Al

A nnu al Report 2017
IMPACTING LIVES THROUGH PARTNERSHIPS
(Click text below to open page link)
Contents
03 Al Baraka Vision & Mission 66 Consolidated Statement of Financial Position
04 Financial Highlights 67 Consolidated Statement of Income
06 Board of Directors & Unified Shari’a 68 Consolidated Statement of Cash Flows
Supervisiory Board
69 Consolidated Statement of Changes in Owners’ Equity
07 Executive Management
70 Consolidated Statement of Changes in Off-Balance
09 Head Office Organisation Chart Sheet Equity of Investment Account Holders
12 Directors’ Report 71 Notes to the Consolidated Financial Statements
16 President & Chief Executive’s Report 106 Additional Public Disclosures and Regulatory Capital
38 Corporate Governance Disclosures (Unaudited)
61 Sustainability and Social Responsibility 126 ABG Head Office Management
63 Unified Shari’a Supervisory Board Report 127 Al Baraka Global Network
65 Independent Auditors’ report to the Shareholders 128 Contacts

of Al Baraka Banking Group B.S.C.
Your Partner Bank

Introduction
“Al Baraka Banking Group’s philosophy, in essence, is that Allah,
The Almighty, grants mankind the power to inherit the land on this earth.
As such Man is not the owner of wealth but he is responsible for it.
The purpose of Man, by the commandment of Allah, The Almighty,

is to construct, embellish, create and build on this earth. Man is there-
fore also ordained to create jobs for others. Thus, the wealth bestowed
upon us belongs to Allah, The Almighty.
Therefore, we must apply Shari’a rules related to the ownership

of wealth in creating the wealth and in investing, exchanging, growing
and spending the wealth.”
Shaikh Saleh Abdullah Kamel

Chairman of the Board of Directors
Al Baraka Banking Group
Over 2.5
Million Customers
We believe that Banking has a crucial role to play in society and
as Bankers we have incredible responsibility for the resources
in our hands.
Exploring
the Innovative Genius
of Islamic Banking
to Impact Lives
02 AL BARAKA BANKING GROUP

ANNUAL REPORT 2017
Banking in the reflection of nature
Vision Mission
We believe society needs To meet the financial needs of communities

a fair and equitable across the world by conducting business
system: one which rewards ethically in accordance with our beliefs,
effort and contributes to practicing the highest professional standards
the development of the and sharing the mutual benefits with the
community. customers, staff and shareholders who
participate in our business success.
AL BARAKA BANKING GROUP

ANNUAL REPORT 2017 03
Financial Highlights
2017 2016 2015 2014 2013

EARNINGS (US$MILLIONS)
Total Operating Income 999 1,074 1,000 918 909
Net Operating Income 430 507 464 396 420
Net Income 207 268 286 275 258
Net Income Attributable to Equity Holders of the Parent 129 152 163 152 145
Basic and Diluted Earnings per Share - US Cents* 9.47 12.66 13.59 12.67 12.07
FINANCIAL POSITION (US$MILLIONS)

Total Assets 25,453 23,425 24,618 23,464 20,968
Total Financing and Investments 19,123 17,465 18,358 17,624 15,355
Total Customer Accounts 20,670 19,179 20,164 19,861 17,744
Total Owners’ Equity 2,511 2,009 2,095 2,075 1,983
Equity attributable to Parent 1,740 1,281 1,356 1,338 1,299
CAPITAL (US$MILLIONS)
Authorised 1,500 1,500 1,500 1,500 1,500
Subscribed and Fully Paid-up 1,206.7 1,149.2 1,115.7 1,093.9 1,048.3
PROFITABILITY RATIOS
Return on Average Owners’ Equity 9% 13% 14% 14% 13%
Return on Average Parent’s Equity 9% 12% 12% 12% 11%
Return on Average Assets 0.8% 1.1% 1.2% 1.2% 1.3%
Operating Expenses to Operating Income 57% 53% 54% 57% 54%
FINANCIAL POSITION RATIOS

Owners’ Equity to Total Assets 10% 9% 9% 9% 9%
Total Financing and Investments as a Multiple of Equity (times) 7.6 8.7 8.8 8.5 7.7
Liquid Assets to Total Assets 25% 24% 24% 26% 27%
Net Book Value per Share (US$)* 1.12 1.07 1.13 1.12 1.08
OTHER INFORMATION
Total Number of Employees 12,795 12,644 11,458 10,853 9,891
Total Number of Branches 675 697 586 549 479
* Adjusted for treasury and bonus shares.

TOTAL ASSETS TOTAL OWNERS’ EQUITY TOTAL CUSTOMER ACCOUNTS
(US$ MILLIONS) (US$ MILLIONS) (US$ MILLIONS)
25,453 2,511 20,670

23,464 19,861
2,095
24,618 2,075 20,164
23,425 19,179
20,968 1,983 2,009 17,744
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
TOTAL FINANCING & INVESTMENTS TOTAL OPERATING INCOME NET INCOME

(US$ MILLIONS) (US$ MILLIONS) (US$ MILLIONS)
19,123
18,358 1,074 286
17,624 1,000 275
999 268
17,465 918 207
15,355 258
909
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
TOTAL NUMBER TOTAL NUMBER

OF BRANCHES OF EMPLOYEES
697 12,795
675
586 12,644
549 11,458
10,853
479 9,891
Net Profit
US$207
million
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Board of Directors &
Unified Shari’a Supervisory Board
BOARD OF DIRECTORS UNIFIED SHARI’A SUPERVISORY BOARD
Shaikh Saleh Abdullah Kamel Shaikh Dr. Abdul Sattar Abu Ghuddah
Chairman Chairman
Mr. Abdulla A. Saudi ¢ Shaikh Dr. Abdulla Bin Sulaiman Al Mannea

Vice Chairman Vice Chairman
Mr. Abdullah Saleh Kamel p Shaikh Dr. Abdullatif Al Mahmood

Vice Chairman Member
Mr. Saleh Mohammed Al Yousef ¢ Shaikh Dr. Abdulaziz Bin Fowzan Al Fowzan
Board Member Member
Mr. Adnan Ahmed Yousif Dr. Ahmed Mohiyeldin Ahmed

Board Member and President & Chief Executive Member
Mr. Abdul Elah Sabbahi

Board Member
Dr. Eltigani El Tayeb Mohammed
Mr. Ebrahim Fayez Al Shamsi ¢p Secretary to the Unified Shari’a Supervisory Board
Board Member
Mr. Jamal Bin Ghalaita ¢

Board Member
Mr. Yousef Ali Fadil Bin Fadil ¢p

Board Member
Dr. Bassem Awadallah ¢p

Board Member
Mr. Mohyedin Saleh Kamel

Board Member
Mr. Saud Saleh Al Saleh ¢p

Board Member
Dr. Khaled Abdulla Ateeq

Board Member
Mr. Salah Othman Abuzaid

Secretary to the Board
COMMITTEE NAME CHAIRMAN OF THE COMMITTEE MEMBER OF THE COMMITTEE
Board Executive Committee p

Board Audit & Governance Committee p
Board Affairs & Remuneration Committee p
Board Risk Committee p
Board Sustainability & Social Responsibility Committee p
Independent Directors ¢

ANNUAL REPORT 2017
Executive Management
Mr. Adnan Ahmed Yousif

President & Chief Executive
Mr. Majeed H. Alawi *

Executive Vice President - Head of Internal Audit
Mr. K. Krishnamoorthy
Executive Vice President - Head of Strategic Planning
Mr. Abdulrahman Shehab

Executive Vice President - Head of Operations & Administration
Mr. Hamad Abdulla Al Oqab

Executive Vice President - Head of Finance
Mr. Jozsef Peter Szalay **

Senior Vice President - Head of Credit & Risk Management
Mr. Salah Othman Abuzaid

Senior Vice President - Head of Legal Affairs
Mr. Mohammed A. El Qaq

Senior Vice President - Head of Commercial Banking
Mr. Khalid Al Qattan

Senior Vice President - Head of Treasury, Investments & Financial Institutions
Mr. Qutub Yousafali

Head of Group Compliance
Dr. Ali Adnan Ibrahim

First Vice President - Head of Sustainability & Social Responsibility
* Mr. Majeed H. Alawi retired on 31st January 2018, and Mr. Mohammed A. Al Alawi, First Vice President,
is the Acting Head of Internal Audit, effective 1st February 2018.
** Mr. Jozsef Peter Szalay retired on 31st January 2018, and Mr. Azhar Aziz Dogar, Senior Vice President
has been appointed as Head of Credit and Risk Management effective 1st February 2018.

About Us
Head Office Organisation Chart
S H A R EH O L D ER S
U N I FI ED S H A R I ’A
S U PERV I S O RY B OA R D O F
D I R EC TO R S
B OA R D
BOARD
EXECUTIVE
COMMITTEE
SHARI’A
OFFICER
PR E S I D EN T AND
C H I EF E X ECU T I V E
BOARD AFFAIRS &
REMUNERATION
COMMITTEE
BOARD AUDIT &

GOVERNANCE
COMMITTEE
D EPU T Y
C H I EF E X ECU T I V E
BOARD RISK
COMMITTEE
BOARD
SUSTAINABILITY
& SOCIAL
RESPONSIBILITY
COMMITTEE
HEAD OF HEAD OF HEAD OF HEAD OF TREAS.,

HEAD OF HEAD OF HEAD OF HEAD OF HEAD OF HEAD OF
SHARI’A CREDIT & SUSTAINABILITY HEAD OF INVEST., AND
INTERNAL GROUP OPERATIONS & LEGAL STRATEGIC COMMERCIAL
INTERNAL RISK AND SOCIAL FINANCE FINANCIAL
AUDIT COMPLIANCE ADMINISTRATION AFFAIRS PLANNING BANKING
AUDIT MANAGEMENT RESPONSIBILITY INSTITUTIONS
PRO FI T
SU PP O RT CEN T ER S
CEN T ER S

Empowering through
Islamic banking to
inspire the world
Building Goodwill
through innovation
and pre-emption
Acheived against a background
of testing economic and political
conditions in many markets,
these results show the strength
of Al Baraka’s growth strategy
Shaikh Saleh Abdullah Kamel

Chairman
Directors’
2017 REVIEW
We are pleased to report that 2017 was a
year when Al Baraka Banking Group (ABG)
achieved robust financial results. Most of
the subsidiaries reported growth in assets,
although currency devaluations in four of
Report
the countries where our Group operates had
some impact. Achieved against a background
of testing economic and political conditions
in many markets, these results show the
strength of Al Baraka’s growth strategy.
The Group’s total assets grew by 9% to
US$25.5 billion (US$23.4 billion as at
31 December 2016). Operating assets (financing
and investments) amounted to US$19.1 billion
(US$17.5 billion as at 31 December 2016), up
9%. Customer accounts also increased, by
8%, to US$20.7 billion (US$19.2 billion as
at 31 December 2016), reflecting a growing
customer base and strong customer loyalty.
The bank takes a cautious approach to credit,
which is reflected in the year’s results. With the
currency devaluations not factored in, in terms
of local currencies the total asset growth was
11% when compared to 2016.
Total operating income declined by 7%
to US$1.0 billion (US$1.1 billion in 2016),
partially impacted by substantial falls in
four local currencies. Net income before
provisions, impairment and taxation
decreased by 15% to US$430 million
(US$507 million in 2016). After an increase
in prudential provisions, net income fell by
23% to US$207 million (US$268 million in
2016). The net income attributable to equity
holders of the ABG fell by 15% to US$129
million (US$152 million in 2016).
The Group issued its maiden Sukuk, which
was significantly over-subscribed by five
times, confirming the market’s confidence in
(All figures in US Dollars unless Stated otherwise)

ANNUAL REPORT 2017
US$999 US$430
MILLION
TOTAL OPERATING INCOME
MILLION
NET OPERATING INCOME
our strategy. The US$400 million Additional As at 31 December 2017, ownership of shares 2018 AND BEYOND
Tier I Perpetual Sukuk complies with Basel III in ABG by Board Members and Executive Looking to the future, we will continue our
under Central Bank of Bahrain rules. Taking Management (except the Chairman) is proven strategy of growth through our branch
into account the Sukuk proceeds, total equity immaterial and no major trading of such opening programme, launching new products
reached US$2.5 billion at the end of 2017, shares took place in 2017. Details of shares and increasing market share. Notably, we will
up 25% on the previous year end. The total- held by Directors and Executive Management expand in the important Moroccan market in
equity-to-total-assets ratio reached 10%. are provided in the notes to the consolidated 2018. Additionally, many of our subsidiaries
Confirming the Group’s capital strength, financial statements. have plans to leverage digital technology,
Dagong Global Credit Rating Company During the year, we welcomed Dr. Khalid focusing on gaining competitive advantage
Limited (Dagong) and Islamic International Ateeq to our Board. Dr. Ateeq brings invaluable in retail markets.
Rating Agency (IIRA) together reaffirmed the experience in regulatory issues, having served The economic and foreign exchange outlook
international investment grade credit rating as Executive Director of Banking Supervision is difficult to predict but there were signs of
of ABG at BBB+/A3 and raised the outlook at the Central Bank of Bahrain. Mr. Fahad Al improving conditions in late 2017. We will
to stable from negative. Additionally, IIRA Rajhi left the membership of the Board earlier continue to apply our cautious policies as
has reaffirmed ABG’s national scale rating at this year and we would like to express our well as our financial and technical resources
A+(bh)/A2(bh). gratitude for his contribution all these years. to strengthen the units, and to maximise
Notably, ABG formed a partnership with BMCE Turning to compliance, the past four years returns for shareholders.
Bank of Africa during the year to launch Bank have seen the Group continue to enhance the We would like to congratulate our subsidiaries
Al-Tamweel Wa Al-Inma (BTI Bank), a new compliance-related policies, procedures and for their commitment to the Group’s values
Moroccan participation bank. We believe now framework. Staff skills have been upgraded and for their performance in the face of
is a promising time to offer Islamic banking by providing targeted training. Systems and 2017’s headwinds in regional banking
products in Morocco and aim to establish a automated tools are being introduced, as markets. We would also like to extend our
model of cooperation that will create a unique required, to improve compliance standards gratitude to our Executive Management
network of branches in the country, thus throughout. team, who have continued to work hard to
extending our presence to much of the North Sustainability and social responsibility is a successfully execute the Group’s strategic
Africa. priority for the Group, which aims to serve plan.
In light of the Group’s 2017 performance, the needs of society, while adhering always Finally, we thank our Unified Shari’a
the Board of Directors has recommended a to the principles of Shari’a. Five years ago, Supervisory Board, the Central Bank of
cash dividend distribution to shareholders of we established the “Al Baraka Sustainability Bahrain, the Ministry of Industry, Commerce
2.0% of the paid-up capital, amounting to and Social Responsibility Programme”, the and Tourism of Bahrain, Bahrain Bourse,
US$24.13 million, after a transfer of US$12.90 first such programme to be introduced by Nasdaq Dubai and all our other subsidiaries’
million to the legal reserve, with the US$91.99 any Islamic bank. In 2017, ABG carried out regulatory authorities, for their constant
million balance of the net income allocated its first full impact assessment of progress, support and wise guidance over the past year.
to retained earnings. The Board has also comparing 2016’s activities against the
recommended a bonus dividend of 3 shares for 2016-2020 goals. We are pleased to report
every 100 shares issued, to be allocated from that ABG has exceeded all its 2016 targets, For and on behalf of the Board of Directors
retained earnings and amounting to US$36.20 defined in the Al Baraka Goals, in jobs,
million. The Board has further recommended a education and healthcare.
remuneration distribution of US$1.50 million,
to be paid to the directors following approval Saleh Abdullah Kamel
of shareholders at the annual general meeting. Chairman

Learning from
the knowledge
of the past
Investing into
the future
A strong influence
in 16 countries
with 12,795
employees across
675 branches

