COVID-19 Measure: Read Full Magazine Here. Ever since Al Baraka Banking Group was founded in 2002, it has stayed true to its traditional values and qualities.
Al Baraka Banking Group (ABG) is an Islamic multinational banking corporation which is headquartered in Manama, Kingdom of Bahrain. ABG was formed in 2002 and is listed in the Bahrain Stock Exchange and NASDAQ DUBAI. The Group offers retail, corporate, investment banking, and treasury services in accordance with the principles of the Shari'a in 17 countries.
The Group has total assets of $26 billion at the end of June 2020.
At the helm of the Group, is the Chairman, Sheikh Abdullah Saleh Kamel, who has been one of the most influential people in financial services sector in the Middle East and North Africa (MENA).
Abdullah Saleh Kamel is the President and Chief Executive Officer of Dallah Al Baraka Group, Kingdom of Saudi Arabia. He is also Chairman of Aseer Company, Chairman of Amlak Real Estate Development and Finance, Chairman of Okaz Press and Publishing Corporation and Vice-Chairman of King Abdullah Economic City Emaar. Previously he held various executive positions at Dallah Al Baraka Group, culminating in the position of Vice President for Business Sector until 1999 when he assumed his current position.
Abdullah Saleh Kamel is a businessman and investor and has over 30 years’ diversified experience in banking, investment and industrial sectors. He is active in public and charitable activities through his membership of many international and local organizations and associations such as the Jeddah Chamber of Commerce (he has been a Board Member on two occasions), the Young Presidents’ Organization, Friends of Saudi Arabia, The Centennial Fund and the Board of Trustees of the Prince of Wales Business Leaders’ Forum. Abdullah Saleh Kamel, a Saudi national, studied Economics at University of California, Los Angeles, USA.
Going further, the Banks within the Al Baraka Group provide products and services through individual business segments: Retail and Private Banking and Wealth Management segment, which includes individual customers’ deposit and current accounts, provides consumer loans, residential mortgages, overdrafts, credit cards as well as fund transfer facilities, investment products, funds, credit facilities, trusts and alternative investments; and the Corporate banking, treasury, investments and the brokerage subsidiary segment offers loans and other credit facilities, deposit and current accounts for corporate and institutional customers, and provides money market, trading and treasury services, as well as brokerage services. The Group operates through its head office and a network of 17 subsidiary banks and two representative offices spread across 3 continents.
Throughout its history, Al Baraka Banking Group has succeeded in consistently providing innovative banking solutions. The group's rich legacy has driven its financial strength.
Today, Al Banking Group is a leading financial provider in its operating markets.
The Group’s President & Chief Executive, Adnan Ahmed Yousif, holds over three decades of international banking experience.
As President & Chief Executive, Yousif has led Al Baraka Banking Group (ABG) since inception, developing the Group into one of the largest and most diversified Islamic banking groups in the world, operating a network of around 700 branches in 17 countries, with its Head Office in the Kingdom of Bahrain. He is the Chairman of, Al Baraka Bank Sudan, Al Baraka Turk Participation Bank, Al Baraka Bank Ltd. South Africa, Banque Al Baraka D'Algerie S.P.A., Al Baraka Bank Pakistan Ltd., Al Baraka Bank Syria s.a. and Vice Chairman of Al Baraka Islamic Bank B.S.C.(c), Bahrain and a Board member of Al Baraka Bank Tunisia and Itqan Capital in Saudi Arabia.
Yousif is currently the Chairman of Bahrain Association of Banks. He has been the Chairman of the Union of Arab Banks, headquartered in Lebanon, for two consecutive terms (2007-2013).
On June 9, 2019, a royal decree was issued appointing Adnan Ahmed Yousif as a member of the Board of Trustees of the Governmental Hospitals.
In 2011, Yousif received the Medal of Efficiency, a unique honor conferred by His Majesty King Hamad Bin Isa Al Khalifa, the King of the Kingdom of Bahrain. In 2017, Yousif received the Honorary Freedom Award, the highest honor from the City of London for his outstanding contributions to international banking services.
The Global Islamic Finance Awards (GIFA) has declared Yousif as the Islamic Finance Personality of the Year 2017. He was also awarded by the LARIBA American Finance House the 2012 LARIBA Award for Excellence in Achievement in recognition of his leadership role in consolidating and operating the largest diversified Islamic banking group in the world. In 2004 and 2009, he twice received the Islamic Banker of the Year award (2004 and 2009).
Adnan was awarded the "Excellence in Partner Empowerment for 2019" award by the Regional Network for Social Responsibility in collaboration with the United Nations Global Marketplace Organization and the Arab Planning Institute during the eighth meeting of the partners of the Regional Network for Social Responsibility in the Arab States held in Kuwait in January 2019. He was awarded also "The Arab Economic Socially Responsible- Personality" Award for 2018” by the Regional Network for Social Responsibility during the honoring ceremony held in the Kingdom of Bahrain in January 2019.
