Strategic directionGood progress was made in 2004 towardsimplementing <strong>BBK</strong>’s current 2003-2005 threeyearstrategic plan. The focus of the strategyis to build upon our strong financial position,continue to diversify our business, and tostr<strong>eng</strong>then 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 <strong>BBK</strong>’s operations in India, as well as thefuture direction of two subsidiaries – <strong>BBK</strong>Financial 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 <strong>BBK</strong>’scorporate rebranding which is expected to beimplemented in 2005. Over the last thirty-threeyears, <strong>BBK</strong> 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 <strong>BBK</strong>’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 governance<strong>BBK</strong> 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 <strong>annual</strong> <strong>report</strong> and consolidated financialstatements. In addition, we continued tostr<strong>eng</strong>then our corporate governance during2004, including the creation of a newCompensation Committee of the Boardof Directors and the str<strong>eng</strong>thening 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, <strong>BBK</strong> 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. <strong>BBK</strong>’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 tostr<strong>eng</strong>then the Bank’s financial control andplanning procedures, and to streamline ourinternal processes.Recognising that our people are <strong>BBK</strong>’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 str<strong>eng</strong>then <strong>BBK</strong>’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.<strong>BBK</strong> became the first Bahraini bank to receivea special GCC award for the employment ofnationals by regional private sector companies.
AppreciationOn behalf of the Board of Directors,shareholders and staff, I would like toexpress my best wishes to His MajestyKing Hamad bin Isa Al Khalifa, the King ofBahrain, and to His Highness Shaikh JaberAl Ahmed Al Sabah, the Amir of Kuwait, andextend my gratitude to their governmentsand regulatory authorities for their continuedsupport to the Bank.I would also like to take this opportunity toconvey our thanks to our shareholders fortheir confidence in the Board of Directorsand management and their continued financialsupport for the Bank; to our loyal customersfor their continued trust; and to all our staffat home and abroad, whose dedication andhard work have contributed to anothersuccessful year for <strong>BBK</strong>.I am pleased to announce that a RoyalDecree was issued in January 2005 toappoint Board member His ExcellencyMr. Rasheed Mohammed Al-Maraj as theGovernor of Bahrain Monetary Agency.I would like to take this opportunity onbehalf of the Board of Directors and all thestaff to wish him well and thank him for hiscontribution during his term as a member ofthe Board of Directors of the Bank. I wouldalso like to take this opportunity to thankMr. Fouad Ismail Dashti and Mr Esam AbdulAziz Al Osaimi for their contribution duringtheir directorship in the Board which endedduring the year and welcome the incomingBoard member Mr. A. Majeed Haji Al Shattiwishing him all the success.Murad Ali MuradChairman13%Increase in customer loans portfolioThe new consumer loans package, introduced in 2003, was further enhanced withmore flexible repayment options. The residential mortgage loans package was alsoenhanced with added features in order to reinforce its position in the market.Annual Report 2004 06 | 07
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