President &
Chief Executive’s
Report

ANNUAL REPORT 2017
US$552 US$707
MILLION
GROUP’S SHARE OF INCOME FROM FINANCING
MILLION
RETURN ON EQUITY OF INVESTMENT
AND INVESTMENTS INCLUDING MUDARABA SHARE ACCOUNT HOLDERS
I am pleased to say that the Group’s expansion debut issue shows a high level of market based banking that many of its customers
continued in 2017, although significant confidence in both ABG’s credit and our still value.
currency devaluations and difficult economic strategy. The capital will help to fuel ABG’s
Turning to 2018, economic conditions appear
conditions had some impact. Whether future growth.
to be improving, helped by the partial recovery
measured by total assets, branches, products
ABG’s branch network and range of products of the oil price from its historic lows. If these
or customers, ABG growth strategy continued
continued to expand across many of the 16 signs of improvement are sustained, our growth
to be implemented during the year.
country units. Targeted expansion in countries strategy should lead to greater profitability in
ABG has consistently set out to expand through where there is strong unmet demand for 2018 and the following years.
opening new branches and launching new Islamic Islamic banking products lies at the heart
products. This has driven continual growth in of the bank’s growth strategy. In 2017, the REVIEW OF THE UNITS
assets and income over the past 10 years. number of branches and representative The following pages review the performance
offices ended the year at 675. of the units in 2017. Except where local
After the currency declines in four countries
In a major step forward, ABG partnered with the currency sums are explicitly mentioned, all
where ABG units operate, total operating
BMCE Bank of Africa at the end of December to figures are stated in the US dollar equivalents
profit decreased by 7% year on year to
launch BTI Bank, a new Moroccan participation of the audited local currency-based balance
US$999 million and net operating income fell
bank. BTI Bank aspires to create a new model sheets and income statements, prepared
by 15% to US$430 million. Net income was
of banking for Moroccan individuals and in accordance with the Islamic Accounting
additionally affected by a rise in provisions,
businesses, with carefully crafted products and Standards, issued by the Accounting and Auditing
resulting in a net profit of US$207 million, a
solutions, at a time when Morocco’s Shar’ia Organisation of Islamic Financial Institutions
decrease of 23% compared with the previous
banking regulations are being developed and (AAOIFI) (and IFRS where AAOIFI is silent), and
year.
the market looks promising. Headquartered in without any Group-level adjustments.
Turning to the balance sheet, total assets grew Casablanca, BTI Bank aims to have a network Each unit is managed by its respective Board
by 9% to reach US$25.5 billion. This increase of 37 branches by 2022 spread across the of Directors. Reporting lines are to the Group,
reflects the expansion in ABG’s customer base, country, supported by electronic channels. but decision making is decentralised within
as well as financing and investment activities.
Across ABG’s units, the drive to enhance the framework of ABG’s strategic direction
In local currency terms growth was higher
multi-channel retail banking continued in the and in full compliance with the regulations
still, but the depreciations against the dollar
year. A decision to revamp the core banking of respective countries’ central banks.
resulted in a lower rate of reported growth.
system in four units, and introduce the same
The issuance of a US$400 million additional tier system for BTI Bank, will help to develop new
1 perpetual sukuk boosted total equity, which digital banking initiatives. Additionally, ABG
stood at US$2.5 billion at the 2017 year end, joined with two other banks to launch ALGO,
25% higher than December 2016. More than the world’s first fintech consortium focused
90 banks and asset managers from Asia, Europe on developing Shari’a-compliant banking
and the Middle East participated in the issue, solutions. As ABG makes a gradual push into
which was heavily oversubscribed by five modern digital banking, it is mindful that it
times. Such widespread demand for ABG’s must combine this with the personal branch-

3
CONTINENTS
Al Baraka is consistently
improving and continuing
its fundamental approach
to its customers – which is
based on relationships
16
COUNTRIES
675
BRANCHES
President & Chief Executive’s Report (Continued)
Turkey
Al Baraka Türk Participation Bank
Established Branches
1985 220
Turkey’s economy was one of the fastest services. However, in dollars operating participation account, a personal accident
growing in the G20, buoyed by a surge in income declined by 1% to US$411 million policy for the education sector and
construction output and a revival in (US$416 million in 2016). workplace/land financing for foreigners.
consumer spending. However, diplomatic
tensions with Western allies put the lira Provisions rose substantially to impact net The bank continued to increase its customer
under pressure, impacting the profits of income. At US$61.0 million, net income base, as well as growing its physical
banks reporting in dollars. was 22% lower than 2016’s US$78.2 presence. The branch network as of the end
million. of 2017 was 220, with the opening of seven
After more than a decade of strong growth, branches in the year. Seven new ATMs were
Al Baraka Turkey’s growth has slowed in the Al Baraka Turkey was one of the first Islamic added, bringing the total to 281.
past two years. Total assets were 10% banks in the world to have a mobile banking
higher in local currency terms at TRY36.3 app, allowing customers to add their cards Reflecting the bank’s strong position in
billion (TRY32.9 billion in 2016). In dollars to Android mobile phones to make Turkey, it continued to attract awards,
terms they were higher only by 2% reaching payments. It also planned a digital banking including: Best Islamic Bank 2017 (Global
US$9.6 billion (US$9.4 billion in 2016). service, which will give customers a Islamic Finance Awards), Best Banking Card
complete omni-channel service, spanning Growth (Mastercard Banking Awards),
Total operating income rose 20% to TRY1.5 the web, call centre, mobile and branch. Excellence in SWIFT International Money
billion (TRY1.2 billion in 2016), reflecting a Transfer (KBC Bank) and Best Islamic Bank,
strong performance from self and jointly Turning to products, the bank actively Turkey (Islamic Finance News).
financed accounts and investments, and broadened its range. New products
moderate growth in revenue from banking included: a silver deposit account, a Hajj (All figures in US Dollars unless Stated otherwise)
Unit Head: Mr. Meliksah Utku

Title: General Manager
Address: Saray Mahallesi, Dr. Adnan Büyükdeniz Caddesi, No. 6, 34768 Ümraniye, Istanbul, Turkey
Tel: +90 216 666 01 01
Fax: +90 216 666 16 00
Website: albaraka.com.tr

ANNUAL REPORT 2017
Jordan
Jordan Islamic Bank
1978 100
Jordan’s economy is improving gradually, expenses to US$93 million (US$90 million Islamic Bank in Jordan by publications
with increases in tourism and exports after in 2016), net income was US$76.4 million including: The Banker, Global Finance and
several years when regional uncertainty ($76.2 million in 2016). World Finance.
took its toll. A growing budget deficit and
depressed trade volumes have held back Jordan Islamic Bank launched mobile
banking activity. But Syrian refugees have banking in the year. This allows customers
counterbalanced this to some extent, to check their account balances, initiate
requiring more banking services – both transactions and convert currencies. It also
deposit accounts and finance for housing. introduced the Visa Signature card for
affluent customers, which provides a
Even so, Jordan Islamic Bank’s asset growth range of concierge services including flight
has slowed. Total assets were nevertheless reservations, recommendations and travel
3% higher at US$5.9 billion (US$5.8 billion insurance.
in 2016). While Ijarah Muntahia Bittamleek
balances and non-trading investments The bank continued to expand, increasing
expanded, other areas were broadly flat. the customer base. Three branches were
added, taking the total to 100, while 15
Total operating income fell by 2% to new ATMs increased the network to 205.
US$207 million (US$211 million in 2016),
partly due to a decline in joint income Reflecting Jordan Islamic Bank’s strong
from sales receivables. After a small rise in market position, it was named the Best (All figures in US Dollars unless Stated otherwise)
Unit Head: Mr. Musa Shihadeh

Title: CEO - General Manager
Address: P.O. Box 926225, Amman 11190, Jordan
Tel: +9626 567 7377
Fax: +9626 566 6326
Website: jordanislamicbank.com

Egypt
Al Baraka Bank Egypt
1980 32
Egypt’s economic reform programme is in banking services income. In US dollar The bank successfully took steps to boost
beginning to restore the country’s finances. terms, total operating income fell by 31% its paid-up capital and capital adequacy
Economic activity is expected to accelerate, to US$104 million (2016: US$150 million). ratio during the year.
supported by reforms aimed at correcting Net operating income in local currency
fiscal and external imbalances, restoring rose 46% to EGP1.4 billion, reflecting One new branch opened, broadening the
competitiveness and creating jobs. Notably, efficiency gains as costs did not rise as bank’s geographic presence and taking
foreign exchange reserves rose in the year. fast. Net income increased by 42% to the branch network to 32.
EGP725 million (2016: EGP512 million),
The bank continued its growth in the year. despite increased provisions.
Total assets rose by 18% in local currency
to EGP50.3 billion (2016: EGP42.5 billion), The bank continued to diversify its range of
boosted by robust growth in Mudaraba products, for example launching a new
financing. Reflecting currency fluctuations, savings account with a minimum deposit of
in US dollars total assets increased by 27% EGP40,000 that attracts a premium rate of
to US$2.8 billion (2016: US$2.2 billion). return, as well as a special travel product to
finance travelling to the 2018 World Cup in
Total operating income jumped by 32% Russia and payroll agreements with major
to EGP1.9 billion (2016: EGP1.4 billion), Egyptian companies.
with substantial growth across all lines of
business. The greatest growth came from Around the year end, the bank introduced its
the bank’s share of income from joint new internet banking service. Preparations
accounts, but there was also an improvement are under way for digitisation of operations. (All figures in US Dollars unless Stated otherwise)
Unit Head: Mr. Ashraf El Ghamrawi

Title: Vice Chairman & CEO
Address: 60, Mohie Elddin Abu Elezz Street, P.O. Box 455, Dokki, Giza, Egypt
Tel: +2023 748 1222
Fax: +2023 761 1436/7
Website: albaraka-bank.com.eg

ANNUAL REPORT 2017
Algeria
Banque Al Baraka D’algerie S.P.A
1991 29
Despite low oil prices, Algeria’s economy income fell 2% to US$48.9 million as
achieved solid overall economic growth. operating expenses increased by 3%. Net
However, strong production in the income further declined by 14% to
hydrocarbon sector was matched by US$32.0 million (2016: US$37 million)
slowing growth in non-hydrocarbon after a rise in taxation and provisions.
activities such as manufacturing. The
government is acting to reduce its The bank continued its drive to diversify.
substantial twin deficits – fiscal and Both a Visa card (gold, platinum and
current account. pre-paid) and an interbank corporate card
were launched. Additionally, a real estate
Total assets were up 14% at US$2.15 finance product linked to the public
billion (2016: US$1.88 billion). The housing programme was developed.
growth was mainly in sales receivables, Market share in the consumer finance
Ijarah Muntahia Bittamleek and balances market, including car finance, remained
with banks. high.
Total operating income was flat at In recognition of its strong position,

US$82.1 million (2016: US$82.2 million), Global Finance named Al Baraka Algeria
after a slight rise in the share of income the best Islamic bank in Algeria for the
from joint accounts and a fall in revenue fifth year in a row.
from banking services. Net operating (All figures in US Dollars unless Stated otherwise)
Unit Head: Mr. Mohammed Seddik Hafid

Title: Board Member & General Manager
Address: Hai Bouteldja Houidef, Villa No. 1, Rocade Sud, Ben Aknoun, Algiers, Algeria
Tel: +213 23 38 12 73
Fax: +213 23 38 12 76/77
Website: albaraka-bank.com

Bahrain
Al Baraka Islamic Bank B.S.C. (C) - Bahrain
1984 8
Relatively low oil prices continued to hold Al Baraka Bahrain launched a Shar’ia-compliant
back Bahrain’s economy. The government credit card during the year. At the same
is introducing some measures for fiscal time, balances with the Al Barakat savings
consolidation. However, consumer demand account with prizes reached a new high.
remained weak. Furthermore, institutional trade finance
made a significant contribution to revenue.
Al Baraka Bahrain’s growth continued,
although at a slower rate than in previous
years. Total assets grew by 3% to end the year
at US$1.28 billion (2016: US$1.24 billion),
with growth mainly in sales receivables
and non-trading investments.
The bank’s total operating income dipped by

21% to US$31.0 million (2016: US$39.0 million),
due largely to a fall in revenue from banking
services and other operating income. Net
operating income fell to US$0.7 million,
after a rise in operating expense. After provisions,
the bank made a loss of US$2.64 million at the
net income level.
Unit Head: Mr. Mohamed Al Mutaweh

Title: Board Member & CEO
Address: Al Baraka Headquarters - Bahrain Bay, P.O.Box 1882, Manama, Kingdom of Bahrain
Tel: +973 17 535 300
Fax: +973 17533 993
Website: albaraka.bh

ANNUAL REPORT 2017
Pakistan
Al Baraka Bank (Pakistan) Limited
2010 188
Pakistan’s economic growth accelerated The merger significantly boosted total

to the fastest rate in many years during operating income, which rose by 40% to
2017. Consumer and investor confidence US$43.7 million (2016: US$31.2 million).
has grown, following policy measures that However, higher operating expenses drove
have restored macroeconomic stability. the bank to an operating loss of US$3.04
Within the banking sector, the State Bank million which translated to a net loss of
of Pakistan has made promoting Islamic US$2.76 million in net income level after the
finance an important goal. impact of higher provisions.
Al Baraka Pakistan successfully integrated There were successes across the product
Burj Bank’s activities after the two banks range. The consumer financing business
merged in late 2016. Some 36 branches continued to grow, as did the home
operating close to others were closed, remittance product. Rahnuma Travel
reducing the network to 188. Actions Services added new destinations to its
were taken to streamline the product existing packages of Umrah and Haj.
range and activities were progressively
moved on to a single core banking system.
Total assets declined 10% to US$1.09 billion,

after reaching a high of US$1.2 billion at the
2016 year-end following the merger. (All figures in US Dollars unless Stated otherwise)
Unit Head: Mr. Shafqaat Ahmed *

Address: Al Baraka House, 162 Bangalore Town, Main Shahrah-e-Faisal, Karachi, Pakistan
Tel: +92 21 3430 7000
Fax: +92 21 3453 0981
Website: albaraka.com.pk
* Mr. Shafqaat Ahmed retired on 28th February 2018, and Mr. Ahmed Shuja Kidwai has been appointed as the new CEO of Al Baraka Bank
(Pakistan) Limited, effective 1st March 2018.

Tunisia
Al Baraka Bank Tunisia
1983 37
Tunisia’s economy showed some signs of income from joint accounts and to a lesser
recovery in 2017, with improvements in extent by increased revenue from banking
agriculture and fishing, while the industrial services. But net operating income fell by
sector still struggled. However, inflation 62% to TND2.2 million due to a jump in
and unemployment maintained their operating expenses. Net income fell to a net
upward paths, the trade deficit widened loss of TND3.96 million (2016: TND3.3
and financial sector liquidity deteriorated. million profit) after higher provisions. In US
The dinar continued to depreciate against dollars, net income fell to a net loss of
major currencies.
US$1.63 million.
Al Baraka Tunisia's total assets were almost
The bank continued to diversify its product
flat at TND1.28 billion (2016: TND1.29 billion),
with reductions in financing and investment range. New finance and investment
were offset by the growth in balances with products included Al Baraka Study, Umrah
banks and other assets. However, in US Al Baraka, Al Baraka Travel and Ijara with
dollars total assets fell to US$518 million the option of home ownership.
(2016: US$552 million).
Al Baraka continued its cautious expansion,
Total operating income expanded by 21% to adding three new branches to bring the
TND53.6 million (2016: TND44.3 million) in total to 37. The number of customers also
dinar, boosted by a rise in the share of continued to grow. (All figures in US Dollars unless Stated otherwise)
Unit Head: Mr. Fraj Zaag *

Address: 88, Avenue Hedi Chaker 1002, Tunis, Tunisia
Tel: +216 71 186 500 / +216 71 186 600
Fax: +216 71 780 235 / +216 71 908 170
Website: albarakabank.com.tn
* Mr. Fraj Zaag retired on 1st January 2018, and Mr. Mohamed El Moncer has been appointed as the new General Manager of Al Baraka
Bank Tunisia, effective 2nd January 2018.

