD 7.5 million, an increase of 127% over 2010. Total assets grew by 5.6% to BD 624 million as compared to BD 591 million in 2010 while customer deposits increased by 56.1% from BD 264 million in 2010 to BD 412 million in 2011. As a result of Bank’s cautious lending policy, total loans and advances grew by 12.9% to BD 350 million during 2011. The results reflect a profit pre-provision of BD 2.6 million and a net loss post provision of BD 3.4 million for the year ended 31 December 2011. STRATEGIC DIRECTION AND ACHIEVEMENTS We began 2011 with a clear and single minded focus on consistently growing our business within the principle of conservatism and prudence. Building on from the strong foundations laid in 2010, we rolled out several new [12] BMI Bank Annual Report 2011
Chairman’s report initiatives including key products and services to enhance our customers experience as well as grow our base. We began the year by unveiling our refreshed brand identity including a new look logo with a new tag line, ‘better, together’, strengthening our position as an entirely customer and customer-service driven bank. The new visual identity reinforces the name of the Bank while establishing a strong yet distinct brand using a new color palette. The dark blue used in our logo makes for a strong, assertive and reassuring color whilst the red, which is a new color to our Bank, brings in passion and charisma reiterating our strong anchorage as a Bahraini Bank. In line with our commitment to making banking convenient and centered around our customers’ needs, we rolled out three new full service branches including a special branch at the Bahrain World Trade Center to serve our high net-worth clients along with six new ATMs taking our total retail reach across Bahrain to ten branches and thirty ATMs. Additionally, we introduced two new payment and deposit options including a safe and secure online channel for customers to pay their credit card bills online. We were one of the first Banks in Bahrain to implement the International Bank Account Number (IBAN) standards used to increase the efficiency of electronic fund transfers both within and outside Bahrain and the only Bank to sign a strategic partnership agreement with Bahrain’s housing finance leader Eskan Bank, offering Bahrainis specifically tailored financial solutions. We also signed a strategic agreement with leading regional insurer Medgulf Allianz Takaful paving the way for us to offer customers a complete suite of life and non-life insurance products from Medgulf Allianz Takaful through our extended branch network within the country Our flagship retail product ‘Ayadi Saving Scheme’ has grown from strength to strength since its re-launch in early 2011 whilst our credit card portfolio has seen a significant higher level of active utilization of limits with the introduction of a prize based reward scheme across all cards including our Diners Club credit card. We expect the operating environment for banks to remain difficult in 2012. However, BMI Bank with its excellent capital position and strong liquidity is well positioned for these difficult market conditions. The management team has done a good job in 2011 as witnessed from a return to profitability for the second half of the year and has the unanimous support of the Board on the way forward in 2012 and beyond. STRENGTHENING OUR TALENT At BMI Bank, we have an experienced team with tremendous talent and potential. Recognizing the fact that our people are an important asset, we continued investing in training and developing this talent during 2011 by maximizing and enhancing the programs available both in house and through the Bahrain Institute of Banking & Finance (BIBF). Additionally several employee initiatives were rolled out throughout 2011 including an annual weight loss program designed to help our employees maintain a healthy diet and lifestyle. To help enhance transparency and build a stronger corporate culture within the organization, the Bank revised a few key policies during the year including recruitment, training and rewards amongst others. Our annual Employee Opinion Survey (EOS) held during the year once again proved to be a success registering an increase within the overall ratings. Keeping up with our commitment of recruiting and training local talent, we improved our Bahrainization ratio to 82% by the end of the year as compared to 77% in 2010. We also completed our Executive team through the appointments of key senior members during 2011. The employee headcount registered a slight decrease of 4.5% from 343 in 2010 to 328 in 2011 as a result of natural attrition and effective use of the performance management process. The experience and talent of our new hires has positioned us well for the future as we continue with the transformation of our business. BMI Bank Annual Report 2011 [13]
Page 1: [Growing Stronger] Annual Report 20
Page 4 and 5: [building a solid reputation for pr
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Management Discussion and Analysis
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Management Discussion and Analysis
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Consolidated Statement of Financial
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