Burgan Bank Financial Results – First Half 2019

Burgan Bank announced results of its operations for the first half of the current year which indicate that the bank’s net profit (after tax deductions) was KD 45.58 million, a decrease by KD 5.44 million or by 10.7%, compared to KD 51.02 million in the same period of 2018.  The decline in net profits was due to the decrease in total 

operating income by a higher value than the decrease in total operating expenses. This decline in the net profit occurred despite the decline in total provisions by KD 10.41 million or by 39.2%. Accordingly, operating profit (prior to the deductions of provisions) decreased by KD 16.86 million or by 20%, reaching KD 67.32 million compared with KD 84.17 million.

In details, total operating income decreased by KD 22.84 million or by 16.4%, and scored KD 116.32 million versus KD 139.16 million in the same period of 2018. That resulted from the drop in net interest income item by KD 11.18 million or by 12%, reaching KD 81.95 million versus KD 93.13 million, accompanied by the decrease in all items of the operating income except for item of net investment income that increased by KD 4.71 million.

Total operating expenses decreased by a lesser value than the decrease in the operating income, i.e. by KD 5.98 million or by 10.9%, reaching KD 49.01 million compared with KD 54.99 million, due to the decrease in all items of the operating expenses. Percentage of total operating expenses to total operating income was 42.1%, rising from 39.5%. Total provisions decreased by KD 10.41 million or by 39.2% as mentioned previously, reaching KD 16.15 million compared to KD 26.56 million during the same period last year. Accordingly, net profit margin decreased to 26.6% compared with 27.8% during the same period of 2018.

The financial statements show a decrease by KD 325.9 million or by 4.5% in the bank’s assets, to KD 6.986 billion compared with KD 7.312 billion in the end of 2018. While it increased by KD 76.4 million or by 1.1%, compared with the total assets for the first half of 2018 when it scored KD 6.910 billion. Item of cash & cash equivalents decreased by 34.6% or by KD 403.2 million, to KD 761.1 million (10.9% of total assets) down from KD 1.164 billion (15.9% of total assets) in the end of 2018. It dropped by 11.3% or by KD 96.8 million, compared to KD 857.9 million (12.4% of total assets) in the same period last year. Also, item of loans and advances to customers decreased by KD 63.6 million or by 1.5%, to KD 4.199 billion (60.1% of total assets) compared to KD 4.263 billion (58.3% of total assets) at the end of the year 2018, and decreased by 1% or by KD 44.2 million compared to the same period of 2018 when it scored about KD 4.243 billion (61.4% of the total assets). Total loans and advances to total deposits and balances reached 79.1% compared to 78.1%. While due from banks and other financial institutions item increased by KD 86.8 million or by 14.6%, reaching KD 681 million (9.7% of total assets) compared to KD 594.3 million (8.1% of total assets) in the end of last year. It increased by 218.7 million or by 47.3%, when it scored KD 462.3 million (6.7% of total assets) during the same period last year.

Figures indicate that the bank liabilities (excluding total equities) decreased by KD 320.3 million or by 5%, and scored KD 6.044 billion compared with KD 6.365 billion in the end of 2018. If we compare these with the same period of the previous year we will note a rise by KD 21.5 million or by 0.4%, as total liabilities scored KD 6.023 billion then. Percentage of total liabilities to total assets scored 86.5% compared to 87.2%.

Results of analyzing financial statements calculated on annual basis indicate that all bank’s profitability ratios declined compared with the same period of 2018. The average return on equity ratio of the Bank’s shareholders (ROE) decreased to 11.9% compared with 14.8%. Average return on capital (ROC) declined to 35.6% versus 46.3%. Likewise, the average return on the bank’s assets (ROA) declined to 1.3% versus 1.4%. Earnings per share (EPS) dropped to 15 Fils compared to 18.9 Fils. (P/E) scored 11.7 times compared to 7 times due to the decline in the EPS by 20.6% against an increase in the share market price by 32.1%. (P/B) scored 0.98 times compared to 0.68 times in the same period of 2018.