ANNUAL REPORT 2017
Syria
Al Baraka Bank Syria S.A.
2009 13
Syria’s economy has suffered during the by 85% to US$4.26 million due to a small
unrest of the past few years. The middle rise in operating expenses. Net income fell
of the country was increasingly stable in to US$0.6 million (2016: US$24.7 million).
2017, although unrest continued in the
north and south. Unemployment remains The bank prepared the first e-payment
high, reportedly at 80%, as does inflation. system for launch in Syria. Launch is
However, there are signs of improvement expected in 2018. It also launched the
in the quality of infrastructure. Takween 2017 Programme for Syrian
Entrepreneurship.
Al Baraka Syria’s total assets grew by 58%
to US$754 million (2016: US$478 million),
with increases in cash held with the central
bank and other banks, as well as increases in
Mudaraba financing.
Total operating income fell by 70% to

US$10.6 million, despite a rise in the share
of income from joint accounts mainly due
to the non recurrence of the exceptional
foreign currency gain booked in the
previous year. Net operating income fell (All figures in US Dollars unless Stated otherwise)
Unit Head: Mr. Mohammed Halabi

Title: Chief Executive Officer
Address: Alshahbander Street, P.O.Box 100, Damascus, Syria
Tel: +963 11 4437 8 20
Fax: +963 11 4437 8 10
Website: albarakasyria.com

Sudan
Al Baraka Bank Sudan
1984 27
Sudan’s economy continued its growth, income rose by only 2% to SDG190 million
despite a severe shortage of foreign exchange, due to a rise in operating expenses. Net
high inflation and a large trade deficit. income rose by 10% to SDG157 million
Notably, the US relaxed economic sanctions (2016: SDG142 million) after reductions
on Sudan. This is expected to gradually in provisions and taxation. In US dollars,
improve the inflow of foreign direct net income was slightly lower at US$20.9
investment and lead to the renewed million.
integration of Sudanese banks into the
international banking system. The bank continued to diversify its products,
launching a pre-paid card and a mobile
Al Baraka Sudan’s total assets grew by 61% payment service. Further product launches
to SDG4.46 billion (2016: SDG2.78 billion), are being planned.
supported by a big increase in non-trading
investments and sales receivables. In US
dollars, total assets rose by 28% to US$500
million (2016: US$391 million).
Total operating income rose by 16% to

SDG385 million (2016: SDG332 million),
boosted mainly by a rise in the share of
income from joint accounts. Net operating (All figures in US Dollars unless Stated otherwise)
Unit Head: Mr. Abdullah Khairy Hamid

Address: Al Baraka Tower, P.O.Box 3583, Qasr Street, Khartoum, Sudan
Tel: +249187 112 000
Fax: +249183 788 585
Website: albaraka.com.sd

ANNUAL REPORT 2017
South Africa
Al Baraka Bank Limited - South Africa
1989 12
Political uncertainty in South Africa is The Corporate Saver Account, launched in

impacting business confidence, with low 2016 for lawyers holding money in trust for
growth and high unemployment as well clients, continued to attract a high level of
as volatility in the Rand. deposits. A tax-free savings account was
launched following government regulations
Despite this situation in the country, there designed to encourage saving, and attracted
was a further acceleration in Al Baraka significant deposits.
South Africa’s robust growth, as total
assets increased by 23% to US$475 In recognition of its market position, Global
million (2016: US$387 million), with Finance magazine named Al Baraka South
Musharaka financing standing out as an Africa as Best Islamic Financial Institution
area of growth. in South Africa 2017.
Total operating income increased by 29%

to US$22.5 million (2016: US$17.4 million),
boosted mainly by a rise in the share of
income from joint accounts. Net operating
income rose by 36% to US$5.92 million
due to tight control on operating expenses.
Net income rose by 41% to US$4.02 million.
Unit Head: Mr. Shabir Chohan

Address: 2 Kingsmead Boulevard, Kingsmead Office Park, Stalwart Simelane Street, P.O.Box 4395, Durban 4000, South Africa
Tel: +27 31 364 9000
Fax: +27 31 364 9001
Website: albaraka.co.za

Lebanon
Al Baraka Bank Lebanon S.A.L.
1991 7
Lebanon’s economy maintained its growth The bank worked to introduce a wider
rate in 2017, supported by a rise in the range of products, diversifying its income
number of tourists and hotel occupancy as and growing the customer base. Around
well as a recovery in exports. However, the the end of the year, it reached agreement
economy is operating at considerably below with Libanpost, the national post provider,
full employment and potential output. to offer Al Baraka services through its branches.
Additionally, a range of innovative services was
Against this backdrop, Al Baraka Lebanon’s under development for introduction in 2018.
total assets increased by 12% to US$355
million (2016: US$316 million), supported
by a growth in sales receivables and
balance with banks.
Total operating income grown by 6% to reach

US$8.65 million (2016: US$8.2 million),
boosted by a rise in self financed income and
the share of income from joint accounts. At
the net operating income and net income
levels, the bank made losses of US$2.06
million and US$2.08 million respectively.
Unit Head: Mr. Mutasim Mahmassani

Title: Board Member & General Manager
Address: Justinian Street, BAC Center, 12th Floor, Sanayeh, near Chamber of Com & Inds.,Beirut, Lebanon
Tel: +96117 48061 - 65
Fax: +96117 48061 - 65 Ext: 700
Website: al-baraka.com

ANNUAL REPORT 2017
Saudi Arabia
Itqan Capital
Established
2007
Based in Saudi Arabia, Itqan Capital is net loss for the year was US$3.8 million.
active in asset management, principal
investment, advisory, custodial and Total assets fell by 13%, to US$28.0
administration services. As the only million due to a fall in non-trading
dedicated investment banking unit within investments, although there was a rise in
the Group, it is strategically important. trading securities.
Saudi Arabia’s economy is in a multi-year The Itqan Murabahat and Sukuk Fund
adaptation to a lower oil price. It grew continued to have a strong position in the
moderately in 2017, and is introducing local market for money market funds.
new taxes to improve the fiscal balance. Additionally, Itqan won several advisory
Saudi institutional and high-net-worth agreements.
individuals have reacted to the more
difficult conditions by becoming
increasingly risk averse.
In these tough conditions, Itqan's total

operating income fell to a loss of US$0.3
million. A rise in revenue from banking
services was offset by a fall in income from
investments such as trading activities. The (All figures in US Dollars unless Stated otherwise)
Unit Head: Mr. Abdullah Farid Shaker

Title: Managing Director & CEO
Address: The Headquarters Business Park - West Tower - 15th Floor, Corniche Road, P.O. Box 8021, Jeddah 21482, Kingdom of Saudi Arabia
Tel: +966 12 510 6030
Fax: +966 12 510 6033
Website: itqancapital.com

Morocco
BTI Bank
2017 1
Like many African economies, Morocco’s The total assets as of the year-end
depends largely on agricultural products. reached around US$34.0 million.
In 2017, a strong recovery in agriculture
boosted the overall economy and supported
consumer spending.
ABG partnered with the BMCE Bank of

Africa in 2017 to launch Bank al Tamweel
wa Inma (BTI Bank), a new participation
bank. Headquartered in Casablanca, BTI
Bank aims to have a network of 37
branches spread across Morocco’s cities
by 2022, supported by electronic channels.
We believe that the Moroccan economy

has considerable potential and that this is
a good time to launch an Islamic bank,
just as Morocco’s Shar’ia banking regulations
are being developed. (All figures in US Dollars unless Stated otherwise)
Unit Head: Mr. Mohamed Maarouf

Title: Director General
Address: 157, Avenue Hassan ll, Casablanca 20 000, Morocco
Tel: +212 5 20 51 51 51
Fax: +212 5 22 26 47 89
Website: btibank.ma

ANNUAL REPORT 2017
Indonesia
Al Baraka Banking Group (Representative Office)
Established
2008
Indonesia’s economy continued to

expand at a rapid rate, underpinned by
stronger-than-expected growth in China
and Europe. The government has been
introducing prudent reforms and has
plans for much-needed infrastructure
investment. The IMF forecasts GDP
growth of 5.2% in 2017.
ABG’s Indonesia representative office

reports on the potential for the Group to
do business in Indonesia or to acquire a
local bank. It maintains contact with local
regulators and major banking groups while
preserving ABG’s image and brand value.
With trade flows between Indonesia and
many of the Group’s markets continuing
to expand, the representative office
identifies opportunities for the units.
Unit Head: Ms. Nurul Bariah

Title: Chief Representative
Address: Ravindo Building, 10th Floor, Jalan Kebon Sirih, No. 75, Jakarta Pusat 10340, Indonesia
Tel: +62 21 316 1345
Fax: +62 21 316 1074
Website: albaraka.com

Libya
Al Baraka Banking Group (Representative Office)
Established
2011
Libya’s protracted political stand-off,

coupled with low oil prices, continues to
hold back the economy. The outlook
depends on restoring lasting stability, as
well as programmes to rebuild economic
and social infrastructures.
Our representative office helps ABG units

to establish and maintain relationships
with local banks and regulators. It has
been facilitating contacts between ABG
units and local banks, as well as fielding
enquiries from local banks that want to
convert to Islamic banking.
Once the political situation is resolved,

there are promising signs for ABG’s Libyan
business.
Unit Head: Mr. Mohamed Elkhazmi

Title: Chief Representative
Address: Tripoli Tower, Tower 1, 14th Floor, Office No. 144, P.O.Box 93271, Tripoli, Libya
Tel: +218 (21) 3362310 / +218 (21) 3362311
Fax: +218 (21) 3362312
Website: albaraka.com

ANNUAL REPORT 2017
Committing to
shortening distances
for those who
endeavor to impact
the world
Corporate Governance
Al Baraka Banking Group was formed in 2002 to bring together 11 and taking measures to enhance the function of internal audit and
individual banks, sharing common ownership and ethical vision but to act in a timely and effective manner on its findings;
separate in all other respects, under a single management group • approving the writing off of credit facilities and investments
focused on the achievement of strong yet sustainable financial where appropriate, in accordance with the Group’s policies and
returns and the building of consistent shareholder value over the procedures;
long term. From the beginning, ABG regarded the inculcation of • approving strategic investments by ABG and its subsidiaries;
a disciplined corporate governance and risk management culture as • monitoring potential conflicts of interest and preventing abusive
a fundamental prerequisite to effective management of the Group. related party transactions;
The adoption and maintenance, through continual and vigilant
• approving material transactions outside the normal course of
review, of the highest standards of corporate governance and risk
business or in excess of the limits of approval authority delegated
management have thus been key to building a strong, ethical,
to Executive Management;
responsible organisation. This has been essential for establishing an
overarching governing structure under which the functions, roles and • ensuring the preparation of financial statements which accurately
responsibilities are clearly divided between the Board of Directors disclose the Group’s financial position, on a regular and consistent
and Executive Management, officers and staff of the organisation. basis, and for reviewing and approving for dissemination its
periodic financial statements and annual reports;
THE BOARD OF DIRECTORS • approving all significant changes in the Group’s accounting and
The Board of Directors is responsible for the establishment and reporting policies;
oversight of the Group’s business strategy and priorities, for setting • ensuring compliance at all times with all relevant requirements of
its high-level policies and for overall management, and is accountable Shari’a and Islamic Accounting Standards, issued by the Accounting
to shareholders for the financial and operational performance of and Auditing Organization for Islamic Financial Institutions
the Group. It is responsible for the raising and allocation of capital, (AAOIFI);
monitoring of Executive Management and its conduct of the Group’s • ensuring that the Group establishes and maintains an approved
operations, for making critical business decisions and for building employee Code of Conduct and is in compliance with it;
long-term shareholder value. The Board ensures that the Group • ensuring that the control environment maintains necessary client
manages risk effectively, through approving and monitoring the confidentiality, and that clients’ rights and assets are properly
Group’s risk appetite, and identifying and guarding against the longer safeguarded;
term strategic threats to the business. • convening and preparing the agenda for shareholder meetings;
The Board is also responsible, inter alia, for: • ensuring equitable treatment of all shareholders including minority
shareholders; and
• setting and reassessing periodically the Group’s corporate goals
• performing any other functions required of the Board of Directors
and objectives;
under applicable laws and regulations.
• establishing policies to further the achievement of the Group’s
corporate goals and objectives; In its regular review of the Group’s strategy, the Board reviews the
• establishing and regularly reviewing the management structure Group’s business plans and the inherent level of risk in those plans. It
and responsibilities, and monitoring the effectiveness of Executive also assesses the adequacy of capital to support the business risks of
Management, including its ability to plan and execute strategies; the Group; sets performance objectives; and oversees major capital
• holding Executive Management accountable for results; expenditures, divestitures and acquisitions.
• putting in place adequate policies and processes for approving The Board of Directors has overall responsibility for the Group’s
budgets, and reviewing performance against those budgets and system of internal control and its effectiveness, and for defining
against key performance indicators; and enforcing standards of accountability that enable Executive
• ensuring that an adequate, effective, comprehensive and Management to achieve the Group’s corporate objectives. The Board
transparent corporate governance framework is in place; ensures that the systems and controls framework, the Board structure
• establishing and approving policies and procedures designed to and the organisational structure of the Group are appropriate for the
ensure ethical behaviour and compliance with laws and regulations, Group’s business and associated risks, and regularly assesses the
auditing and accounting standards and the Group’s own corporate systems and controls framework to that end. There are established
governance policy; and ongoing procedures in place for identifying, evaluating and
• ensuring that ABG and its subsidiaries’ operations are supported managing significant risks faced by the Group. These are regularly
by an appropriate control environment, i.e. that internal audit, reviewed by the Board. The Group’s system of internal control
compliance, risk management and finance and reporting functions, provides for a documented and auditable trail of accountability
are well resourced and structured; and applies across its operations. This system is designed to ensure
effective and efficient operation and compliance with all applicable
• ensuring that the Group’s operations are supported by a reliable,
laws and regulations, and seeks to manage risk with a view to
sufficient and well-integrated information system;
avoiding material errors, losses and fraud.
• recognising and communicating to Executive Management
the importance of the internal audit function at ABG and its
subsidiaries, periodically reviewing internal control procedures,

ANNUAL REPORT 2017
In meeting its responsibility to ensure efficient governance in all The Chairman is responsible for leadership of the Board and for its
matters related to ABG, the Board has established a written compliance efficient functioning. He ensures that all members receive an agenda,
policy governing the Group’s compliance with all laws and regulations; minutes of prior meetings and background information in writing
in particular those enunciated by the Central Bank of Bahrain (CBB) before each Board meeting and between meetings when necessary.
and other local regulators. The Board has delegated responsibility The Board and its Committees are supplied with full and timely
for monitoring compliance to the President & Chief Executive. information to enable them to discharge their responsibilities. In this
This responsibility is carried out through a dedicated Compliance respect, the Board, its Committees and all Directors individually have
Department, with a mandate to cover all aspects of compliance including: access to Executive Management, external legal or other professional
formulation of effective policies and processes for the management consultants and advisors at the Group’s expense, and to the Board
of the Group’s compliance risk; assisting Executive Management and Secretary, who is responsible for ensuring that the Board procedures
staff in managing risk; advising on laws and regulations and applicable and applicable rules and regulations are observed. The Board
compliance standards; disseminating compliance policies and providing encourages participation by members of Executive Management at
guidelines to ABG staff members; ensuring an effective compliance Board meetings, if appropriate, regarding matters which the Board
methodology; providing periodical reports to the Board in connection is considering and where the President & Chief Executive believes
with compliance controls; and establishing operational controls and a management should have exposure to the Board.
robust Know Your Customer (KYC) and Anti-Money Laundering (AML)
Under ABG’s Articles of Association, the Board of Directors shall
framework. ABG is continuously enhancing its compliance framework
consist of no fewer than five and no more than 15 members. Members
and that of each of its subsidiaries.
of the Board of Directors hold office for a three-year renewable term,
In 2010, the CBB introduced new requirements to be met by all although the term of office may be extended at the request of the
licensees under Volumes 2 and 6 of Module HC of its Rulebook, with Board for a period not exceeding six months with the approval of the
respect to corporate governance principles. These requirements were Minister of Industry & Commerce of Bahrain.
in line with the Principles relating to the Corporate Governance Code
There is no maximum age limit at which a Director must retire from
issued by the Ministry of Industry & Commerce of the Kingdom of
the Board of Directors. Each Director’s membership of the Board shall
Bahrain, international best practice corporate governance standards
terminate upon the expiry of his/her term, or upon the resolution of
set by bodies such as the Basel Committee for Banking Supervision and
the shareholders in General Meeting, or as a result of one of a number
related high-level controls and policies. In 2014, the CBB introduced
of specified events or circumstances, including:
further requirements addressing the matter of remuneration of
Approved Persons and Material Risk Takers (see below), which • the original appointment being found to be contrary to the
requirements were duly adopted by ABG. ABG conducts annually provisions of ABG’s Articles of Association;
detailed internal assessments to ensure compliance with these • abuse by the individual of his/her position as Director or failure to
requirements and, in the event that any shortfall is identified, sets comply with the provisions of his/her appointment or the terms of
specific milestones for implementation of measures to address the the Charter of the Board or of its Committees;
shortfall. The CBB, ABG’s shareholders, the Board of Directors and • the individual’s failure to attend three consecutive Board meetings
Executive Management are all kept fully appraised of such shortfalls, without lawful excuse notified in writing to the Board;
if any, and the milestones set. In accordance with this procedure,
• the individual’s formal resignation from the Board following
ABG earlier applied for and received the CBB’s consent to appoint
reasonable prior notice; or
the Chairman of the Board of Directors, although he is not an
• occupation of any other remunerative office within ABG unless
independent director as defined in the CBB Rulebook.
specifically approved by the Board of Directors.
ABG continuously ensures that the Group’s minority shareholders are
When an announcement is made requesting nominations for the
well represented on the Board of Directors through the independent
position of membership of the Board of Directors to replace those
directors, who have additional responsibility for protection of the
members whose three-year term is due to expire, such nominations
rights of minority shareholders.
must be submitted to the Chairman of the Board, within the time
The Board of Directors meets regularly (at least four times a year) frame provided in the announcement, then to the Board Affairs and
and has a formal schedule of matters reserved for it, considering Remuneration Committee for it to make its recommendations to
key aspects of the Group’s affairs referred to it for decision. The the Board. As part of the nomination process, each nomination must
Board reviews the Group’s strategy and financial plans, all proposed comply with local rules and regulations, and must be submitted for
material changes to the Group’s policies, structure and organisation, approval to the CBB in order to ensure compliance with the CBB’s
reports provided to it on the operations of the Group (with emphasis “Fit and Proper” criteria. The names of all nominated individuals so
on organisational, risk management and information technology approved by the CBB are then submitted to the shareholders at the
development) and the performance of Executive Management. All next AGM for consideration and election. Election of ABG Directors
Directors attend all Board meetings whenever possible and in any takes place in accordance with the rules and procedures set out in
event not less than 75% of meetings in any year, and maintain the Commercial Companies Law and ABG’s Articles of Association.
informal contact among themselves between meetings.
In line with best corporate governance best practice, there is a
succession plan for the Board of Directors. This is reviewed annually
and submitted to the CBB.

