BBK Annual Report 2011

Management Review continuedMuch of the focus was on driving business volumes at the FinancialMalls and in this regard we are delighted to be partnering withleading organisations such as Batelco. This partnership involvesthe establishment of a Batelco shop unit in five of BBK’s FinancialMalls - offering telecommunications products and services to theBank’s customers. The Secura Insurance has been strengthenedthrough the introduction of a range of Bank Assurance productscatering to the various needs of customers at different stages in theirlife. This was achieved in partnership with Allianz and BKIC allowingBBK to offer both Islamic and conventional insurance productsthrough fully trained and certified employees in all BBK branches.Other significant developments included the continuous expansionof the range of services offered to our Priority Banking customerbase, a Mobile Banking service, SMS banking service and“eStatements”. Our Mobile Banking service is amongst the mostsophisticated service of its type in the local market and we areproud that our website has won both the Bahrain eContent Awardby the eGovernment Authority of Bahrain as well as the MiddleEast eGovernment and eService Excellence Award 2011.For Transactional Banking the launch of “BBKCashlink”, theBank’s new internet accessible payments management system, hasbeen very well received by our corporate and SME clients. No otherlocal bank has a product which can match BBKCashlink in terms ofservice scope and functionality. In addition to signing up over 499local clients we are pleased to report that a number of well knowninternational financial institutions are already using the service as well.The disturbances in Bahrain in March have had some impacton local SMEs but the Transactional Banking team remainedvery active, reaching out to offer support to clients who wereexperiencing difficulties. This included offering top-ups to creditfacilities or in some cases help with restructuring facilities.Overall, the quality of SME assets was maintained and BBK hasbeen able to get good volumes of new deposits. We believethat this is due to the “flight to quality” which has characterisedthe local market, particularly in the first half of the year.On the other side of the balance sheet, the Bank has strong liquidity.While lending margins were under pressure, this was more than offsetby a reduction in interest expense afforded by the Bank’s strongliquidity position. Corporate Banking were also able to manage theircosts carefully and overall were able to outperform last year’s.International Banking had another profitable year. The operationin India, which currently consists of two branches, performed aboveexpectations. During the year fresh capital was injected into our Indianoperation, which, it is hoped, will allow us to book larger facilities inIndia and open the door for dealing with more substantial businessesthan has hitherto been the case. It also demonstrates our commitmentto further expand our business in India. We are also planning toimprove our geographical reach in the country and have applied forfresh branch locations. The Indian economy is growing quickly andthere will be more and more opportunities for us to leverage our GCCpresence to capitalise on trade flows between India and the GCC.Our focus on doing more business in the GCC region haspaid dividends in the form of some significant new businesswins during the year, particularly in Qatar and Oman.The Kuwait branch contributed to the profitability of theInternational Banking activities. We have modified our strategyin the Kuwait market to concentrate on the traditional bankingproducts and services for higher yields, commissions and fees.Our target will be lending and financing trade to large corporatebusinesses as well SMEs. Operations in Kuwait are expected toboost even further due to the enhancement of Corporate andTreasury teams better service existing and potential clients.Facilities booked for clients in Dubai, as a result of thebusiness development efforts of our representativeoffice employees there, are growing steadily.The Saudi market remains challenging – while we continue toseek out quality business there, this is a highly competitive marketwhere it is difficult for us to compete with the highly liquid localbanks due to their ability to undercut overseas banks on pricing.Trade Finance business inevitably dropped somewhat as a resultof the general slowdown in local economic activity, but by beingproactive and working closely with their clients, TransactionalBanking were able to meet their income targets for the year.Although Corporate Banking focuses exclusively on the localmarket, business growth was not affected by the slowdownin the local economy. Businesses across Bahrain havenaturally been cautious about committing to new projects.With the reduction in business investment and the hope thatthe Government would boost the economy with spending oninfrastructure projects, Corporate Banking have positionedthemselves to take advantage of such potential opportunities.We saw a good level of growth in deposits from our NRI (Non-Resident Indians) business and our range of products andservices for this key customer group continues to expand.We are in the process of launching a new service for NRIs inKuwait – through a joint venture between BBK, Geojit and aKuwaiti partner we will be able to offer NRIs there the opportunityto purchase a range of investments products in India.Treasury and Investment continued in the same successfuldirection as 2010 with further diversification and re-structuring of theinvestment portfolio. In line with the Strategic Plan the focus wason seeking out quality, and highly liquid, investment opportunities inthe GCC region and to a lesser extent in the wider MENA region.BBK Annual Report 201124Implementation of Strategic Plan initiatives continued and CorporateBanking pursued the same overall approach as in 2010. RelationshipManagers (RMs) have stayed close to their clients to monitor signsof deterioration in asset quality and dealt with restructuring requestsand requests for margin reduction on a case-by-case basis.In 2011 the markets were not as strong compared to 2010. Therewere limited new issues in the market with a number of issuersdeciding to defer their offerings until such time as market sentimentimproves. Despite the challenging market conditions our investmentportfolio made a substantial contribution to the Bank’s profit.