BBK annual report eng 21.5.5

Strategic directionGood progress was made in 2004 towardsimplementing BBK’s current 2003-2005 threeyearstrategic plan. The focus of the strategyis to build upon our strong financial position,continue to diversify our business, and tostrengthen our leadership in banking servicesbased on technology. Two key objectives areto increase the return on shareholders’ equityto 20 per cent by the end of 2005, and toenhance the ratio of gross income to operatingexpenses. We will also continue to identify andstudy further strategic alliances, as well as theopportunity of mergers and acquisitions, inorder to establish cost efficiencies and diversifyour assets and revenues.During the year, the Board of Directors andManagement continued their strategic reviewof BBK’s operations in India, as well as thefuture direction of two subsidiaries – BBKFinancial Services and Al-Khaleej IslamicInvestment Bank – in line with changing marketconditions. We also reviewed plans for thefurther development of the Bank’s insuranceand Islamic banking activities, both of whichoffer new opportunities for diversification andgrowth. In this respect, it is hoped that thelong-awaited enactment of Bahrain’s newCentral Bank Law will take place during 2005.A key strategic achievement in 2004 was theconsiderable work done to launch BBK’scorporate rebranding which is expected to beimplemented in 2005. Over the last thirty-threeyears, BBK has developed into a dynamic,innovative and responsive financial enterprise,with a growing regional presence. Our newbright and contemporary visual identity reflectsthis change, and also communicates BBK’svision of a bright future for all our stakeholders.During 2005, it will be used to spearhead theintroduction of our new and innovative retailbanking concept, which will focus on customerservice as the key competitive differentiatorrather than products and services.Corporate governanceBBK welcomes the disclosure standardsintroduced in 2004 by Bahrain MonetaryAgency and their initiatives on corporategovernance, guidelines on insiders andrevised anti money laundering regulationsthat are being introduced from 2005 for theKingdom's banks and listed companies. Sucha move will no doubt help to preserve Bahrain’sreputation as a well regulated financial centrein the region, operating in accordance with thehighest international standards.In this regard, a code of conduct for the Boardof Directors was introduced and signed byeach member of the Board.Also, I would like to emphasise that wehave made every endeavour to comply withall current BMA disclosure standards in thisyear’s annual report and consolidated financialstatements. In addition, we continued tostrengthen our corporate governance during2004, including the creation of a newCompensation Committee of the Boardof Directors and the strengthening of thecompliance function. Such measures aredesigned to keep us at the forefront oftransparency and good corporategovernance in the region.We also welcome the BMA’s plans toestablish a new Credit Reference Bureau(CRB) for Bahrain in 2005. This will mean thatfinancial institutions will be in a better positionto provide credit to their customers. The CRBwill help in setting healthy parameters for banksand financial institutions to continue the selfregulationof their retail lending business. Theretail sector of the banking industry is extremelyvital for the economy and has contributed toits growth in a number of ways, and it ishoped that this sector will continue itsactivities based on supply and demand of themarket and without additional restrictions andconstraints. Such initiatives will no doubt helpto preserve Bahrain's reputation as a wellregulated financial centre in the region,operating in accordance with the highestinternational standards.Operational achievementsThroughout 2004, BBK continued to lead theway with new and innovative products andservices for our retail, corporate, treasury, andinvestment clients. We further enhanced oursuccessful consumer and mortgage loans,introduced a new ‘smart’ credit card, andlaunched another exclusive real estateinvestment fund.In addition, we made more products andservices available online, such as real timepayment of telephone bills, and the purchaseof Secura insurance products and Al-Hayratsavings certificates. We also continued toprovide financing for a range of industrial,commercial and infrastructural projects,including the latest Alba pot line expansionand the refinery modernisation for Bapco.A key achievement during the year was thedevelopment of our new Information Technologyinfrastructure, representing a major strategicinvestment of BD 1.7 million. BBK’s new corebanking and branch automation systems,which will be implemented during 2005, willhave a profound effect on improving ouroperating efficiency and customer servicelevels. At the same time, we continued tostrengthen the Bank’s financial control andplanning procedures, and to streamline ourinternal processes.Recognising that our people are BBK’s mostimportant assets, we continued to place utmostpriority on their professional development. TheBank’s new Performance Management Systemwas introduced in 2004. As well as recognisingand rewarding individual performance, it willalso strengthen BBK’s succession planningprocess. It was also encouraging to see the firstgroup of graduates in our new ManagementTrainees Programme complete their initialtraining and take up permanent positionsthroughout the Bank. This innovativeprogramme is now regarded as a role modelfor the industry. The Bank’s successful trackrecord for recruiting and retaining Bahraininationals was also recognised during the year.BBK became the first Bahraini bank to receivea special GCC award for the employment ofnationals by regional private sector companies.