Corporate Governance (Continued)
Each new Director elected to the Board receives a written BOARD COMMITTEES
appointment letter, detailing the powers, duties, responsibilities and The Board has put in place a number of Board committees,
obligations of that Director, and other relevant terms and conditions membership of which is drawn from the Board membership and to
of his appointment. which it has delegated specific responsibilities. The principal Board
There are currently 13 Directors on the Board. They have varied committees are:
backgrounds and experience and are, individually and collectively,
Board Executive Committee
responsible for performing the responsibilities of the Board, and
for exercising independent and objective judgement. No individual The Board Executive Committee is chaired by Mr. Abdullah Saleh
Director or group of Directors has unfettered powers of decision making Kamel (Non-Executive Director), and the other members are Mr.
or dominates the Board’s decision making. Other than the President & Adnan Ahmed Yousif, President & Chief Executive (Executive
Chief Executive, all Directors are non-executive and fully independent Director), Mr. Abdul Elah Sabbahi (Non-Executive Director) and
of management, and are individually responsible for scrutinising and Mr. Saleh Mohammed Al Yousef (Independent Director). The Board
challenging management decisions and performance. The posts of Executive Committee comprises a minimum of four Directors and
Chairman, Vice Chairman and President & Chief Executive are held by meets at least four times a year. The Board has delegated to the
different Directors, and the President & Chief Executive has separate, Board Executive Committee, under a formal written charter adopted
clearly defined responsibilities. The size and composition of the Board by it, the responsibility to make recommendations to the Board, for
and its Committees are regularly assessed, while the effectiveness, the Board’s approval, concerning the Group’s overall strategies and
contribution and independence of individual Directors are assessed business plan, or any significant change to them, or any major change
annually in light of interests disclosed and conduct. The independence to its capital or organisation structure, assets or investments.
or non-independence of Directors is, likewise, reviewed annually.
Board Affairs and Remuneration Committee
All Directors are remunerated solely by means of an annual retainer The Board Affairs and Remuneration Committee operates in
fee and sitting fees paid for each meeting attended. Their travel accordance with a formal written charter adopted by it. The
expenses are also reimbursed as appropriate. Committee is chaired by Mr. Saud Saleh Al Saleh (Independent
Director), and its other members are Mr. Ebrahim Fayez Al Shamsi
The Board of Directors has adopted a formal Code of Business Conduct
(Independent Director) and Mr. Yousef Ali Fadil Bin Fadil (Independent
and Ethics applicable to Directors and Executive Management,
Director). The Committee meets at least twice a year and considers
officers, employees and agents, consultants and others representing
all material elements relating to remuneration policy, including, inter
or acting for the Group. Details of the Code are provided in the
alia, the approval of the remuneration of the Directors, based on their
Additional Public Disclosures section of this report. attendance at Board and Committee meetings. It also recommends
In line with international best practice and the CBB Rulebook, the to the Board the level of remuneration of the Executive Management
Board has instituted corporate governance measures to ensure members and other ABG employees under an approved performance-
that the interests of the shareholders are protected, including the linked incentive structure. The Committee also performs the role of a
appointment to the Board of more than one third of Directors as Nominations Committee, as described below.
independent Directors, as defined in the CBB Rulebook. The Committee conducts an annual evaluation of the performance
In 2017, the shareholders elected the following members of the Board: of the Board, Board Committees and the President & Chief Executive.
When an issue relating to the personal interest of a Director is
Non-Executive Directors discussed in the Committee, the interested Director withdraws from
1. Shaikh Saleh Abdullah Kamel – Chairman the meeting and abstains from voting. The Committee is responsible
for identifying persons qualified to become members of the Board
2. Mr. Abdullah Saleh Kamel – Vice Chairman
or the Chief Executive Officer, the Chief Financial Officer, the Board
3. Mr. Abdul Elah Sabbahi Secretary and other executive officers considered appropriate (except
4. Mr. Mohyedin Saleh Kamel for the Head of the Internal Audit Department), and for making
5. Dr. Khalid Abdulla Ateeq recommendations accordingly. It is also responsible for inducting,
educating and orienting new Directors, and for conducting seminars
Independent Directors and other training programmes from time to time for members of
1. Mr. Abdulla A. Saudi – Vice Chairman the Board.
2. Mr. Saleh Mohammed Al Yousef
3. Mr. Ebrahim Fayez Al Shamsi Board Audit and Governance Committee
The Board Audit and Governance Committee is chaired by
4. Mr. Jamal Bin Ghalaita
Mr. Ebrahim Fayez Al Shamsi (Independent Director). Other members
5. Dr. Bassem Awadallah
are Dr. Bassem Awadallah (Independent Director), and Mr. Mohyedin
6. Mr. Saud Saleh Al Saleh Saleh Kamel (Non-executive Director). The Committee is governed
7. Mr. Yousif Ali Fadil Bin Fadil by a formal written Charter, adopted by it and approved by the
Board. The Committee meets formally at least four times a year.
Executive Director External auditors attend at least one meeting annually; moreover,
Mr. Adnan Ahmed Yousif – President & Chief Executive external auditors have unrestricted access to the Committee and its
All current Directors were elected for a 3-year term on 20 March 2017. Chairman throughout the year.

ANNUAL REPORT 2017
The Board of Directors has delegated to the Board Audit and & Chief Executive, Head of Credit and Risk Management and other
Governance Committee the responsibility for ensuring that an senior executives of the Group at any of its meetings.
effective internal auditing and continuous internal controls monitoring
The Group’s risk appetite is determined by the Board, based on
environment, and a sound system of accounting and financial control,
the recommendations of the Board Risk Committee. The Board
are in place. The Committee achieves this through regular review of
Risk Committee is responsible for setting acceptable levels of risks
internal audit reporting, external auditors’ management letters, central
to which the Group may be exposed, for approving management’s
banks’ inspection reports and the Group’s accounting and financial
strategy for the managing of risk and for ensuring that all necessary
policies and practices, financial reporting and disclosure controls
steps are taken by management to identify, measure, monitor and
and procedures, and the adequacy and effectiveness of the internal
control risk. The Committee’s objective is to oversee the Group’s
control procedures at the Head Office and at ABG’s subsidiaries. The
risk management systems, practices and procedures, as well as to
Committee considers all matters relating to financial control and
ensure effective risk identification, management and compliance
reporting, internal and external audits and their scope and results, risk
with internal guidelines and external requirements. The Committee
management and compliance with regulatory and legal requirements
reviews issues identified by the Internal Audit and Compliance
and accounting standards. It also considers and approves the annual
departments of ABG and/or any of its subsidiaries, such as weaknesses
audit plans, ensures coordination between the internal and external
or breakdowns in controls.
auditors, monitors the independence, qualifications, effectiveness and
performance of the external auditors, and makes recommendations to Board Sustainability and Social Responsibility Committee
the Board regarding the appointment, retirement and remuneration of
The Board Sustainability and Social Responsibility Committee is
the external auditors and the appointment of the Head of the Group’s
chaired by Dr. Bassem Awadallah (Independent Director), and other
Internal Audit Department.
members are Mr. Abdul Elah Sabbahi (Non-Executive Director)
The Committee reviews the Group’s annual and interim financial and Mr. Saleh Mohammed Al Yousef (Independent Director).
statements to recommend their approval to the Board of Directors, The Committee leads the Al Baraka Sustainability and Social
the adequacy of provisions and any reports by external consultants Responsibility Programme. It oversees the formulation of policies
on specific investigative or advisory engagements. and strategies by Executive Management, intended to make ABG and
its subsidiaries a model Islamic banking group, offering banking and
The Committee ensures that there are in place systems of control
financial services in a sustainable and socially responsible manner
appropriate to the business of the Group and the information needs
and in conformity with the objectives of Shari’a.
of the Board. These include systems and functions for identifying and
monitoring risk, the financial position of the Group and compliance The Committee aims to adhere to the spirit of Islamic finance that
with applicable laws, regulations and best banking practice. The enjoins Sustainability and Social Responsibility as a principal feature
Committee ensures that all such information is produced on a timely of Islamic banking and finance. The Committee demonstrates its
basis. The various internal controls and processes are subject to commitment to the spirit of Sustainability and Social Responsibility
independent review by the Group’s Internal Audit Department, which inherent in Islamic finance by setting various quarterly and annual
reports directly to the Committee, as stated above, and external targets for Executive Management.
auditors and regulators as appropriate. Management letters and other
issues of importance raised by external auditors, and inspection reports All minutes and reports of meetings of the Committee are
issued by the CBB’s inspectors, or inspectors of any other applicable disseminated to all members of the Board of Directors.
authorities where ABG or its subsidiaries operate, are reviewed by the
Committee once issued. Acting on behalf of the Board, the Committee UNIFIED SHARI’A SUPERVISORY BOARD
ensures that appropriate corrective action is taken.
ABG’s Unified Shari’a Supervisory Board (USSB) is elected by the
The Committee also oversees and monitors the implementation of shareholders at Annual General Meeting upon recommendation by the
the corporate governance policy framework, providing the Board Board of Directors. The USSB is actively involved in the development
with reports and recommendations based on its findings. of the Group’s products and services, and certifies or oversees the
certification by individual subsidiaries’ USSBs of every product and
The Board has adopted a ‘whistleblower’ programme, allowing service accordingly as complying with the standards and principles of
employees confidentially to raise concerns about possible Shari’a.
improprieties in financial or legal matters. Under the programme,
concerns may be communicated directly to any member of the Board The USSB operates independently within its own charter which
Audit and Governance Committee or, alternatively, to an identified covers its policies, procedures and responsibilities. In carrying out
officer or employee who, in turn, reports the matter to the Committee. its responsibilities, the USSB has full access to the Board, Executive
Management and Management and Officers of the subsidiaries. In
Board Risk Committee addition to reviewing and advising on Shari’a compliance of all products
The Board Risk Committee is chaired by Mr. Yousif Ali Fadil Bin Fadil and services, it oversees the audit of the operations of the Group from
(Independent Director), with its other members being Mr. Jamal Bin a Shari’a perspective.
Ghalaita (Independent Director) and Dr. Khalid Ateeq (Non-executive The USSB meets at least six times a year. Its members are remunerated
Director). The Board Risk Committee meets formally at least twice a by annual retainer fee and sitting fees per meeting attended, with
year but may meet more frequently at the request of the Chairman travel expenses reimbursed as appropriate. Its members are not paid
of the Committee. It can call for the attendance of the President any performance-related remuneration.

DIRECTOR’S ATTENDANCE AT MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES IN 2017
Name of the Board/ No. of meetings Dates of the No. of meetings

Committees in 2017 meetings Member’s name attended
Sh. Saleh Abdullah Kamel 5
Mr. Abdulla A. Saudi 7
Mr. Abdullah Saleh Kamel 5
22/02/2017 Mr. Saleh Mohammed Al Yousef 7
20/03/2017 Mr. Adnan Ahmed Yousif 7
10/05/2017 Mr. Abdul Elah Sabbahi 7
Board of Directors 7 04/06/2017 Mr. Ebrahim Fayez Al Shamsi 7
07/08/2017 Mr. Jamal Bin Ghalaita 7
13/11/2017 Mr. Yousef Ali Fadil Bin Fadil 7
24/12/2017 Dr. Bassem Awadallah 7
Mr. Mohyedin Saleh Kamel 6
Mr. Saud Saleh Al Saleh 6
Dr. Khalid Abdulla Ateeq 5 ¢
Mr. Abdullah Saleh Kamel 3
29/01/2017
Mr. Saleh Mohammed Al Yousef 3 p
06/05/2017
Board Executive Committee 4 Mr. Adnan Ahmed Yousif 4
27/09/2017
Mr. Abdul Elah Sabbahi 4
03/12/2017
Mr. Yousef Ali Fadil Bin Fadil 1
12/02/2017
Mr. Saleh Mohammed Al Yousef 1
10/05/2017
Mr. Ebrahim Fayez Al Shamsi 5
Board Audit & Governance Committee 5 07/08/2017
Dr. Bassem Awadallah 5
13/11/2017
Mr. Mohyedin Saleh Kamel 2 p
20/12/2017
20/02/2017 Mr. Saleh Mohammed Al Yousef 1

Board Affairs & Remuneration 04/06/2017 Mr. Ebrahim Fayez Al Shamsi 4
4
Committee 14/09/2017 Mr. Yousef Ali Fadil Bin Fadil 4
09/12/2017 Mr. Saud Saleh Al Saleh 3 p
Mr. Jamal Bin Ghalaita 3
02/03/2017 Mr. Yousef Ali Fadil Bin Fadil 2 p
Board Risk Committee 3 10/05/2017 Mr. Mohyedin Saleh Kamel 1
11/11/2017 Mr. Saud Saleh Al Saleh 1
Dr. Khalid Abdulla Ateeq 2 p
Mr. Saleh Mohammed Al Yousef 2 p
21/02/2017
Board Sustainability & Social Mr. Adnan Ahmed Yousif 1
3 03/06/2017
Responsibility Mr. Abdul Elah Sabbahi 3
24/12/2017
Dr. Bassem Awadallah 3
¢ Was not a Board Member in Meeting No. 1 & 2

p Executive Committee: Was not a Member in Meeting No. 1 Executive Committee: Just attended Meeting No. 1 as a Member
p Audit & Governance Committee: Was not a Member in Meeting No. 1 Audit & Governance Committee: Just attended Meeting No. 1 as a Member
p Remuneration Committee: Was not a Member in Meeting No. 1 Remuneration Committee: Just attended Meeting No. 1 as a Member
p Risk Committee: Was not a Member in Meeting No. 1 Risk Committee: Just attended Meeting No. 1 as a Member
p Sustainability & Social Responsibility: Was not a Member in Meeting No. 1 Sustainability & Social Responsibility: Just attended Meeting No. 1 as a Member