Adnan was awarded the "Scientific Competency Award in the fields of Green Banking" by the Regional Network for Social Responsibility during the CSR conference, held online in June 2020. He was also awarded the Scientific Competency Award in the fields of CSR and business ethics as well as the International Excellence Award in the field of CSR during the International Congress of CSR in the Kingdom of Morocco in September 2019.
In 2017, Yousif won the 12th Islamic Business & Finance Awards for his Outstanding Contribution in CSR in Islamic banking. In 2016, the CSR Regional Network named him as the High Commissioner for advocating the United Nations Sustainable Development Goals 2030. The CSR Regional Network, in 2015, named him the CSR International Ambassador (Kingdom of Bahrain). He also received the Gold Award for Sustainable Development for his major role in the social responsibility programs nationally and internationally in 2016, as well as recognition for the leading role of ABG in the field of CSR at Oman International Conference on Social Responsibility.
Yousif was previously at the Arab Banking Corporation for over 20 years, and last served as Director on its Board. He holds a Master of Business Administration degree from University of Hull, UK. In recognition of Yousif’s outstanding contribution in the field of contemporary Islamic finance and for modernizing its theoretical fundamentals in practice, the Al Jinan University of Lebanon granted him an Honorary Doctorate of Philosophy in Business Administration.
Adnan Ahmed Yousif is well recognized for his competency, professionalism and distinction.
He has long been an advocate for continuous personal development and has shaped the direction of not only individuals, but of organizations and systems through his efforts.
He strongly believes that the choice of being a distinguished leader is within the grasp of every leader if they have the honesty and courage to reach within and beyond themselves. Distinguished leaders develop themselves and their followers in a manner that they can mutually embrace transcendent values and work together toward the social good.
Banking has evolved as a process of safeguarding the interest of people. It may be described as a social device to reduce or protect customers’ cherished savings, property and business ventures.
Banking contributes a lot to the general economic growth of the society by provides stability to the functioning of process. The banking industry develop financial institutions and reduces uncertainties by improving financial resources, thus impacting business and human life.
Banks invest in many areas.
This exclusive interview with the reputed and dynamic financial expert Adnan Ahmed Yousif, explores the role of banking in supplying liquidity and how executive management improve the role of entrepreneurs and individuals.
Banking industry plays an important role with respect to financing the economy.
BL: What about ABG results during the first half of 2020?
Adnan Ahmed Yousif: The total income of the Group recorded during the first half of 2020 was US$ 90 million compared to US$ 95 million for the same period of 2019 with a 5% decline. This decrease came as a result of the Group's allocating of a significant increase in precautionary provisions to offset the expected damages resulting from the negative economic impact of the COVID-19 pandemic on the businesses of the Group and its units. These provisions increased by 345% to reach US$ 127 million during the first half of 2020 compared to with US$ 28 million in the first half of 2019.
The Group's total operating income increased by 25% during the first half of 2020 to US$ 553 million, compared to US$ 442 million during the first half of 2019. As a positive result of the Group's ability to control expenses, net operating income increased by 62% to US$ 275 million during the first half of the year 2020 compared to US$ 170 million for the same period last year.
Total assets of the Group showed a decrease of 1% by end of June 2020 to reach US$ 26.13 billion compared to US$ 26.26 billion by the end of December 2019. The Group focus during the first half of 2020 on maintaining a large portion of these assets in the form of liquid assets in order to face any emergency requirements of the units because of the COVID-19 pandemic.
BL: What were the main challenges your faced during the first half of 2020?
Adnan Ahmed Yousif: We witnessed during the first half of this year, unprecedented challenges that the world has not witnessed for a long time, which was represented by the outbreak of the COVID-19 pandemic in all countries of the world, resulted in wide damages and negative results across the various sectors, professions, institutions and societies, including banks and financial institutions. Based on our philosophy and model of socially responsible businesses, we have initiated a comprehensive strategy that do not only focus on maintaining the integrity of our financial conditions during the pandemic only, but also provides the required support to the societies in which we operate, and individuals, institutions and companies that deal with us, and at the same time maintain the sustainability of our services and the safety and protection of our employees.
BL: In view of these challenges, what were you focusing to keep the safety of the Group and your clients and societies?
Adnan Ahmed Yousif: Since the beginning of the outbreak of the Corona pandemic, we have initiated at the level of the Group and the Units, the activation of our business continuity plans, which have included many precautionary health, operational and financial initiatives in order to protect our customers, employees, and provide support to customers, while monitoring our financing and investment portfolios, communicating with the potential customers, maintaining appropriate liquid balances in anticipation of facing all eventualities, and enhancing security of data, information and technical services network.
