Banking Industry in Bahrain

The decision to open up Bahrain to embrace all people indiscriminately was fostered in me ever since I was a child.

- Hamad bin Isla Al Khalifi

زالة فيفيكVivek Jhala

سينغ أنجادAngad Singh

History Of Banking

1920 – Eastern Bank (Standard Chartered)

1944 – British Bank of the Middle East

(HSBC)

1957 – Bank of Bahrain (NBB)

1960 – Arab Bank Ltd.

1970 – Oil Boom

1973 – Central Bank (Bahrain Monetary

Agency)

1975 - OBU’s (Citibank and

Algemene Bank)

2006- BMA replaced by the Central Bank

of Bahrain

Bahrain Facts

• Financial Institution Sector – 2nd Highest contributor to the GDP

73%

27%

Financial Sector Workforce

Bahraini NationalsForeign Nationals

Bahrain Currency

• 1 Bahraini dinar = 2.6525 US dollars• 1 Bahraini dinar = 148.1430 Indian rupees

(as on 6th September, 2012)

Attractions of Banking Businessin Bahrain

• Strategic location • Highly favorable tax

environment• Stable currency and dynamic

banking environment • No restriction on repatriation of

capital, profits or dividends• Effective support and efficient

banking regulation from the central bank

Attractions of Banking Businessin Bahrain• A world leader in Islamic Banking expertise• Attractive local and regional investment

opportunities • Excellent communications network and

communication infrastructure • A well educated and professional bilingual workforce • Relaxed lifestyle and cosmopolitan multi-cultural

environment

Central Bank of Bahrain

• Created on 6th September 2006• Replaced the Bahrain Monetary Agency (BMA)• Responsible for maintaining monetary and

financial stability in the Kingdom of Bahrain• Single integrated regulator of Bahrain's

financial industry

Objectives

1. Set and implement monetary, credit and other financial sector policies for the Kingdom of Bahrain;

2. Provide effective central banking services to the Government and financial sector of the Kingdom;

3. Develop the financial sector and enhance confidence therein; and

4. Protect the interests of depositors and customers of financial institutions, and enhance the Kingdom's credibility as an international financial centre.

Organization Structure

371 – No of Banks & Financial

Institutions

150 – Banking Institutions

151 – Insurance Firms

36 – Capital Market Brokers 34 - Others

Banking sector assets – growing at a faster pace.…

Islamic banking – increasing its penetration…..

FUTURE BANK

Futurebank is a full commercial Bank promoted in Bahrain and approved by the Central Bank of Bahrain (CBB). The Bank has its headquarters

in Manama, Bahrain. Future Bank was established on the 1st of July, 2004 as a Joint Venture Project between three highly reputed financial institutions - Bank Saderat Iran, Bank Melli Iran, and Ahli United Bank (AUB) Bahrain, with a strategic vision of becoming a unified entity which incorporates the strengths of all

three of its constituents.

BOARD COMMITTEE MEMBERS

• Mr. Gholam Souri(Chief Executive Officer & Managing Director)

• Mr. Mahmoud Reza Khavari (Chairman).

• Dr. Hamid Borhani and Mr. Abdul Aziz Ahmed A. Malek (deputy chairman).

• Dr. Valiollah Seif and Mr. Gholam H. Zaferani (director).

Mr. Mahmoud Reza Khavari

THE BANK’S PHILOSOPHY ON CODE OF GOVERNANCE

• To protect and enhance shareholder value.• To protect the interest of all other stakeholders such as customers, employees and society at large.• To ensure transparency and integrity in communication and to make available full, accurate and clear information to all concerned.• To ensure accountability for performance and customer service and to achieve excellence at all levels.• To provide corporate leadership of highest standard for others to emulate.

