Burgan Bank Financial Results – 30 September 2019

Burgan Bank announced results of its operations for the first nine months of the current year, which indicate that the bank’s net profit (after tax deductions) scored KD 68.98 million, declining by KD 2.72 million or by 3.8%, compared with KD 71.70 million in the same period of 2018. The decrease in the bank’s net profits was caused by the decrease in total operating income by a greater value than the decrease in total operating expenses. This decrease in the net profit occurred despite the drop in total provisions by KD 18.60 million or by 42%. Therefore, the bank’s operating profit (before provisions deductions) declined by KD 22.10 million or by 17.6%, reaching KD 103.57 million compared with KD 125.67 million.

In details, total operating income decreased by KD 28.34 million or by 13.7%, to reach KD 178.27 million compared with KD 206.61 million in the same period of 2018. That resulted from decline in item of net interest income by KD 13.44 million or by 9.7%, scoring KD 125.22 million compared with KD 138.66 million. Also, items of dividends income and other income decreased by a total of KD 19 million. While item of net investment income increased by KD 9.42 million. 

Total operating expenses decreased by a lesser value than the decrease in total operating income, by KD 6.24 million or by 7.7% and scored KD 74.69 million compared with KD 80.93 million, due to the decrease in all items of the operating expenses. Percentage of total operating expenses to total operating income scored 41.9% versus 39.2%. Total provisions dropped by KD 18.60 million or by 42% as mentioned previously, and reached KD 25.66 million compared with KD 44.26 million in the same period of last year. Therefore, the net profit margin rose to 26.3% compared with 26% in same period of 2018. The bank’s financial statements indicate that total assets declined by KD 554.4 million or by 7.6%, reaching KD 6.758 billion versus KD 7.312 billion in the end of 2018. It dropped by KD 79.2 million or by 1.2%, if compared with the total assets in the same period of 2018, when it scored KD 6.837 billion. Item of loans and advances portfolio decreased by KD 44.4 million or by 1%, and scored KD 4.218 billion (62.4% of total assets) versus KD 4.263 billion (58.3% of total assets) in the end of 2018. While it rose by 1.5% or by KD 63.1 million, compared with KD 4.155 billion (60.8% of total assets). Percentage of total loans and advances to total deposits scored about 83% compared with 78.1%. Also, item cash and cash equivalents dropped by KD 466.9 million or by 40.1%, to reach KD 697.4 million (10.3% of total assets) compared with the end of 2018 when it scored KD 1.164 billion (15.9% of total assets), and dropped by 20% or by KD 174.7 million compared with KD 872.1 million (12.8% of total assets) in the same period of last year. 

Figures indicate that the bank liabilities (excluding total equity) decreased by KD 557.4 million or by 8.8%, and scored KD 5.807 billion compared with KD 6.365 billion in the end of 2018. If we compare total liabilities with its value in the same period of last year, we will note it dropped by KD 134.5 million or by 2.3%, as it scored KD 5.942 billion. Percentage of total liabilities to total assets scored 85.9% versus 86.9%.Results of analyzing financial statements calculated on annual basis indicate that all bank’s profitability ratios dropped compared with the same period of 2018.

The average return on capital (ROC) declined to 35.9% compared with 43.3%. The average return on equities (ROE) decreased to 12% versus 13.8%. Likewise, the average return on bank’s assets (ROA) dropped slightly to 1.31% versus 1.34%. Earnings Per Share (EPS) declined to 19 Fils versus 25.2 Fils. (P/E) scored 12.5 times compared with 7.4 times, due to the decline in the EPS by 24.6% against an increase in the market share price by 26.8% compared with the same period of last year. (P/B) scored 0.9 times compared with 0.6 times in the same period of last year.