ANNUAL REPORT 2017
BOARD OF DIRECTORS’ PROFILES Mr. Saleh Mohammed Al Yousef
Shaikh Saleh Abdullah Kamel Board Member
Chairman Board Member, Al Baraka Bank Lebanon. Previously, Chairman and
Chairman of Dallah Albaraka Holding Company E.C.; Chairman, Managing Director of The Industrial Bank of Kuwait K.S.C. Prior to
General Council for Islamic Banks and Financial Institutions; that, Mr. Al Yousef held executive positions with The Industrial Bank
Chairman, Jeddah Chamber of Commerce & Industry; and Chairman, of Kuwait and the Central Bank of Kuwait. He has also served as
the Islamic Chamber of Commerce, Industry and Agriculture. Chairman of ABC Islamic Bank (E.C.), Bahrain and of the Supervisory
Member of the Advisory Panel of the Islamic Development Bank. Board of Arab Banking Corporation – Daus & Co. GmbH, Frankfurt; as
He is also a Director of several international organisations. A highly- Chairman and Managing Director of Afkar Holding Co.; Commissioner,
respected international businessman and pioneer of Islamic banking, Capital Markets Authority, Kuwait; and on the Boards of Directors of
with experience spanning over five decades, Shaikh Saleh Abdullah the Financial Securities Group; Gulf Bank K.S.C. Kuwait; Arab Banking
Kamel founded Dallah Albaraka Group and the Al Baraka Banking Corporation (B.S.C.), Bahrain; Ahli United Bank B.S.C., London; and
Group. Recognising his achievements and his role in promulgating Gulf Investment Corporation. He has over 35 years’ experience in
Islamic economic principles — encapsulated in the message of his the banking industry. A Kuwaiti national, he holds a Bachelor of
Group: “Reconstruction of the Earth” — Shaikh Saleh Kamel has been Commerce Degree from Kuwait University.
awarded the highest of certificates, trophies and accolades. A Saudi
national, he holds a Bachelor of Commerce degree. Mr. Adnan Ahmed Yousif
Mr. Abdulla A. Saudi
Vice Chairman Mr. Yousif has led Al Baraka Banking Group (ABG) since inception.
He is the Chairman of Al Baraka Turk Participation Bank, Banque
Chairman, United Bank for Commerce and Investments, Tripoli, Al Baraka D’Algerie, Al Baraka Bank Ltd. South Africa, Al Baraka
Libya and Executive Chairman, ASA Consultants W.L.L., Bahrain. Bank Lebanon, Jordan Islamic Bank, Al Baraka Bank Egypt, Al Baraka
Board member of Credit Lebanese Bank Beirut. Previously, Founder, Bank Syria, Al Baraka Bank Sudan, Al Baraka Bank Pakistan Ltd., Vice
President & Chief Executive, Arab Banking Corporation (B.S.C.), Chairman of Al Baraka Islamic Bank, Bahrain and a Board member
Bahrain from 1980 to 1994. He also founded Arab Financial Services of both Al Baraka Bank Tunisia and Itqan Capital in Saudi Arabia.
(E.C.) and ABC Islamic Bank (E.C.), Bahrain. Prior to that he was the Mr. Yousif was Chairman of the Union of Arab Banks, Lebanon
Founder, Chairman and General Manager of Libyan Arab Foreign for two terms (2007-2013). He is the recipient of the Medal of
Bank, Tripoli 1972-1980. In addition, he held positions at the
Efficiency, a unique honor conferred by His Majesty King Hamad
Central Bank of Libya for 14 years. Mr. Saudi is a world-renowned
Bin Isa Al Khalifa, the King of the Kingdom of Bahrain during the
international banker of over five decades standing. He has received
year 2011. He holds the title of the CSR International Ambassador
many international accolades and decorations, including: the title
(Kingdom of Bahrain) from the CSR Regional Network, and was
of one of the “Most Innovative Bankers” in 1980 at a presentation
twice named Islamic Banker of the Year (2004 and 2009). In
at Georgetown University, Washington D.C.; “Best Banker” award
addition, he was awarded the 2012 “LARIBA Award for Excellence in
from the Association of Arab American Banks in 1990; “Arab Banker
Achievement”. The Al Jinan University of Lebanon has granted him
of the Year” award from the Union of Arab Banks in 1993. He
an Honorary Doctorate of Philosophy in Business Administration and
also has several gold medals and awards, notably those bestowed
by the King of Spain and the President of Italy in 1977, and the Grand he has been awarded the Accolade of the Sudanese Presidency for
Medal of the Republic of Tunisia in 1993. Recently, he was honoured Excellency in Social Responsibility. In 2016, Mr. Yousif was decorated
with the Integrity Award for Combating Forgery by the Arab with the Title of “High Commissioner to preach the United Nations
Union - subordinate of the Arab League – in 2012. Mr. Saudi, a Libyan Sustainable Development Goals 2030”. He also won the Gold Award
national, holds a Certificate in Management and Accounting. for Sustainable Development at Oman International Conference on
Social Responsibility 2016. In 2017, Mr. Yousif was elected Chairman
Mr. Abdullah Saleh Kamel of the Bahrain Association of Banks, was named Islamic Finance
Vice Chairman Personality of the Year 2017 at the Global Islamic Finance Awards
ceremony and was awarded with the Outstanding Contribution to
President and Chief Executive Officer of Dallah Albaraka Group, Saudi
CSR in Islamic Banking by CPi Financial. Mr. Adnan holds a Master
Arabia. Chairman of Aseer Company; Chairman of Amlak Real Estate
of Business Administration degree from University of Hull, UK.
Development and Finance; Chairman of Okaz Press and Publishing
He was earlier with Arab Banking Corporation for over 20 years
Corporation; Vice-Chairman of King Abdullah Economic City Eimaar.
and last served as Director on its Board.
Previously held executive positions at Dallah Group, culminating in
the position of Vice President for Business Sector until 1999 when he
assumed his current position. Mr. Abdullah Kamel has over 29 years’
experience. Mr. Abdullah Kamel is active in public and charitable
activities through his membership of many international and local
organizations and associations, such as Jeddah Chamber of Commerce
(a Board Member twice), Young Presidents’ Organization, Friends of
Saudi Arabia, The Centennial Fund and the Board of Trustees of the
Prince of Wales Business Leaders Forum. Mr. Abdullah Kamel, a Saudi national,
studied Economics at University of California, Los Angeles, USA.

Mr. Abdul Elah Sabbahi Dr. Bassem Awadallah

Board Member Board Member
Vice President, Dallah Albaraka Group; Chairman of Al Baraka Bank Personal Representative of His Majesty King Abdullah II Bin Al Hussein
Tunisia. Chairman of Arab Leasing International Finance, Saudi Arabia of the Hashemite Kingdom of Jordan, and Special Envoy to the Kingdom
and La Société de Promotion du Lac de Tunis. Mr. Sabbahi is also a of Saudi Arabia. He is the Chief Executive Officer of Tomoh Advisory, a
Member of the Boards of Dallah Albaraka Holding Co. E.C., Bahrain; strategy and financial consultancy based in the United Arab Emirates.
Al Amin Investment Co., Jordan and a number of other international He is also Vice Chairman of the Arab Bank (Jordan) and member of
companies. Mr. Sabbahi has over 38 years’ experience in international the Board of Directors of Arab National Bank (Saudi Arabia);
banking and business, the last 27 of which were with the Dallah Previously, he held the following positions in Jordan: Economic
Albaraka Group in Saudi Arabia. Mr. Sabbahi, a Saudi national, holds Secretary to the Prime Minister (1992-1996); Economic Advisor
a Bachelor of Science Degree in Accounting from King Abdulaziz to the Prime Minister (1996-1999); Director of the Economic
University, Saudi Arabia. Department at the Royal Hashemite Court (1999-2001); Minister
of Planning and International Cooperation (2001-2005); Minister of
Mr. Ebrahim Fayez Al Shamsi Finance (2005); Director of the Office of His Majesty King Abdullah
Board Member II (April 2006-November 2007); and Chief of the Royal Hashemite
Board Member, Al Baraka Turk Participation Bank and Al Baraka Bank Court (November 2007-October 2008). Dr. Awadallah also served
Syria. Previously Member of the Board of Arab Fund for Economic as the Secretary General of the Islamic Chamber of Commerce
& Social Development, Kuwait; Chief Executive Officer of Emirates and Industry (2010-2013). He was awarded the King Abdullah Bin
Islamic Bank, Dubai; and Deputy General Manager, Abu Dhabi Fund Abdulaziz Visiting Fellowship at the Oxford Centre for Islamic Studies
for Development. Mr. Al Shamsi has 45 years’ varied experience in the in 2012. He is also a member of the Advisory Board of the Middle
financial services industry and in service of the U.A.E. Government. East Centre at the London School of Economics and Political Science,
Mr. Al Shamsi, a U.A.E. national, holds a Bachelor of Commerce and is Vice Chairman of the Board of Trustees of Al-Quds University,
degree. in Palestine. Dr. Awadallah is the recipient of the Al Hussein Medal for
Distinguished Service, the Al Kawkab Decoration of the First Order,
Mr. Jamal Bin Ghalaita and the Al Istiqlal Decoration of the First Order of the Hashemite
Board Member Kingdom of Jordan, as well as other decorations from several
countries. Dr. Awadallah has 32 years of diverse experience. He holds
Mr. Bin Ghalaita has been Chief Executive Officer (CEO), Emirates a PhD in Economics and a Master of Science in Economics from the
Islamic since 2011. He was previously Board Member of Emirates London School of Economics and Political Science. He also holds a
Islamic while serving as Group Deputy CEO and General Manager, Bachelor of Science in Foreign Service, International Economics,
Consumer Banking and Wealth Management at Emirates NBD. He has International Finance and Commerce, from Georgetown University,
driven unprecedented growth at Emirates Islamic, as acknowledged Washington, D.C.
through awards, including “Best Islamic Bank” in the U.A.E.
Mr. Bin Ghalaita also serves as the Chairman of Emirates Islamic Mr. Mohyedin Saleh Kamel
Financial Brokerage LLC and is a Board Member of Al Baraka Banking Board Member
Group and Tanfeeth LLC. A U.A.E. national, he has been a banker
for over 27 years, with key roles in corporate, retail, trade finance Deputy Chief Executive Officer of Direct Investments, Dallah
and human resources at Emirates Islamic and Emirates NBD Group. Albaraka Holding Company. Previously, Chairman of the Boards
Achievements include planning the launch of Emirates Islamic and of Directors of Dallah Media Production Company and of Al Rabie
establishing new areas of business at Emirates NBD, including private Saudi Foods Co. Ltd.; Member of the Boards of Directors of Dallah
banking, asset management and Emirates Money. Additionally, he is Real Estate Investment Company, Egypt; Almaza Real Estate
credited with overseeing the growth of the consumer banking and Development Company, Egypt; Jabal Omar Development Company;
wealth management business. Al Khozami Company; Saudi Research and Marketing Group; Dallah
Health Co. Okaz Organization for Press and Publication; VFS Tasheel
Mr. Yousef Ali Fadil Bin Fadil International company and Member of the Management Committee
Board Member of Dallah Albaraka Holding Company, E.C; Mr. Mohyedin Kamel
is a past member of the Board of Directors of Jeddah Chamber of
Board Member, Al Baraka Islamic Bank, Bahrain and Ajman Bank. Commerce and Industry and is active in public and community work
Previously, General Manager of the Emirates Financial Company in Saudi Arabia. A Saudi national with 16 years of varied experience,
and before that he served as Executive Manager for Investment, he studied Economics at the University of San Francisco, USA.
Dubai Islamic Bank and held senior positions at National Bank of
Umm Al Qaiwain. Mr. Bin Fadil has also served on the Boards of
Directors of financial institutions including Union Insurance Company
(U.A.E.); Bahrain Islamic Bank; Bosnia International Bank and Dubai
Islamic Insurance Company. He has more than 32 years’ experience
in banking. Mr. Bin Fadil, a U.A.E. National, holds a Bachelor’s degree
in Mathematics & Computer Science from Gonzaga University,
Spokane, Washington State, U.S.A.

ANNUAL REPORT 2017
Mr. Saud Saleh Al Saleh As at the end of 2017, the Executive Management Team consisted
Board Member of the President & Chief Executive and the Heads of: Strategic
Planning; Operations and Administration; Finance; Credit and Risk
Mr. Saud Saleh Al Saleh is the Chairman of MAAD International
Management; Legal Affairs; Treasury, Investments and Financial
Company, Chairman of Gulf Complexes for Housing Company, and
Institutions Commercial Banking; and Sustainability and Social
Head of the Board of Trustees of Riyadh Economic Forum. Previously,
Responsibility. All members of the Executive Management Team have
he was Chairman of SAIB-BNP Paribas Asset Management Company;
been provided with a written appointment agreement specifying the
Vice Chairman of American Express (Saudi Arabia) Limited. He was
rights and obligations attaching to the office of each member.
also a Board Member of the following: the Saudi Arabian General
Investment Authority, General Organization for Social Insurance, the Executive Management also exercises control via a number of
Higher Education Fund, the Saline Water Conversion Corporation, committees with specific responsibilities, among which are:
Saudi Orix Leasing Company, Boeing Industrial Technology Group
L.P., AMLAK International for Real Estate Development and Mortgage Executive Management Committee
Finance and The Mediterranean & Gulf Cooperative Insurance & The Executive Management Committee’s role is to oversee the
Reinsurance Co. Mr. Al Saleh has more than 33 years’ experience in implementation of the strategic objectives of the Group in relation
banking, including 26 years with The Arab National Bank followed to its business direction, operations, risk, expansion plans and overall
by management positions at the Saudi Investment Bank, where he policies and procedures. The Committee is chaired by the President
eventually became General Manager. Then he was appointed as a & Chief Executive with the remaining membership comprising
Minister as General Secretary of the Supreme Economic Council the Heads of: Strategic Planning; Operations and Administration;
of the Kingdom of Saudi Arabia. A Saudi national, he holds a B.Sc. Finance; Credit and Risk Management; Treasury, Investments and
degree in Business Administration from Portland State University, Financial Institutions; Commercial Banking; IT; Sustainability and
Oregon, U.S.A. and an M.A. in Economics from The University of Social Responsibility; and Legal Affairs with Head of Internal Audit
Rhode Island, U.S.A. as observer.
Dr. Khaled Abdulla Ateeq Asset and Liability Committee

Board Member The Asset and Liability Committee’s mandate is to monitor the
liquidity and capital adequacy of the Group and review the Group’s
Chief Executive Officer (CEO) and a Board Member of Family Bank long-term equity investments and its penetration into the different
in Bahrain. Dr. Ateeq served as the Executive Director of Banking markets. The Committee reviews liquidity and cash flow of ABG
Supervision at the Central Bank of Bahrain (CBB), where he was and the Group units and sets balance sheet growth targets, besides
responsible for the licensing, inspection and supervision of financial monitoring the distribution of profits to investors. The Committee is
institutions, ensuring that all banks and financial institutions, either chaired by the President & Chief Executive and its remaining members
operating in Bahrain or incorporated in Bahrain, complied with laws are the Heads of: Strategic Planning; Operations and Administration;
and regulations issued by the CBB. In addition, Dr. Ateeq is a Director Finance; Credit and Risk Management; and Treasury, Investments
of Al Baraka Islamic Bank (Bahrain). He has held senior posts with and Financial Institutions, together with a senior member from the
a number of firms, including Deputy CEO at Venture Capital Bank. Bahrain-based subsidiary, Al Baraka Islamic Bank (Al Baraka Bahrain).
He has over 37 years of experience in banking, finance, auditing,
and accounting. Before joining the CBB, Dr. Ateeq was an Assistant Head Office Credit Committee
Professor at the University of Bahrain. Dr. Ateeq holds a PhD in The Head Office Credit Committee is the authority that approves
Philosophy of Accounting from Hull University, U.K. credits and considers issues of Group credit policy and Group credit
exposures, problem credits and provisioning levels. The Head Office
EXECUTIVE MANAGEMENT
Credit Committee is chaired by the President & Chief Executive,
The Board of Directors has delegated to the Group’s Executive with the remaining membership being drawn from among Executive
Management team the primary responsibility for implementing
Management.
the strategy of the Group, identifying and evaluating significant
risks to the business of the Group and for the design and operation Management Risk Committee
of appropriate internal controls. Its other responsibilities include:
The Management Risk Committee’s role is to assist the Board Risk
ensuring that resolutions of the Board of Directors are carried out;
Committee in managing and controlling risks, and to introduce
ensuring that the Group operates at all times in accordance with the
and support such measures which enhance the efficiency of risk
principles of Shari’a and that the decisions and recommendations of
management policies, procedures, practices and controls within
the Unified Shari’a Supervisory Board are carried out; providing the
the Group. It is chaired by the President & Chief Executive, with
Board of Directors with analysis, assessments and recommendations
remaining membership comprising the Heads of: Operations
regarding the Group’s activities and supplying the CBB with all
and Administration; Finance and Credit and Risk Management;
information required under the CBB Law and relevant regulations.
together with the Manager of Credit Review and Analysis; and the
Executive Management disseminates to Group units strategic and
other central decisions taken at the parent level, thus ensuring the Manager - Credit Portfolio Analysis.
implementation of Groupwide policies and common operational
processes and procedures.

