All data are collected in the Fiscal Year of 2008-2009.

Sudan / Finance, Insurance, Investment

Al Baraka Banking Group B.S.C. ('the Bank') is a joint stock company incorporated in the Kingdom of Bahrain on 27 June 2002 with an authorized capital of US$ 1.5 billion. The Bank is engaged in banking activities in the Middle East, Europe, North African and South African region. The Bank operates under a wholesale banking license issued by the Central Bank of Bahrain ('the CBB').

Albaraka Banking Group ABG is one of the largest Islamic banking and financial services organizations in the world. The ABG’s international network comprises of 10 subsidiaries with almost two hundred branches in 10 countries in Asia, the GCC region, the Middle East and Africa. Al Baraka Banking Group (Al Baraka Group) is listed on Bahrain Stock Exchange and NASDAQ Dubai Stock exchange. It has Standard and Poors long and short term credit ratings of BBB- and A-3 respectively.

AlBaraka Bank Sudan was established in 1984 and operates 25 branches.

AlBaraka Tower, Kaser, Khartoum, Sudan; Tel: +249183 780 688; Fax: +249183 788 585

Al Baraka Banking Group offers retail, corporate and investment banking and treasury services strictly in accordance with the principles of the Shari'a. AlBaraka Bank Sudan’s activities comprise retail, commercial and investment banking.

656 employees in Sudan

In 2008 Albaraka Sudan’s total assets grew by 5% to $302 million, fed by 7% growth in its customer current and other accounts. Most of the increase in total assets was in the Istisna’a finance portfolio, liquid assets, nontrading investments and other balances as at the end-year, however, the bank’s total income from jointly financed sales and investments rose 27% to $23 million which, after accounting to the unrestricted investment account holders for their share less the bank’s share as Mudarib, yielded it an increased income from this source of $21 million. Including income from Mudarib fees for managing the restricted investment account, banking and other services, total operating income was 24% up on 2007 at $32 million. Operating expenses of $18 million were 5% higher than the previous year, resulting in a net operating profit of $13 million. After accounting for provisions, Albaraka Sudan reported a net profit for the year of $9 million, 4.5 times 2007’s $2 million.

It is the 11th largest bank in Sudan.

“To be the Leading Islamic Banking Group with a World Wide Presence, Offering; Retail, Commercial, Investment Banking, and Treasury Services Strictly in Accordance with the Principles of Sharia” and “To consolidate the diverse banks in the Group in order to pursue a uniform Group Strategy in their respective countries, whilst retaining their individual identities”

“The Al Baraka Banking Group's initial strategy after formation was fourfold: to achieve a successful consolidation of the subsidiaries into the Group structure; to establish control over the members of the Group via head office departments established by the Group's executive management team; to achieve a successful share flotation; and to commence the Group's expansion, both organically through expansion of its existing subsidiaries and by the establishment or acquisition of new subsidiaries in new countries.

With the control and consolidation of the Group, followed by the successful flotation and subsequent enhancement of the share capital of many of its subsidiaries, and unification of broad Group policies, Al Baraka Banking Group has largely achieved its initial strategic aims.

Its original strategic objectives - enhancement of shareholder value; research and development into new Islamic financial products benefiting its customers; distribution of its products and services and promotion of cross-border services; and achievement and maintenance of the highest corporate governance and regulatory compliance standards - are now established aims of all members of the Group and an inherent part of the corporate ethos.

Whilst all of these aims will continue to be important motivators, however, we have determined that enhancement of shareholder value and stakeholder benefits must be the main business driver for the Group. In order to bring focus to that key objective, therefore, it is crucial that a clear set of strategies be established for the medium term, designed to ensure that all parts of the Group be made aware of what they must do to ensure success.

With the help of a SWOT analysis we identified four primary strategic objectives that must be met if the Group is to achieve consistent and improving delivery of shareholder value and stakeholder benefits in terms of the new “Unified Corporate Identity” strategy. These are: increased profitability; product innovation; technology and process enhancement and improvement in customer service and staff satisfaction. We have communicated these value drivers amongst the Group successfully and we meet twice a year to review our strategic direction.

As widely evident, Islamic banks have remained largely unscathed by the crisis of 2007-2008 owing to the prudent policies of Islamic banking. The Group's conservative strategy of preservation of liquidity and conduct of business in an environment of good Shari'a compliant internal controls and processes coupled with a cautious approach to business growth throughout the Group and to the strengthening of existing relationships has paid it rich dividends. Besides the very nature of Islamic banking's prohibition of dealing in derivative and speculative assets has served to protect the Group from the adverse effects of the economic crisis.”