The pandemic nudged institutions and banks to provide their services remotely, and ABG, thanks to the Almighty, proved the success of its strategies in the transition towards digital banking that we launched two years ago, where we, both at the Group level and unit level, took the initiative to transform our electronic networks into integrated platforms to provide all the banking services needed by customers and other stakeholders. This has contributed greatly to providing security and safety for our customers and employees, and in ensuring continuity of providing our banking services in an outstanding manner."
Environmental protection aspects also played a large part in our efforts during the first half of the year, especially those related to fighting the Corona virus, and directing our operations and funding towards supporting environmental projects and green banking in the societies in which we operate.
BL: What will be your priorities for the coming period?
Adnan Ahmed Yousif: During the second half of the year, we will continue to maintain our balance and capabilities in dealing with the ongoing repercussions of the Corona pandemic by continuing to reinforce and develop the initiatives and strategies that we launched since the beginning of the year, hoping that we will conclude the year with good results that are consistent with our expectations and aspirations.
BL: Following an agreement signed with UNEP last year, ABG had pledged to allocate approximately $197 million to finance environmental projects over the course of 2019 - 2020. What projects has ABG financed since? What more is there in the pipeline and do you plan to expand this allocation further?
Adnan Ahmed Yousif: We have already developed our business plan to achieve this target through our units and some of them have already implemented initiatives in their countries. These units will provide financing of over $78 million towards renewable energy projects and over $ 119 million towards enhancing the energy efficiency of existing cooling & electric systems. We have confidence that these targets are achievable.
Through channeling finance for renewable energy and energy efficiency projects, we hope to be able to strengthen efforts towards achieving sustainable development in the countries where we operate while improving the lives of local communities.
We expect that our collective effort with UNEP will help reduce carbon emissions in these countries. In addition, we hope that this financing pledge will encourage other banks to finance renewable and energy efficiency projects in a similar fashion.
BL: How you see the world economic developments in view of COVID-19?
Adnan Ahmed Yousif: The swift and massive shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction.
According to World Bank forecasts, the global economy will shrink by 5.2% this year. That would represent the deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870.
Economic activity among advanced economies is anticipated to shrink to 7% in 2020 as domestic demand and supply, trade, and finance have been severely disrupted.
The hardest blow is being hit in countries where the pandemic has been the most severe and where there is heavy reliance on global trade, tourism, commodity exports, and external financing.
The pandemic highlights the urgent need for health and economic policy action, including global cooperation, to cushion its consequences, protect populations, and strengthen countries’ capacities to prevent and deal with similar events in the future.
It is critically important for emerging market and developing economies to strengthen public health systems, address challenges posed by informality and limited safety nets, and enact reforms to generate strong and sustainable growth once the crisis passes.
Emerging market and developing economies with available fiscal space and affordable financing conditions could consider additional stimulus if the effects of the pandemic persist. This should be accompanied by measures to help credibly restore medium-term fiscal sustainability, including those that strengthen fiscal frameworks, increase domestic revenue mobilization and spending efficiency, and raise fiscal and debt transparency.
BL: What is the impact of COVID-19 on the Banking Sector?
Adnan Ahmed Yousif: As far as banking sector is concerned, though banks are not being hit by the novel coronavirus as directly as other retail institutions, they are at the forefront of public attention.
Banks sit at the heart of the economy and provide funding to corporates and individuals. Their stability is crucial to keep the system up and running.
Millions of consumers are now being placed under quarantine or lockdown. As a result, they might lose their ability to pay for credit, particularly mortgages.
Also, business loans, especially to small and medium enterprises, are at risk due to the forced shutdown. But industries such as travel and hotels will be hit very badly, as they will have no way to make up for the lost revenues in the future.
Other industries, such as manufacturing and retail, will suffer now but may see increased activity once things go back to normal.
Banks have already started waiving fees, increasing credit card limits, and granting mortgage payment holidays and access to fixed saving accounts to those impacted by the virus.
At this difficult time, it’s important to make the impacted clients feel that a bank has their back and to offer payment holidays or short-term cash-flow support. This is clearly also in their own interest, but this is only a temporary solution.
However, banks should be reassessing the risk profiles of their customers and particularly reclassifying borrowers impacted by the coronavirus as high risk. This will lead to more provisions should be allocated and banks will show losses at the end.
If the COVID-19 crisis lasts longer, this option will increasingly become unavoidable. Of course, unless the state steps in to provide more support for banks.
Therefore, the role of central banks was not as essential as it is today. They should continue employing the embedded flexibility of regulatory, supervisory, and accounting frameworks, while upholding internationally agreed minimum regulatory standards and supervisory principles. Abandoning such principles could sow the seeds of future risks that potentially undermines the medium-term soundness and health of the banking system.
A considerable concern is the rise in cyber-attacks and fraud, as consumers, businesses and employees adapt to this new environment. Crisis and rapid change always create an opportunity for bad actors, and COVID-19 will be no different.
