Bahrain-based Al Baraka Islamic Bank saw net income reach BD978,000 ($2.5 million) in 2011 compared to BD1.75 million in 2010, marking a drop of 44 per cent.

The drop was a result of the 61 per cent increase in operating expenses due to full consolidation of operations of the bank in Pakistan and Bahrain for the first time in 2011.

Net operating income decreased by 6.3 per cent to BD1.46 million, but total operating income improved by 51 per cent to BD16.2 million.

The improvement in total operating income was due to the increase of the bank's business in Bahrain and Pakistan, improvement in the quality of income-generating assets and a reduction in non-performing financing as well as an increase in income from foreign trade financing and from arranging financing deals.

Total assets increased by 18.7 per cent to BD602.4 million.

In the fourth quarter of the year, the bank had a net loss of BD379,000 compared to a profit of BD1.4 million for the same period in 2010.

'The year 2011 was tough locally, regionally and globally and was characterised by aggravation of economic problems internationally, especially in the euro zone and the US, which in turn created an unfavourable environment for businesses and banks in the world,' said bank chairman Khalid Rashid Al Zayani.

'Despite this, we are delighted to see the good performance of Al Baraka Islamic Bank,' Mr Al Zayani said.

'The year was certainly challenging for all of us, given the negative political and economic developments witnessed on regional and global levels,' said vice-chairman, president and chief executive of parent group Al Baraka Banking Group Adnan Yousif.

'The bank faced all these challenges by implementing a series of initiatives that had clear positive effects on the bank's performance during 2011.

'The conversion of the bank's branches in Pakistan to an independent Islamic commercial bank following the merger with Emirates Global Islamic Bank in Pakistan and our hard work to turn around these branches to profitability had an evident positive effect on the operations of the bank.

'We also continued our ambitious work in Bahrain to launch new services and products, open new branches, and enhance capital, technical and human resources of the bank.

'All these factors helped in achieving the good results for the bank during 2011,' he added. - TradeArabia News Service