Major Shareholders (5% and above)

Name Nationality No. of Shares

Ahli United Bank through its Trustee arrangements with Dana Trust

Bahraini 27,700,000

Bank Saderat Iranian 27,700,000

Bank Melli Iranian 27,700,000

• Net interest income 20.9 14.4 13.1 13.7 11.4 • Other income (0.7) 1.0 1.0 0.8 1.0 • Total income 20.2 15.4 14.1 14.5 12.4 • Operating expenses 4.0 4.0 3.5 3.3 2.6 • Profit before provisions 16.2 11.4 10.6 11.2 9.8 • Net provision / write-back (6.7) (1.3) 2.4 (0.5) (1.0)• Impairment of goodwill (1.0) (1.0) - - - • Net profit / (Loss) 8.4 9.1 8.2 10.7 8.8 • Financial Position (BD millions)• Total assets 532.3 524.3 547.5 547.5 498.1 • Net loans 141.3 151.7 118.4 113.1 83.3 • Due from banks 302.8 276.8 358.9 381.0 340.8 • Investments 36.5 50.3 12.4 8.8 10.2 • Total deposits 372.4 371.1 421.5 446.4 417.4 • Medium term borrowings 58.6 60.0 48.8 31.9 16.6 • Customer deposits 140.8 131.7 108.7 95.9 67.7

Income and Expenses (BD millions)

• Shareholder's equity 96.6 88.2 73.7 63.3 58.2 • Ratios (percentage)• Profitability• Net income / Average equity 9.1 11.3 12.2 17.8 17.9 • Net income / Average assets 1.6 1.7 1.5 2.1 2.4 • Operating expenses / Total income 19.8 26.1 24.8 23.0 21.0 • Earning per share (BD/USD) 0.105 0.128 0.152 0.237 0.209 • Liquidity• Customer deposits / Net loan and advances 99.6 86.8 91.8 84.7 81.2 • Loans and advances / Total assets 26.5 28.9 21.6 20.7 16.7 • Liquid assets / Total assets 41.7 38.3 44.6 39.1 52.4 • Capital Adequacy • Capital adequacy 20.2 25.7 21.0 15.6 20.0 • Equity / Total assets 18.1 16.8 13.5 11.6 11.7

Operational achievements

• In 2011, Futurebank reviewed its short to

medium term operational stance within Bahrain, with an aim to enhance its services and ability to meet the needs of its growing customer base. Most notably, the Bank increased the spread of its ATMs across the Kingdom from 17 to 20. This drive was aimed at increasing its customer service capabilities, as well as driving higher penetration levels across the local Bahraini market.

• In keeping with its unwavering commitment to the highest quality standards, Futurebank renewed and extended its ISO 27001 certification for another 3 years. This achievement marks the Bank’s commitment to maintaining and enhancing quality standards across all areas of its operation.

Products and services

• Corporate banking• Retail banking • Treasury

CORPORATE BANKING

• FutureBank provides client-centric banking solutions and offers a complete range of products and services designed to meet the requirements of Large and Medium Corporate clients, as well as High Net worth Individuals in Bahrain. These include working capital, trade finance and term loan products and facilities.

• The Bank offers a various corporate banking products including Bahraini Dinar and Foreign Currency Debt, working capital credit, structured financing, syndication and transaction banking products and services.

Retail banking• Saving Bank Account

• Current Accounts

• Fixed Deposits

• ATM Services

• Remittances

• Retail Loans

Treasury

• Futurebank has its own Treasury Unit widely participating in trade related business between GCC Countries and Islamic Republic of Iran by way of forfeiting transactions.

• Other areas of concentration:• Foreign exchange – spots and forwards in all currencies (including

gulf currencies)• Inter-bank deposits.

Interest rates(Averages for the second quarter of 2012)

• Average interest rate on personal loan: 5.59.• Business loan : 4.81.• Deposits : 1.11.• Money market(interbank rates):0.47 to 0.73.• Repos :2.25• Long term government bonds : 1.73.• Conventional retail banks charge varying rates

ranging from no interest to as 10.58 for corporate loans.

Recommendation

• Deal with Phising & Skimming• Focus more on Islamic Banking

THANK YOU

زالة فيفيكVivek JhalaD-13

سينغ أنجادAngad Singh

D-36