Banks must be aware of new types of attacks and fraud, particularly as more staff work from home and therefore open new threat vectors.
BL: At the same time, COVID-19 creates new business opportunities for banks. What do you think?
Adnan Ahmed Yousif: Yes, I believe that despite the negative outlook, economic uncertainty creates opportunities for new business models powered by emerging digital banking.
In the coming years, consumers will fear infection. This will accelerate the switch to a cashless society and the adoption of alternative integrated payment features powered by mobile wallets.
Technology providers should be focusing on alternative authentication methods through biometrics.
The advancements in digital banking are making the crisis more bearable and are enabling businesses to keep working with access to key services (communication, payments, credit, collaboration, etc.), while enabling social distancing and helping to fight COVID-19. We expect digital technology to experience another boost during and after the crisis.
BL: What about ABG strategy towards digital banking?
Adnan Ahmed Yousif: ABG has been implementing its digital transformation strategy since three years now. Almost all our banking services to clients can be provided online.
All our subsidiary banks in 17 countries across Arab, Asia, Africa and ME countries have digital transformation strategies and they have started the implementation process.
Within this context, Al Baraka has launched the first Islamic Digital bank in Europe called ‘Insha’ that is based in Germany.
We also, through our Turkish subsidiary launched a FinTech payment solution called “alneo” in the Turkish market as well as an investment arm that invests in FinTechs. In addition, we launched our Global API marketplace for FinTechs to test theirinnovative solutions.
Al Baraka Units in Bahrain and Turkey conducted Hackathons both internally with the employees and externally with FinTechs.
BL: What are some of the hurdles you face? How do you think these challenges can be overcome?
Adnan Ahmed Yousif: Like any other major move, open banking and digital banking involve deep changes. Education, training and awareness are required to develop the right skills for dealing with the transformation. Huge investments in IT and systems, as well as adoption of new internal policies and procedures to ensure compliance with the new regulations, are also necessary. This transformation will reshape the products and services of the banks and will create severe competition from the newcomers. All these challenges, among many others, require banks to develop new strategies. The banks must also try to benefit from each other’s experience in order to create new business opportunities.
BL: How does the regulatory environment encourage innovation?
Adnan Ahmed Yousif: Bahrain has had a long history of proactive adoption of new technology. Over the past few years, the CBB [Central Bank of Bahrain] has taken a number of important steps in this area, including the regulatory sandbox for FinTech and endorsement of Bahrain FinTech Bay.
Two years ago, the CBB issued many regulations aimed at enhancing digital banking. These new rules will enable specialized FinTech firms planning to offer digital financial advice to obtain a license. In addition, banks and investment firms will now be able to introduce new services under CBB supervision.
Crypto assets operating under Blockchain distributed-ledger systems have also drawn much regulator attention globally, and the CBB established rules aimed at ensuring that related activities are brought within the regulatory perimeter where they will be subject to supervisory measures. These new initiatives are a continuation of the CBB’s efforts to provide the right mix of policies and products to develop and enhance the quality and competitiveness of services in the financial sector.
BL: What are the investment opportunities in Bahrain today?
Adnan Ahmed Yousif: Bahrain offers opportunities across all major aspects of finance, from banking and asset management to FinTech, insurance and Islamic finance. The country continues to attract local and international institutions that wish to capitalize on significant growth in regional demand across the full spectrum of banking services. Bahrain’s banking industry has expanded thanks to the support of an open-market economy, stable and prudent macroeconomic and fiscal policies, and a highly capable, well-qualified local workforce. Furthermore, Bahrain’s rigorous, comprehensive regulatory framework is in line with international standards.
BL: As a Chairman of Bahrain Association of Banks, what is the Association’s role towards enhancing the juridical environment in Bahrain?
Adnan Ahmed Yousif: The Bahrain Association of Banks (BAB) is organizing a series of online meetings with stakeholders in the government, private and civil sectors to discuss ways of settling disputes in banking and financial sector through mediation law issued last year.
The forthcoming meetings organized by BAB on this topic will attract an elite group of lawmen and experts on arbitration and mediation and will review the experiences of regional and international arbitration centres to avoid the drawbacks while consolidating the advantages. This is in addition to reviewing all arbitration laws in the countries of the region and making a comparative study, especially with regard to appointing arbitrators, implementing arbitral decisions, appealing them, and how to set up arbitrators’ lists and selecting them,” Adnan said.
The legal provisions relating to banking, financial markets and companies are among the most difficult legal processes due to the overlapping of concepts and their complexity. Therefore, we believe that mediation can provide a solution characterized by speed and effectiveness and provide impartiality and justice to litigants. Also, the speed in settling investor disputes is one of the most important factors and criteria for measuring the competitiveness of the investment climate and developing the financial and banking industry in Bahrain.
