31/12/2014 07:00 AST
Assets of 34 Bahrain-domiciled banks have grown by $568 million to $154.046 billion at the end of the first half of this year, the Bahrain Association of Banks (BAB) said.
This indicates a consistent upward trend, according to BAB.
This strength is emphasised by individual bank results for the first three quarters which again show a substantial growth in both assets, pre-tax profits and loans and deposits, it said.
The Bahrain Banks Annual Review 2014, to be officially released in mid-January next year, says the benchmark indicator, which measures total assets, shows how the 34 Bahrain-domiciled banks have recovered from the low of $125.937bn recorded in 2009 to post total assets of $153.478bn last year.
Key findings of the report were shared yesterday during a Press conference by a panel comprising BAB board member and Al Baraka Banking Group chief executive Adnan Yousif, Economic Development Board chief economist Dr Jarmo Kotilaine, BAB's official publication The Bahrain Banker's publisher and head of external communications Abdullah Wallace and its editor James Grant-Morris and BIBF's head of banking, Islamic finance, accounting and IT Deen Jayah.
The Bahrain-domiciled banks' total assets have grown by 22 per cent since 2009 and are higher than before the global financial crisis when Bahrain's banks had $142.872bn worth of assets, Mr Grant-Morris said.
The $12.320bn increase in total assets between 2012 and 2013 was the biggest year-on-year improvement at 8pc and shows that the recovery is very real and is gaining traction.
However, growth for the current year is likely to be around the 5pc mark based on results so far, the report said.
Net profit, the most closely-watched indicator in banking, rose from $1.322bn in 2012 to $1.826bn last year.
Conventional retail posted profits of $940m last year followed by conventional wholesale and Islamic wholesale.
Islamic retail posted a loss of $65m last year but this year there will be a positive gain as a result of profits from both Ithmaar Bank and Khaleeji Commercial Bank as opposed to the losses posted a year earlier.
Extrapolating net profits of approximately $953m for the first half of the year shows that the banking sector is on target to exceed last year's total for the year although it will be significantly short of $2.212bn recorded during the peak of the real estate boom in 2007.
However, it does show a huge jump from the lows of 2009 when local banks posted losses of $1.460bn for the year.
Net interest margin, a measure of the difference between the interest income generated by banks and the amount of interest paid out to their lenders in deposits, rose from a low of 1.90pc in 2009 to 2.02pc last year.
Return on average assets, a percentage which shows how profitable a bank's assets are in generating revenue, showed an increase from -0.84pc in 2009 to 1.24pc last year.
A similar jump was seen for return on average equity, which typically refers to the performance of bank's shares over a fiscal year. The indicator rose to 7.84pc last year - up from 5.98pc in 2012 and a low of -5.74pc in 2009.
Cost-to-income ratio, another key indicator of a bank's health, is also moving in the right direction.
The ratio, which shows a bank's costs, including administrative and fixed costs, such as salaries and property expenses (but not bad debts that have been written off) by operating income, fell to 51.11pc last year from 52.50pc in 2010.
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