Head Office IT Steering Committee Islamic Banker of the Year (2004 and 2009). In addition, he was
The Head Office IT Steering Committee’s role is to draw up the awarded the 2012 “LARIBA Award for Excellence in Achievement”.
Group’s short and long-term IT strategy, and to oversee and monitor its The Al Jinan University of Lebanon has granted him an Honorary
implementation throughout the Group with a view to effecting standardisation Doctorate of Philosophy in Business Administration and he has been
in information and operation management. The Committee is chaired by the awarded the Accolade of the Sudanese Presidency for Excellency
Head of Operations and Administration. The other members are the Heads in Social Responsibility. In 2016, Mr. Yousif was decorated with
of: Finance, Strategic Planning, and Credit and Risk Management; the Title of “High Commissioner to preach the United Nations
together with senior support nominees drawn from the Group. Sustainable Development Goals 2030”. He also won the Gold Award
for Sustainable Development at Oman International Conference on
Human Resources & Compensation Committee Social Responsibility 2016. In 2017, Mr. Yousif was elected Chairman
The role of the Human Resources & Compensation Committee is of the Bahrain Association of Banks, was named Islamic Finance
to review the Human Resources policies, management and planning Personality of the Year 2017 at the Global Islamic Finance Awards
at the Group’s Head Office. The Committee is chaired by the Head ceremony and was awarded with the Outstanding Contribution to
of Operations and Administration and the other members are the CSR in Islamic Banking by CPi Financial. Mr. Adnan holds a Master
Heads of Strategic Planning and Finance. of Business Administration degree from University of Hull, UK.
He was earlier with Arab Banking Corporation for over 20 years
Head Office Insiders Committee and last served as Director on its Board.
The Head Office Insiders Committee was set up in accordance
with the guidelines issued by the CBB and the Bahrain Bourse (BB), Mr. Majeed H. Alawi
for the purpose of ensuring the maintenance of a fair, orderly and Executive Vice President - Head of Internal Audit
transparent securities market, and enhancing and developing the Mr. Alawi has over 37 years of international banking experience,
practices relating to the risk management systems and internal mainly in audit. He reports directly to the Audit and Governance
controls within listed companies and similar institutions. The Committee of the Board of ABG, for which he also acts as Secretary.
Committee is responsible for monitoring and supervising issues He participates as an observer member in Audit Committee
relating to insiders in order to regulate their dealings in the Group’s meetings of all ABG’s subsidiaries. The audit function reviews the
securities, and to ensure that Group insiders are acquainted with and IT controls environment of IT systems, and compliance with local
aware of the legal and administrative requirements regarding their and international regulations relating to anti-money laundering
holdings and dealings in the Group’s securities. Furthermore, it is and financial crime. Previously, he was an audit team leader at Arab
responsible for preventing the abuse of inside information by such Banking Corporation (B.S.C.)’s Internal Audit Department, prior
insiders. The Committee is chaired by the President & Chief Executive to which he was Head of Operations at Banque National de Paris
and the other members are the Heads of: Internal Audit; Operations in Bahrain. Mr. Alawi is a Fellow of the Chartered Association of
and Administration; Legal Affairs; Treasury, Investments and Financial Certified Accountants, UK (1980).
Institutions and Investors’ Relations.
Mr. K. Krishnamoorthy
Other Committees Executive Vice President - Head of Strategic Planning
The Executive Management also forms ad hoc committees, as and
when required, to address specific initiatives in which the Group may Mr. Krishnamoorthy has over 41 years’ experience in financial and
be engaged from time to time. management reporting, corporate and structured finance, credit,
strategic planning, project management, equity research, fund
EXECUTIVE MANAGEMENTS’ PROFILES management and administration. Before joining ABG in 2004,
he headed the worldwide banking solutions business of a major
Mr. Adnan Ahmed Yousif Canadian IT solutions company in Toronto, Canada, after two years
President & Chief Executive as a partner in a regional Gulf investment bank. Prior to that, he spent
Mr. Yousif has led Al Baraka Banking Group (ABG) since inception. 13 years at Arab Banking Corporation (B.S.C.) in investment banking
He is the Chairman of Al Baraka Turk Participation Bank, Banque Al and treasury. His early career was spent as finance professional in
Baraka D’Algerie, Al Baraka Bank Ltd. South Africa, Al Baraka Bank India and Bahrain. Mr. Krishnamoorthy is an Associate of the Institute
Lebanon, Jordan Islamic Bank, Al Baraka Bank Egypt, Al Baraka Bank of Chartered Accountants of India and holds a B.Com (Hons) degree
Syria, Al Baraka Bank Sudan, Al Baraka Bank Pakistan Ltd., Vice from Osmania University, India.
Chairman of Al Baraka Islamic Bank, Bahrain and a Board member
of both Al Baraka Bank Tunisia and Itqan Capital in Saudi Arabia.
Mr. Yousif was Chairman of the Union of Arab Banks, Lebanon for two
terms (2007-2013). He is the recipient of the Medal of Efficiency,
a unique honor conferred by His Majesty King Hamad Bin Isa Al
Khalifa, the King of the Kingdom of Bahrain during the year 2011.
He holds the title of the CSR International Ambassador (Kingdom
of Bahrain) from the CSR Regional Network, and was twice named

ANNUAL REPORT 2017
Mr. Abdulrahman Shehab Mr. Salah Othman Abuzaid
Executive Vice President - Head of Operations and Administration Senior Vice President - Head of Legal Affairs
Mr. Shehab has over 41 years’ experience with international financial Mr. Abuzaid has over 33 years’ professional experience as a judge,
institutions, both Islamic and conventional. He is a Member of the a practicing advocate and legal consultant for local, regional and
Boards of Banque Al Baraka D’Algerie and Al Baraka Bank (Pakistan) international law firms and financial institutions. He also serves as
Ltd. Before joining ABG in May 2006, he was Assistant Chief Secretary to the Board of Directors of ABG and some of its Board
Executive Officer – Head of Operations & Administration at Bahrain Committees. He joined ABG as First Vice President - Head of Legal
Islamic Bank from 2002-2006, which he joined from Faysal Islamic Affairs & Compliance, and was promoted to Senior Vice President.
Bank of Bahrain (now Ithmaar Bank) where he worked from 1985- Before joining ABG, he worked at Al Baraka Islamic Bank (Bahrain) as
2002. Previously, he worked at Bahrain Middle East Bank and the Manager, Legal Affairs, prior to which he was based in the Sultanate
Bahrain branches of American Express Bank, Bank of America and of Oman from 2001-2004 working for an international law firm. In
Chase Manhattan Bank. He started his career with Habib Bank Ltd. in Oman, he was admitted to practice before all Omani courts. Before
1973. Mr. Shehab holds a Master degree in Business Administration that, he spent 20 years in legal practice in Sudan. Mr. Abuzaid has an
from Hull University, UK. LLB degree from the Faculty of Law, University of Khartoum, Sudan.
Mr. Hamad Abdulla Al Oqab Mr. Mohammed A. El Qaq

Executive Vice President - Head of Finance Senior Vice President – Head of Commercial Banking
Mr. Al Oqab has over 24 years’ experience in finance and auditing. Mr. El Qaq has over 26 years of experience in commercial banking.
He is Chairman of the Accounting Standards Board of the Accounting Before joining ABG in August 2014, Mr. El Qaq was General Manager,
and Auditing Organization for Islamic Financial Institutions (AAOIFI). International Banking & Syndications at Commercial Bank of
He is also a Member of the Boards of Al Baraka Turk Participation Kuwait, prior to which he was a First Vice President at Arab Banking
Bank, Jordan Islamic Bank and Banque Al Baraka D’Algerie, Algeria. Corporation (B.S.C.), Bahrain, and Deputy Chief Executive & Head of
In addition, he serves as a member of the audit committees of Corporate Banking Group at Arab Banking Corporation (Jordan). He
Jordan Islamic Bank and Banque Al Baraka D’Algerie, a member of also served as a Member of the Board of Directors of ABC Islamic Bank
the Board of Sustainability & Social Responsibility Committee and from 2009-2012. Having started his career with the Housing Bank for
Credit Committee of Jordan Islamic Bank, and a Member of the Trade and Finance, Jordan, in 1990, he then worked with Arab Bank in
Board Executive Committee and Observing Member of the Board Jordan and Qatar National Bank in Qatar. Mr. El Qaq holds a Master
Audit Committee of Al Baraka Turk Participation Bank. Before joining of Business Administration degree from Howard University, U.S.A.
ABG in February 2005, he worked at Shamil Bank as Senior Manager,
Internal Audit. Prior to this, he was a member of the audit team at Mr. Khalid Al Qattan
Arthur Andersen. Senior Vice President - Head of Treasury, Investments and Financial
Institutions
Mr. Al Oqab is a Certified Public Accountant and a Chartered Global
Management Accountant. Mr. Al Qattan has over 34 years of banking experience in treasury and
operations. Before joining ABG in June 2007 as Vice President – and
Mr. Jozsef Peter Szalay appointed to his present post in 2016 - he was Treasury Manager at
Senior Vice President - Head of Credit and Risk Management Eskan Bank, Bahrain where he was responsible for liquidity management
and served on several management committees. Prior to that, he
Mr. Szalay has over 41 years’ international banking experience,
worked at Shamil Bank, Bahrain, as Manager of Treasury operations,
encompassing credit and risk management, corporate banking and
and at United Gulf Bank, Bahrain. Mr. Al Qattan holds a Master of
trade finance. Mr. Szalay has been a member of ABG’s executive
Business Administration degree from the University of Hull, UK.
management team since September 2006. Previously, he worked with
Gulf International Bank B.S.C., which he joined in 1979 as Regional
Marketing and Credit Officer for Central Europe, subsequently
working in credit and business development before becoming Chief
Credit Officer and Member of the Group Risk Committee. Prior to
that, he worked at Bank of Montreal, Canada, latterly being appointed
its Middle East Representative. Mr. Szalay holds an M.A. (Econ.) from
University of Budapest and a Banking Certificate from the Institute
of Canadian Bankers. He is a graduate of the Advanced Management
Program at INSEAD France.

Mr. Qutub Yousafali COMPLIANCE, POLICIES AND PROCEDURES

Group Compliance
Mr. Qutub Yousafali is a banking professional with more than 38 years’ ABG Group is committed to complying with ever increasing
experience who joined ABG in January 2012. Previously, Mr. Yousafali international regulatory requirements. The Group Compliance
worked with Arab Banking Corporation (B.S.C.) in Bahrain for nearly function supports the Group units, updating policies when necessary.
18 years, latterly as Group Head of Compliance. He was responsible There is a continual drive to enhance the compliance culture
for overseeing and coordinating compliance functions and activities, through investment in advanced systems and effective staff training.
including regulatory compliance, corporate governance, anti-money The Group has never hesitated to decline business that might
laundering and international sanctions across the network of offices risk breaching the letter or the spirit of applicable laws, rules and
worldwide. Prior to this appointment in 2009, Mr. Yousafali had held regulatory standards.
senior positions in the Arab World Division & Universal Banking
The Head of Group Compliance, who is the Group Compliance Officer
in Arab Banking Corporation (B.S.C.). Previously, he worked for an
(GCO) has formulated a Group compliance strategy and compliance
affiliate bank in senior positions, including Head of Internal Audit
management framework for implementation throughout the ABG
and Finance. Mr. Yousafali started his professional career with Peat
Group. They reflect the following core principles and practices which
Marwick Mitchell & Co. (now KPMG), London.
are firmly embedded in ABG and all its subsidiaries:
Mr. Yousafali is a Fellow of The Institute of Chartered Accountants in
• comply with both the letter and the spirit of all applicable laws,
England & Wales, UK.
rules and regulatory standards;
Dr. Ali Adnan Ibrahim • conduct business strictly in accordance with all regulatory and
First Vice President - Head of Sustainability and Social Responsibility ethical standards;
• encourage a strong compliance culture, with every individual held
Dr. Ibrahim has over 21 years of experience. He is the Head of the
personally responsible for compliance; and
Group Sustainability and Social Responsibility Department, and
specialises in market-based strategies for economic development, • maintain a robust corporate governance environment at all times.
corporate sustainability, impact investing, Islamic micro-and- ABG and its subsidiaries continue to enhance the compliance-related
SME finance, mergers and acquisitions, and Shari’a-structuring. He policies, procedures and framework. Staff skills have been upgraded
develops strategies and processes to ensure that Al Baraka’s businesses by providing current and targeted training. Systems and automated
contribute to its communities. Dr. Ibrahim is also Chairman of the tools are being introduced, as required, to improve compliance
Sustainable Development Committee of the Bahrain Association of standards throughout the Group.
Banks, and is also a World Economic Forum Young Global Leader.
An Independent Function
Previously, Dr. Ibrahim was a counsel at Baker & McKenzie. As a
Group Compliance in ABG is an independent function responsible for:
Fulbright Scholar, Dr. Ibrahim received his doctorate in financial
regulation from the Georgetown University (with distinction). He has • proactively identifying and evaluating compliance risks;
attended leadership programs such as “Global Leadership and Public • developing and implementing compliance policies, programmes
Policy in 21st Century” at Harvard University and “Transformational and plans;
Leadership” at Oxford University. He has twice served as Co-Chair • monitoring, managing, mitigating and reporting compliance risks;
of the Islamic Finance Committee of the American Bar Association. • monitoring, investigating and reporting compliance breaches,
Dr. Ibrahim has been published internationally on market-based incidents and risks; and
strategies for economic development, financial inclusion, Islamic • advising management and staff on compliance and regulatory
finance and its regulation, Islamic microfinance, comparative matters.
corporate governance and capital markets in developing countries.
The GCO reports directly to the President & Chief Executive. He
provides independent oversight on behalf of the Board of Directors,
and reports to the Board of Directors whenever deemed necessary.
In addition, the GCO has the right and the authority to contact
the Central Bank of Bahrain (CBB), as and when he considers it
necessary. The GCO is supported by dedicated compliance teams in
all ABG subsidiaries. At the Group level, the GCO is responsible for
coordinating the identification and management of the ABG Group’s
compliance risks, in collaboration with local Heads of Compliance in
each of the subsidiaries.
Throughout its network of offices, ABG has issued written guidelines
for staff. They describe the appropriate implementation of laws,
regulations, rules and standards through policies and procedures,
including the overarching Group Compliance Policy. This policy
requires all subsidiaries, officers and staff to comply with all relevant
laws, rules, regulations and standards of good market practice.