The operations of banks in Sudan are based on Islamic principles. The banking system in Sudan is regulated and supervised by the Bank of Sudan (BOS) as provided under section 6 (c) of the Bank of Sudan Law 2002 that states one of the objectives of BOS is to "regulate, control and supervise banking activity and act to develop and enhance the effectiveness of banking activity, so as to achieve balanced economic and social development." The Central Bank of Sudan Policies for 2009 amongst others is as follows:

• Continuation in the implementation of the wealth-sharing protocol pertaining to financing, monetary and banking policies;
• Promoting the efficiency of the dual banking regime through strengthening the financial positions of banks, enhancing their performance, assets quality and promoting their efforts towards addressing the problem of non-performing loans beside protecting them from the anticipated impacts of the international financial crisis;
• The overall level of the liquidity in the economy will be managed in a balanced manner to meet the requirements of the economic activities for finance, without generating inflationary pressures, through focusing on applying dual banking-friendly indirect monetary policy instruments and measures as follows: the Islamic banks shall maintain cash balances with the Central bank of Sudan as a statutory reserve in local and foreign currency of a ratio of 8% of total local currency deposits and 8% of total foreign currency deposits. The total deposits of the denominator of the ratio will include current deposits, saving deposits and the other deposits as reflected in the weekly report of the position of deposits and finance of each bank excluding the investment and the like deposits. The 8% ratio may be divided in 6% to be kept in cash and 2% in the form of the Central bank Ijara Certificates “Shihab”; banks shall maintain -as indicative rate- 10% of the current and the like deposits as internal liquidity to meet the customers’ daily withdrawals for settlements of transactions via using the Real Time Gross Settlements System “RTGS” through the electronic-based clearing system; banks may hold 30% -as indicative rate-of its overall outstanding investment portfolio in liquid assets including the Central bank Ijara Certificates “Shihab”, Government Musharaka Certificates “Shahama”, other Government Sukouks and non-government institutions’ sukouks traded in Khartoum stock Exchange
• The Central Bank of Sudan may provide financial support to the Islamic banks facing temporary liquidity problems through purchasing financial papers “sukouks” from them in accordance with what the Central bank may decide
• It is permissible for any group of Islamic banks to establish a consortium investment funds for financing the various economic activities particularly the productive sectors after notifying the Banking Regulation & Development Department of the Central Bank, prior to the establishment of those consortium investment funds
• As an indicative rate, the profit margin for the Murabaha finance shall be around 9% per annum for all local and foreign currency financing operations Murabaha is a concept found in Islamic finance that governs a contract between a bank and its client, by which the bank purchases goods and then sells them to the client at a cost that includes a profit margin. The contract requires specific instalment payments to the bank. This arrangement allows the bank to avoid charging interest, which is forbidden under some interpretations of Islamic law
• The percentage of finance to be extended through the Murabaha mode shall not exceed 30% of the overall financing portfolio of each bank at any time
• Financing the following activities is strictly banned by this policy: purchase of foreign currencies, shares and financial papers; repayment of outstanding or non-performing finance operations; foreign Exchange bureaus and Financial services office
• The conventional banks shall maintain cash balances with the Central Bank of Sudan as a statutory reserve in local and foreign currency of a ratio of 8% of total local currency deposits and 8% of total foreign currency deposits. The total deposits of the denominator of the ratio will include current deposits as reflected in the weekly report of the position of deposits and finance of each bank excluding time and saving deposits. The 8% ratio may be divided in6% to be kept in cash and 2% in the form of the Central Bank Ijara Certificates “Shihab” or Certificates of deposits
• Banks shall maintain- as indicative rate-10% of the current and the like deposits as internal liquidity to meet the customers’ daily withdrawals for settlements of transactions via using the Real Time Gross Settlements System ”RTGS” through the electronic-based clearing system.

In 2009 a new core banking IT system is to be installed and implemented, following which Albaraka Sudan will be able to commence rollout of a number of new services for its customers, beginning with telephone and SMS banking services. New products to be introduced include financial leasing and real estate investment services. The bank also plans to open one new branch during the year as part of its network expansion strategy which aims to have 34 branches in place by 2013. It will also complete the implementation of systems to meet the requirements of Basel II and the standards of the Islamic Financial Services Board.