BANDAR SERI BEGAWAN – Brunei’s largest financial institution, Bank Islam Brunei Darussalam (BIBD), posted its largest profits to date recording $169 million in 2017, increasing profitability by 39 percent from the previous year.
BIBD’s highest profits come on the back of a modest recovery in the Brunei economy, which grew 1.3% in 2017 after seeing four consecutive years of negative growth.
Speaking at the bank’s annual general meeting on Wednesday, BIBD Managing Director and CEO Mubashar Khokhar said despite market challenges all key business segments experienced positive revenue growth.
Overall, BIBD Group posted total revenue of $331.5 million (0.2 percent growth), while the bank itself reported revenue of $348 million (13.2 percent growth).
“One key contributor to this performance is the 9.7 percent growth in net fee and commission income… Revenue growth was also supported by strong results in our financing, leasing and investment activities,” said the bank’s CEO.
After deducting zakat and tax, the bank’s net profit was $169.8 million, compared to $122 million in 2016, while BIBD Group recorded profits of $116.2 million, up 11.5 percent from the previous year.
Total assets for the bank increased modestly by 2.2 percent to $9.2 billion, propelled by a 4.7 percent increase in deposits, cementing BIBD’s dominant market share in Brunei with 207,000 customers.
Meanwhile total assets for the group — which includes subsidiaries BIDB At-Tamwil, BIBD securities, and BIBD (Middle East) Limited — was up by 1.1 percent to $9.6 billion.
The bank also paid out its highest ever dividends to shareholders in 2017 at $0.176 per ordinary share — a total of $127 million.
Brunei’s financial regulator Autoriti Monetari Brunei Darussalam (AMBD) said 2017 was a challenging period for the banking industry, with declines in overall assets by 2.6 percent, deposits by 1.6 percent, and financing to the corporate sector by 7.8 percent compared to 2016. Hire purchase transactions of finance companies also declined by 6.5 percent.
“The brake in financial activities is typical for a domestic economy facing periods of sluggish growth – the economy only began to recover in Q2 2017 following four quarters of negative real GDP growth,” AMBD said in its annual report for 2017.
Brunei’s economy is projected to grow 1.5 percent in 2018 and two percent in 2019, according to forecasts made by the Asian Development Bank.
Second finance minister YB Dato Seri Paduka Dr Hj Mohd Amin Liew Abdullah, in his capacity as BIBD’s chairman, added that the the bank is expected to benefit from Brunei’s economic rebound, spurred by recovering oil prices.
“However, the Bruneian government remains focused in its efforts to diversify its economy in order to create alternative income streams, reducing its dependence on oil and gas and mitigating any future shocks to the economy,” he said in statement published in BIBD’s annual report.
The minister said he looks forward to seeing the growth of BIBD’s business beyond Brunei, particularly in Singapore and the Middle East: “These locations not only provide us the opportunity to reinforce income streams for BIBD but also showcases our ability to be recognised as part of a larger global financial ecosystem.”
BIBD was formed in 2005 through the merger of Islamic Bank of Brunei and Islamic Development Bank of Brunei. Its main shareholders are Brunei’s Ministry of Finance, the Sultan Haji Hassanal Bolkiah Foundation, Fajr Capital Limited, and approximately 6,000 individual Bruneian investors.