ANNUAL REPORT 2017
In the ABG Group, compliance risks fall broadly into the following International Sanctions
categories: Owing to a raft of sanctions imposed by local and international
• Regulatory Compliance and Corporate Governance; regulatory bodies, sanctions compliance is one of the primary
challenges faced by banks today, particularly those operating
• Anti-Money Laundering and Countering Financing of Terrorism;
across multiple geographies. Breaches of sanctions expose banks to
• International sanctions; and significant regulatory, reputational and commercial risks, including
• Foreign Account Tax Compliance Act and Common Reporting potential financial losses. As evidenced by the large number of cases
Standard (FATCA/CRS). reported and the very sizeable fines imposed, sanctions risk has
become one of the most serious risks faced by banks worldwide.
Regulatory Compliance and Corporate Governance
At the Group level, policies are continuously developed for managing Being mindful of such risks, ABG has a Group Sanctions Policy in
compliance risks in all the above categories. These policies are place, which is implemented throughout its network in order to
systematically cascaded down to the subsidiaries, which adapt and ensure uniform adherence to all relevant sanctions orders. This policy
implement them in accordance with local regulatory requirements. sets out various restrictions and prohibitions relating to customers
In addition, the ABG Group has a strict Code of Conduct in place and transactions subject to sanctions. These restrictions sometimes
that all employees must adhere to at all times. The Code sets out extend beyond the strict requirements of applicable laws in order to
to deter wrongdoing and to promote ethical conduct. It outlines safeguard the ABG’s reputation and standing.
the responsibilities of all members of the ABG Group, its officers
ABG’s strategy and policy for managing sanctions risk is determined
and staff, who are expected to read, understand and uphold these
standards and principles at all times. at the Group level and implemented across all subsidiaries. The Group
is increasing staff awareness of sanctions compliance and investing
The ABG Group has a whistleblowing policy in place, which provides in screening systems to manage and minimise sanctions risk. Being
a formal channel for staff to report any unethical conduct, gross mindful of its responsibilities, ABG is committed to further enhancing
mismanagement or corporate wrongdoing. Staff members are its sanctions risk management framework on an ongoing basis.
encouraged to report their concerns through specified communication
channels which protect their identities, without fear of reprisal or Foreign Account Tax Compliance Act and Common Reporting
victimisation. Reportable disclosures may include legal or regulatory Standard (FATCA/CRS)
wrongdoing, fraud or any other malpractice. US legislation known as FATCA, aimed at preventing tax evasion
by US citizens and residents by hiding their assets in accounts with
Anti-Money Laundering and Countering Financing of non-US banks, became law in 2010. FATCA requires Foreign Financial
Terrorism (AML/CFT) Institutions (FFIs) such as ABG and its subsidiaries to enter into FFI
Risks relating to financial crime are proactively managed at the Group agreements, under which they agree to identify and provide the US
and subsidiary levels. The ABG Group is committed to complying Internal Revenue Service (IRS) with information on accounts held by
with AML/CFT laws and regulations, as well as the recommendations US persons and US-owned foreign entities, or otherwise face 30%
of the Basel Committee and Financial Action Task Force. These laws, withholding tax on certain payments made to them. FFIs are also
regulations and recommendations are reflected in the AML/CFT required to withhold tax on certain payments made to other FFIs
policies of ABG and each of its subsidiaries. The Group has strict that have not entered into an FFI agreement, and on payments made
Know Your Customer policies, which include detailed requirements to account holders who do not respond to requests to confirm their
for identifying and verifying customers. These policies preclude all US person status and/or do not agree to the FFI reporting certain
operating units from establishing a new business relationship until all account-related information to the IRS.
relevant parties to the relationship have been identified and verified,
and the nature of the business they expect to conduct has been Intergovernmental Agreements (IGAs) Models 1 and 2 were offered by
clearly established. the IRS to reduce the compliance costs and operational issues arising
from the implementation of FATCA. A number of countries, including
In line with the requirements of the CBB and the Group AML Policy, Bahrain, where ABG subsidiaries operate either have signed or are
suitably qualified Money Laundering Reporting Officers (MLROs) expected to sign an IGA Model 1 with the US. If the IGAs are signed
are appointed in all subsidiaries. The MLROs are responsible for in accordance with the FATCA regulations, ABG subsidiaries will be
ensuring compliance with all relevant laws, regulations and policies required to report the necessary US account-related information to
in respect of AML/CFT. They also have responsibility for reviewing their competent local authorities only, which in turn will provide the
and monitoring customers and transactions, and reporting to their information to the IRS.
respective host regulators any suspicions concerning them.
From the outset, the ABG Group has taken necessary steps to build
At the Group level, ABG has appointed a Group MLRO, who is awareness. It has also made substantial investments in training
responsible for formulating and implementing ABG’s AML strategies
people and introducing systems in order to implement the new
and policies on an ongoing basis. The Group MLRO coordinates the
legislation throughout its network of offices. A robust Group FATCA
activities of each subsidiary’s MLRO, overseeing appropriate AML
strategy and policy is in place and is being implemented throughout
training for all relevant staff, and reporting to the Board Audit and
the Group. As a result, all our subsidiaries comply with the applicable
Governance Committee and the Board of Directors on all critical
FATCA reporting and withholding requirements.
money laundering issues.

The OECD published the CRS in 2014, which is supported by the G20 In the event that any of the above mentioned persons is requested
countries to improve tax transparency through automatic exchange to make statements relating to the financial statements, financial
of information about the financial assets of tax residents of a country indicators or general financial performance of the Group, that person
in other jurisdictions participating in the CRS programme. ABG and will consult and/or confirm with the Head of Finance with regard to
its subsidiaries are expanding their FATCA policies and frameworks to the accuracy, timeliness and reliability of the information prior to
include CRS. As a result, all members of the ABG Group are taking all making any public announcements.
steps necessary to become fully compliant with CRS requirements,
The Group distributes its Financial Statements and Prudential
as and when these are adopted by the countries in which ABG
Returns to the CBB, BB and NASDAQ Dubai on a quarterly and an
subsidiaries operate.
annual basis. Then the Group makes this information available on
Group Disclosure Policy its website.
The Group communication strategy aims to keep the market informed Press releases are posted on the Group’s website and published in
of material information in a timely, accurate and balanced manner. either Arabic or English. Persons authorised by the Group to make
The Group’s communications with the market ensures compliance public disclosures will not make any announcement on a one-to-one
with the CBB’s directives as detailed in the Public Disclosure Module basis before disseminating the information on the Group’s website or
of its Rulebook, Volume 2, Part A and the CBB Disclosure Standards in local newspapers as appropriate.
as specified under the CBB Capital Markets Regulations.
The Group has in place an effective framework for dealing with
Material information is any information, financial or non-financial, complaints received from its shareholders and other stakeholders.
relating to the business and affairs of ABG, the Group or any of ABG’s Different channels have been established to enable communication
subsidiaries that results in, or would reasonably be expected to result with investors, including through the offices of the Registrar,
in, a significant change in the market price of the Group’s shares or an online enquiry centre on the Group’s website and dedicated
in the decision of a prudent investor to sell, buy or hold the Group’s telephone and facsimile lines. All complaints received are transmitted
shares or cause to change a prudent investor’s decision to transact to the concerned department, Executive Management and the Board.
or refrain from transacting with the Group or its units. Material In accordance with the CBB’s disclosure requirements, the Group
information consists of, but is not limited to, both material facts and maintains at least the previous three years’ financial performance
material changes relating to the business and affairs of the Group and information on its website.
ABG’s subsidiaries.
In order for the Group to comply fully with the CBB disclosure Regulations
requirements as specified in the CBB Rulebook, the Group will disclose The Group complies with all the regulatory requirements governing
all the required information in its published quarterly reviewed Islamic Banks issued by the CBB, which include, inter alia, regulations
financial statements, and its annual audited financial statements, governing the Group’s capital adequacy, asset quality and risk
and any applicable ad hoc information requirement of the CBB from management, liquidity and fund management and corporate
time to time. governance.
Further, as a listed company on the Bahrain Bourse (BB) and NASDAQ The CBB, as the home supervisor, sets and monitors ABG’s capital
Dubai, ABG is committed to adhering on a timely basis to all periodic requirements on both a consolidated and an unconsolidated basis,
information dissemination requirements of the BB and NASDAQ while ABG’s banking subsidiaries are directly regulated by their local
Dubai, as stipulated in their respective regulations and directives. banking supervisors, which set and monitor their capital adequacy
requirements.
Additionally, the Group will publicly disclose and broadly disseminate
material information immediately upon becoming aware of The CBB requires each Bahrain-based bank or banking group to
circumstances or events that underlie such material information, maintain a minimum capital adequacy ratio of 8% on a solo basis
or when a decision to implement a material change is made by the and 12.5% (including capital conservation buffer (CCB) of 2.5%) on
Board of Directors or Executive Management. a consolidated basis.
As a listed company, ABG adheres to a strict policy, which delegates By the end of 2014, the CBB had issued the final regulation to
to certain specific individuals the authority to issue press releases or give effect to the Basel III framework, which came into effect on
make announcements to the public, financial or non-financial, about 1st January 2015. The Basel III framework significantly revises the
the Group. Only the following persons are authorised to make public definition of regulatory capital. The framework emphasises common
information via the media: equity as the predominant component of tier 1 capital by introducing
a minimum common equity tier 1 (CET1) capital ratio. The Basel III
• Chairman of the Board of Directors rules also require institutions to hold capital buffers. For the purpose
• Vice-Chairmen of the Board of Directors of calculating CET1 capital, the regulatory adjustments including
• President & Chief Executive amounts above the aggregate limit for significant investments in

ANNUAL REPORT 2017
financial institutions, mortgage servicing rights, and deferred tax REMUNERATION POLICY AND RELATED DISCLOSURES
assets from temporary differences, will be deducted from CET1 The Group’s total compensation approach, which includes the variable
over a phased manner to be fully deducted by 1st January 2019. remuneration policy, sets out the Group’s policy on remuneration for
The current capital position is sufficient to meet the new regulatory Directors and senior management and the key factors that are taken
capital requirements. into account in setting the policy.
Pursuant to the Group’s Compliance Policy, which was approved Through the remuneration framework summarised below, the
and adopted by the Board of Directors in November 2009, as Group aims to comply with the CBB’s regulations concerning Sound
mentioned earlier ABG appointed a Compliance Officer, whose role Remuneration Practices.
is to assist management to ensure the Group’s adherence to the
Group Compliance Policy, in particular that all Group activities are Remuneration Strategy
conducted in conformity with all applicable laws and regulations and It is the Group’s basic compensation philosophy to provide a
in accordance with best practice. competitive level of total compensation to attract and retain qualified
and competent employees. The Group’s variable remuneration
Financial performance monitoring policy is driven primarily by a performance-based culture that
Executive Management has in place various measures that help aligns employee interests with those of the Group’s shareholders.
monitor and control the activities of the Group worldwide. These elements support the achievement of the Group’s objectives,
A comprehensive financial consolidating procedure exists and is through balancing rewards for both short-term results and long-term
working effectively. All subsidiaries submit their financial data in a sustainable performance. The Group’s strategy is designed to share
format that is compatible with Islamic Accounting Standards issued its success, and to align employees’ incentives with its risk framework
by AAOIFI and with International Financial Reporting Standards and risk outcomes.
(IFRS). These are consolidated quarterly, and a consolidated set
of financial results is produced. Additionally, subsidiaries submit The quality and long-term commitment of all of the Group’s
a monthly return to Group headquarters providing details of their employees is fundamental to its success. The Group therefore
financial performance, measured against approved budgets. aims to attract, retain and motivate the very best people, who are
committed to maintaining a career with the Group, and who will
Related party transactions perform their role in the long-term interests of its shareholders. The
Dealings with persons or entities connected with the Group (including Group’s reward package is comprised of the following key elements:
directors and shareholders) are called “related party transactions”. 1. Fixed pay;
The Group treats all such transactions at arm’s length and requires
that they have the specific approval of the Board. If a director is 2. Benefits;
an interested party, he is required to abstain from voting on the
3. Annual performance bonus; and
respective matter. The Related Party Transactions pertaining to 2017
are reflected in Note 25 to the Consolidated Financial Statements. 4. The Long-Term Performance Incentive Plan.
Code Of Business Conduct And Ethics A robust and effective governance framework ensures that the Group
operates within clear parameters of its compensation strategy and
ABG maintains a board-approved policy on the employment of
policy. All compensation matters, and overall compliance with regulatory
immediate family members or other relatives of employees. The
requirements, are overseen by the Board Affairs & Remuneration
policy prohibits the employment and internal transfers where
Committee (BARC) and approved by the Board of Directors thereafter.
applicable, of first and second-degree relatives. However, the policy
permits third and fourth degree relatives to be employed in positions The Group’s remuneration policy, in particular, considers the role
other than where there is an actual, potential or perceived conflict of of each employee and sets guidance on whether an employee is
interest, or an opportunity for collusion. The Human Resources and a “Material Risk Taker” and/or an “Approved Person” in a business
Internal Audit departments are responsible for examining potential line, control or support function. An Approved Person is an employee
applications for employment to check whether there is likely to be whose appointment requires prior regulatory approval because of
an actual or potential conflict of interest as defined by the Group’s the significance of the role within the Group, while an employee
policies, with particular reference to the code of conduct and conflict is considered a Material Risk Taker if either he/she is the head of a
of interest policies. significant business line, or any individuals within their control have a
material impact on the Group’s risk profile.

In order to ensure alignment between what the Group pays its people hedging strategies or remuneration and liability-related insurance
and its business strategy, the Group assesses individual performance to undermine the risk alignment effects embedded in their
against annual and long-term financial and non-financial objectives, remuneration arrangements.
summarised in its performance management system. This assessment • The aggregate remuneration paid to BARC members during the
also takes into account adherence to the Group’s values, risks and year in the form of sitting fees amounted to US$48 thousand
compliance measures and, above all, acting with integrity. Altogether, (2016: US$49 thousand); other details concerning BARC membership
performance is, therefore, judged not only on what is achieved are disclosed elsewhere in this report.
over the short and the long-term but also importantly on how it is
achieved, as the BARC believes the latter contributes to the long- External Consultants
term sustainability of the business. The Bank used external consultants for some small updates to its
remuneration process during the year and for generation of suitable
BARC Role and Focus reports for the BARC.
The BARC has oversight of all reward policies for the Group’s
employees. The BARC is the supervisory and governing body for Scope of Application of the Remuneration Policy
compensation policy, practices and plans. It is responsible for setting The remuneration policy has been adopted on a Group-wide basis.
the principles and governance framework for all compensation
decisions. The BARC ensures that all persons must be remunerated Board Remuneration
fairly and responsibly. The remuneration policy is reviewed on a The Board of Directors’ remuneration is determined in line with the
periodic basis to reflect changes in market practices, the business provisions of Article 188 of the Bahrain Commercial Companies Law,
plan and risk profile of the Group. 2001. Board remuneration is subject to approval of the shareholders
in the Annual General Meeting. Remuneration of non-executive
The responsibilities of the BARC with regard to the Group’s variable Directors does not include performance-related elements such
remuneration policy, as stated in its mandate, include, but are not as grants of shares, share options or other deferred stock-related
limited to: incentive schemes, bonuses or pension benefits.
• Approving, monitoring and reviewing the remuneration system to
ensure the system operates as intended;
Variable Remuneration for Staff
Variable remuneration is performance related and consists
• Approving the remuneration policy and amounts for each
primarily of the annual performance bonus award. As a part of the
Approved Person and Material Risk Taker, as well as total
staff’s variable remuneration, the annual bonus rewards delivery
variable remuneration to be distributed, taking account of total
of operational and financial targets set each year, the individual
remuneration including salaries, fees, expenses, bonuses and other
performance of the employees in achieving those targets, and their
employee benefits;
contribution to delivering the Group’s strategic objectives.
• Ensuring remuneration is adjusted for all types of risks and that
the remuneration system takes into consideration employees who The Group has adopted a Board-approved framework to develop a
earn the same short-run profit but take different amounts of risk transparent link between variable remuneration and performance.
on behalf of the Group; The framework is designed on the basis of both meeting satisfactory
financial performance and the achievement of other non-financial
• Ensuring that, for Material Risk Takers variable remuneration forms
factors that will, all other things being equal, deliver a target bonus
a substantial part of their total remuneration;
pool for employees, prior to consideration of any allocation to
• Reviewing the stress testing and back testing results before business lines and employees individually. In the framework adopted
approving the total variable remuneration to be distributed, for determining the variable remuneration pool, the BARC aims to
including salaries, fees, expenses, bonuses and other employee benefits; balance the distribution of the Group’s profits between shareholders
• Carefully evaluating practices by which remuneration is paid for and employees.
potential future revenues whose timing and likelihood remain
Key performance metrics at the Group level include a combination of
uncertain; the BARC will question pay-outs for income that cannot
short-term and long-term measures, and include profitability, solvency,
be realised or whose likelihood of realisation remains uncertain at
liquidity and growth indicators. The performance management process
the time of payment;
ensures that all goals are appropriately cascaded down to respective
• Ensuring that, for approved persons in risk management, internal business units and employees.
audit, operations, finance and compliance functions, the mix of
fixed and variable remuneration is weighted in favour of fixed In determining the amount of variable remuneration, the Group
remuneration; starts from setting specific targets and other qualitative performance
measures that result in a target bonus pool. The bonus pool is then
• Recommending Board members’ remuneration based on their
adjusted to take account of risk the use of risk-adjusted measures
attendance and performance, and in compliance with Article 188
(including forward-looking considerations).
of the Bahrain Commercial Companies Law; and
• Ensuring appropriate compliance mechanisms are in place to The BARC carefully evaluates practices by which remuneration is paid
make sure that employees commit themselves not to use personal for potential future revenues whose timing and likelihood remain
uncertain. The BARC demonstrates that its decisions are consistent

