BBK annual report eng 21.5.5

Operating expensesTotal operating expenses, which include staff,premises, equipment, depreciation and otheradministrative costs, increased by BD 1.2million (5.5%), reflecting the Bank’s continuousinvestment in technology and human resources.The staff cost was higher by BD 0.7 million,which included the cost of new recruits, salaryadjustments, as well as other benefits. Otheroperating costs and depreciation grewmarginally over 2003, by BD 0.47 million.The continuous efforts to curtail revenueexpenditure have resulted in a greatlyimproved cost-to-income ratio of 43.7%,as compared to 46.3% in 2003.The net provisions for the year were BD 4.2million, up from BD 2.3 million last year. Whilethe Bank did recover a substantial amountagainst its non-performing loans, the recoverieswere offset by a higher level of provisioning asthe Bank continued its strategy to provideaggressively against its non-performingportfolio as a measure of prudence.Net provisionsThe Bank follows the International AccountingStandard (IAS) 39 with regard to accountingfor impairment of financial assets. The provisionsfor impairment of the Bank’s financial assetsare arrived at after calculating the Net PresentValue of the anticipated future cash flows fromfinancial assets, discounted at original interestrates. This approach to provisioning forimpairment of the Bank’s financial assets isaimed at providing more realistic estimatesof the impairment in the value of the assets,thereby giving greater protection to the Bank’sdepositors and preserving the capital baseof the Bank.53.125.74547.541.720.023.3354152.450.747.746.343.737.332.016.73013.12300 01 02 03 0400 01 02 03 0400 01 02 03 0400 01 02 03 04Total incomeBD millionNet profitBD millionEarnings per shareFilsCost/income%Annual Report 2004 18 | 19