ANNUAL REPORT 2017
with an assessment of the Group’s financial condition and future processes, remuneration practices where potential future revenues
prospects. whose timing and likelihood remain uncertain are carefully evaluated.
The Group uses a formalised and transparent process to adjust Risk adjustments take into account all types of risk, including
the bonus pool for quality of earnings. It is the Group’s objective intangible and other risks such as reputation risk, liquidity risk and
to pay bonuses out of realised and sustainable profits. If the quality the cost of capital. The Group undertakes risk assessments to review
of earnings is not strong, the profit base may be adjusted at the financial and operational performance against business strategy and
discretion of the BARC. risk performance prior to distribution of the annual bonus. The Group
ensures that total variable remuneration does not limit its ability to
Funding for distribution of a bonus pool is dependent on threshold
strengthen its capital base. The extent to which capital needs to be
financial targets being achieved by the Group. The performance
built up is a function of the Group’s current capital position and its
measures ensure that total variable remuneration is generally
ICAAP.
considerably contracted where subdued or negative financial
performance of the Group occurs. Furthermore, the target bonus The bonus pool takes into account the performance of the
pool, as determined above, is subject to risk adjustments in line with Group, which is considered within the context of the Group’s risk
the risk assessment and linkage framework. management framework. This ensures that the variable pay pool is
shaped by risk considerations and Group-wide notable events.
Remuneration of Control Functions
The size of the variable remuneration pool and its allocation within
The remuneration level of staff in the control and support functions
the Group takes into account the full range of current and potential
is maintained at a level, which enables the Group to attract and thus
risks, including:
employ qualified and experienced personnel in these functions. The
Group ensures that the mix of fixed and variable remuneration for a) The cost and quantity of capital required to support the risks taken;
control and support function personnel is weighted in favour of fixed b) The cost and quantity of the liquidity risk assumed in the conduct
remuneration. The variable remuneration of control functions is of business; and
based on function-specific objectives and is not determined by the
financial performance of the business areas they monitor. c) Consistency with the timing and likelihood of potential future
revenues incorporated into current earnings.
The Group’s performance management system plays a major role The BARC keeps itself abreast of the Group’s performance against
in deciding the performance of the support and control units on the the risk management framework. The BARC will use this information
basis of the objectives set for them. Such objectives are more focused when considering remuneration to ensure that returns, risks and
on non-financial targets that include risk, control, compliance remuneration are aligned.
and ethical considerations as well as the market and regulatory
environment, apart from value-adding tasks, which are specific to Risk Adjustments
each unit. The Group has an ex-post risk assessment framework, which is a
qualitative assessment to back-test actual performance against prior
Variable Compensation for Business Units
risk assumptions. In any year where the Group suffers material losses
The variable remuneration of the business units is primarily determined
in its financial performance, the risk adjustment framework will work
by key performance objectives set through the performance
as follows:
management system of the Group. Such objectives contain financial
and non-financial targets, including risk control, compliance and • There will be considerable contraction of the Group’s total variable
ethical considerations, as well as market and regulatory requirements. remuneration;
The consideration of risk assessments in the performance evaluation • At an individual level, poor performance by the Group will mean
of individuals ensures that any two employees who generate the individual KPIs are not met and hence employee performance
same short-run profits but take different amounts of risk on behalf of ratings will be lower;
the Group are treated differently by the remuneration system.
• Reduction in the value of deferred shares or awards;
Risk Assessment Framework • Possible changes in vesting periods and additional deferral applied
The purpose of risk linkages is to align variable remuneration to to unvested rewards;
the risk profile of the Group. In its endeavour to do so, the Group • Lastly, if the qualitative and quantitative impact of a loss incident
considers both quantitative measures and qualitative measures in the is considered significant, a malus or clawback of previous variable
risk assessment process. The risk assessment process encompasses awards may be considered.
the need to ensure that the remuneration policy as designed
The BARC, with the Board’s approval, can rationalise and make the
reduces employees’ incentives to take excessive and undue risks, is
following discretionary decisions:
symmetrical with risk outcomes and delivers an appropriate mix of
remuneration that is risk aligned. • Increase/reduce the ex-post adjustment;
The BARC considers whether the variable remuneration policy • Consider additional deferrals or increase in the quantum of non-
is in line with the Group’s risk profile and ensures that, through cash awards;
the Group’s ex-ante and ex-post risk assessment framework and • Recovery through malus and clawback arrangements.

Malus and Clawback Framework

The Group’s malus and clawback provisions allow the Board of
Directors to determine that, if appropriate, unvested elements under
the deferred bonus plan can be forfeited/adjusted or the delivered
variable remuneration recovered in certain situations. The intention
is to allow the Group to respond appropriately if the performance
factors on which reward decisions were based turn out not to reflect
the corresponding performance in the longer term. All deferred
compensation awards contain provisions that enable the Group to
reduce or cancel the awards of employees whose individual behaviour
has had a materially detrimental impact on the Group during the
relevant performance year.
Any decision to take back an individual’s award can only be made by
the Board of Directors.
The Group’s malus and clawback provisions allow the Board to
determine that, if appropriate, vested/unvested elements under the
deferred bonus plan can be adjusted/cancelled in certain situations.
These events include the following:
• Reasonable evidence of wilful misbehaviour, material error,
negligence or incompetence of the employee causing the Group/
employee’s business unit to suffer material loss in its financial
performance, material misstatement of the Group’s financial
statements, material risk management failure or reputational loss
or risk due to such employee’s actions, negligence, misbehaviour
or incompetence during the relevant performance year.
• The employee deliberately misleads the market and/or shareholders
in relation to the financial performance of the Group during the
relevant performance year.
• Clawback can be used if the malus adjustment on the unvested
portion is insufficient given the nature and magnitude of the issue.

ANNUAL REPORT 2017
Components of Variable Remuneration
Variable remuneration has the following main components:
Upfront cash The portion of the variable compensation that is awarded and paid out in cash on conclusion of the performance evaluation
process for each year
Deferred Cash The portion of variable compensation that is awarded and paid in cash on a pro-rata basis over a period of 3 years
Up front share awards The portion of variable compensation that is awarded and issued in the form of shares on conclusion of the performance
evaluation process for each year
Deferred shares The portion of variable compensation that is awarded and paid in the form of shares on a pro-rata basis over a period of 3 years
All deferred awards are subject to malus provisions. All share awards are released to the benefit of the employee after a six-month retention
period from the date of vesting. The number of equity share awards is linked to the Group’s share price as per the rules of the Group’s Share
Incentive Scheme. Any dividend on these shares is released to the employee along with the shares (i.e. after the retention period).
Deferred Compensation
All employees earning over BHD100 thousand or equivalent, in total compensation shall be subject to deferral of variable remuneration as follows:
Element of variable remuneration Deferral Deferral period Retention Malus Clawback

Upfront cash 40% Immediate - - Yes
Upfront shares - Immediate 6 months Yes Yes
Deferred cash 0% Over 3 years - Yes Yes
Deferred share awards 60% After 3 years 6 months Yes Yes
The BARC, based on its assessment of role profile and risk taken by an employee, may increase the coverage of employees that are subject to
deferral arrangements.
Details of remuneration paid
a) Board of Directors
US$ ‘000
2017 2016
Sitting Fees 246 475
Remuneration 1,500* 1,500
Other 100 221
The category ‘Other’ includes the reimbursement of air fares and payment of per diem allowances for attending Board of Directors and Board
Committees’ meetings.
*To be approved by AGM in March 2018.
b) Employee Remuneration
Total fixed remuneration for Approved Persons and Material Risk Takers affected by the policy amounted to US$4,644 thousand (2016: US$3,696
thousand) and the number of persons affected: 12 (2016:9).
The total variable remuneration for 2017 was US$2,569 thousand (2016: US$2,886 thousand).
c) Deferred Awards
Selected members of management in ABG’s subsidiaries are entitled to deferred variable remuneration under a Management Incentive
Programme based on pre-defined objectives and thresholds of performance. Annual amounts of such variable remuneration, in accordance
with the said programme, are used to purchase shares in ABG, which purchases are deferred over a three year period, with annual vesting. Total
amounts of deferred variable remuneration amounted to US$3,853 thousand (2016: US$4,329 thousand).
d) Severance Pay – Nil (2017-2016)

(1) Employee remuneration
Details of Remuneration Paid For the Financial Year Ended 2017

Total
Categories of Employees No. Fixed Remuneration (US$ ’000) Variable Remuneration (US$ ’000) (US$ ’000)
Other Deferred
Other Performance Performance Performance Compensation
Salaries Benefits & Bonuses Bonuses Linked paid during the
and Wages Allowances Total (in Cash) (in Shares) Incentives period Others Total
Employees engaged in risk taking

activities (business areas) 2 1,829 768 2,597 2,083 3,124 - - - 5,207 7,804
Employees, other than approved
persons, engaged
in functions under 3. 10 2,815 868 3,683 486 729 - - - 1,215 4,898
Total 12 4,644 1,636 6,280 2,569 3,853 - - - 6,422 12,702
Details of Remuneration Paid For the Financial Year Ended 2016

Total
Categories of Employees No. Fixed Remuneration (US$ ’000) Variable Remuneration (US$ ’000) (US$ ’000)
Other Deferred
Other Performance Performance Performance Compensation
Salaries and Benefits & Bonuses Bonuses Linked paid during the
Wages Allowances Total (in Cash) (in Shares) Incentives period Others Total
Employees engaged in
risk taking activities
(business areas) 2 1,748 433 2,181 2,435 3,652 - - - 6,087 8,268
Employees, other than approved
persons, engaged
in functions under 3. 7 1,948 630 2,578 452 677 - - - 1,129 3,707
Total 9 3,696 1,063 4,759 2,886 4,329 - - - 7,216 11,975
(2) Deferred awards
2017
Shares
Cash (US$ ’000) Number (’000) (US$ ’000) Others (US$ ’000) Total (US$ ’000)
Opening balance - 15,556 7,871 - 7,871
Awarded during the period - 10,275 3,853 - 3,853
Paid / released during the period - - - - -
Service in value unvested opening awards - - - - -
Closing balance - 25,830 11,724 - 11,724
2016
Shares
Cash (US$ ’000) Number (’000) (US$ ’000) Others (US$ ’000) Total (US$ ’000)
Opening balance - 6,721 3,542 - 3,542
Awarded during the period - 8,835 4,329 - 4,329
Paid / released during the period - - - - -
Service in value unvested opening awards - - - - -
Closing balance - 15,556 7,871 - 7,871

ANNUAL REPORT 2017
RISK MANAGEMENT A consolidating system for the calculation of capital adequacy, taking
The Group is committed to complying with internationally into account credit, market and operational risk, all in accordance
established principles and policies in relation to risk management. In with Basel III requirements, is in operation. This allows Head Office
particular the Group fully subscribes to the guiding principles of risk to retrieve data automatically. Furthermore, operational risk systems
management for Islamic financial services institutions set down by in each Subsidiary ensure a consistent approach to operational risk.
the Islamic Financial Services Board and the need for a comprehensive The Group has continued to maintain momentum towards achieving
risk management and reporting process. optimal risk management policies, practices and procedures, pursuing
ABG’s Head of Credit and Risk Management is responsible for five key objectives:
formulating and monitoring the Group’s policies relating to all • Continuous improvement in credit and risk management practices
aspects of risk, developing the framework for risk measurement and intensified efforts on collections, recoveries and settlement of
and coordinating with the Group subsidiaries all necessary steps for outstanding debts to bring about resilient asset quality in face of
adhering to the requirements of Basel III and, where and when still increased challenges in some of the Group’s markets.
applicable, Basel II, under the Central Bank of Bahrain (CBB) rules. He is
• All subsidiaries ensure that their NPA provisioning policies are in
also responsible for introducing and implementing risk measurement
line with both Group policies and local regulatory requirements.
software, monitoring the Group’s compliance with risk measurement
standards and providing the Risk Committee of the Board of Directors • Subsidiaries continue to strive to ensure a high degree of
and Group management with reports on the various risks. cooperation between their business arms and risk management
departments. Hiring and training of credit and risk management
Risk management is an integral part of the Group’s decision making staff is an ongoing priority in each unit.
process. The Board of Directors, acting on recommendations made
• Each subsidiary has an approved Credit and Risk Management
by the Board Risk Committee defines and sets the Group’s overall
Manual, covering all relevant risks to which it is subject, which
risk appetite, risk diversification and asset allocation strategies.
accords with Group policies and procedures.
This includes the policies regarding related party transactions, their
reporting and approval. The Management Risk Committee and • All subsidiaries submit timely quarterly risk management reports
other executive committees guide and assist with management of to Head Office, which fully meet regulatory requirements. The
the Group’s balance sheet risks. The Group manages exposure by contents of these reports are continuously expanded in order to
setting limits approved by the Board of Directors or under delegated provide Head Office with increasingly comprehensive data.
authorities by committees of the management. Risk policies and A standard risk management framework has been established across
processes to mitigate the risks are regularly reviewed. the Group, reflected in operational manuals that closely adhere to
Group policy regarding all the major categories of risk that the Group
The Group’s risk management has the following objectives:
faces when carrying out its business. These are: Credit, Liquidity,
a. unified Group-wide risk management with the ultimate aim of Market (including Equity Price, Profit Rate and Foreign Exchange risk),
enabling the Group to calculate risk-adjusted return on capital; Operational (including Fraud Risk and Information Security Risk) and
Shari’a Compliance risks. Each of these major risks is discussed below.
b. inculcation of a professional risk management culture throughout
the Group with a prudent, disciplined approach to risk-taking based Credit Risk
on comprehensive Group-wide policies, processes and limits;
Credit risk is the risk that one party to a financial contract will fail to
c. professionally qualified staff and ongoing credit training; discharge an obligation and cause the other party to incur a financial
loss. It applies to the Group in its management of the financing
d. investing in technology and systems enabling best practice risk exposures arising out of receivables and leases (for example,
management; Murabaha and Ijarah) and working capital and other financing
e. throughout the Group, strict segregation of duties and reporting transactions (Salam, Istisna’a, Musharaka or Mudaraba).
lines between personnel transacting business and personnel Each Group subsidiary has in place a framework for credit risk
processing that business; management that includes identification, measurement, monitoring,
f. strict compliance with all Shari’a and legal requirements and reporting and control of credit risks. Each subsidiary controls credit
regulatory directives; and risk through the process of initial approval and granting of credit,
subsequent monitoring of counterparty creditworthiness and the
g. maintaining clear, well documented policies via a “Group active management of credit exposures. Authority to approve credits
Credit and Risk Policies and Guidelines Manual” and credit and is delegated by the subsidiary’s Board of Directors to committees
risk management manuals in each of the subsidiaries, which entrusted with the task of credit assessment and evaluation, under
incorporate the policies and guidelines of the Group in addition to specific credit policies and operational procedures in place in that
the local requirements. subsidiary.
Each of ABG’s subsidiaries is governed by its respective Board of
Directors. Group subsidiaries follow documented credit policies and
procedures which, as stated above, reflect Group-wide policies and so
ensure that sound risk management is in place in all ABG’s subsidiaries.

Mitigation of credit risk is chiefly achieved through obtaining various Profit Rate Risk or Rate of Return Risk
forms of collateral if this is deemed necessary. Profit rate risk or rate of return risk is the risk that the Group will
Each subsidiary maintains an internal audit department responsible incur a financial loss as a result of a mismatch in the profit rate on
for carrying out reviews of credit exposures to counterparties, the Group’s assets and unrestricted investment accounts. The Group
and assessing their quality and adherence to laid down approval is not liable to pay any predetermined returns to investment account
procedures. Each subsidiary also maintains policies and procedures holders, although it does apply appropriate income smoothing
covering “single obligor large exposures” and case-by-case approvals techniques to ensure that profits are fairly distributed to the
of “related party transactions”. investment account holders.
During the year ABG and its Subsidiaries made all necessary Foreign Exchange Risk
preparations including acquiring credit rating and other systems and Foreign exchange rate risk arises from the movement of currency
revising credit policies and procedures for introduction of the new exchange rates over a period of time, leading to an adverse impact on
FAS 30 Accounting Standard of AAOIFI on January 1, 2018. the Group’s earnings or shareholders’ equity. The Group is exposed to
foreign exchange rate risk in that the value of a financial instrument,
Liquidity Risk or its net investment in its foreign subsidiaries, may fluctuate due to
Liquidity risk is the risk that the Group will be unable to meet its changes in foreign exchange rates. The Group’s significant net foreign
payment obligations when they fall due under normal or stressed currency exposures as at 31 December 2017 are detailed in Note 28
circumstances. to the Financial Statements.
ABG and its subsidiaries each has in place a liquidity management Operational Risk
framework, taking into account its liquidity exposures in respect of its
Operational risk is the risk of financial loss or damage resulting from
current and savings accounts, deposits from banks and other financial
inadequate or failed internal processes, people and systems or from
institutions, and its restricted and unrestricted investment accounts.
external events.
This ensures that it maintains liquid assets at prudential levels so
that cash can quickly be made available to honour all its obligations. Management of risk associated with carrying out the Group’s
Liquidity management also recognises the impact of potential cash operations is through internal procedures and monitoring and control
outflows arising from irrevocable commitments to fund new assets, mechanisms, while management of legal risk is through effective
as well as the potential risk impact of withdrawals by large single consultation with internal and external legal counsel. Other kinds of
depositors, ensuring that ABG does not rely excessively on one operational risk are managed by ensuring that trained and competent
customer or small group of customers. In addition to its own internal people – and appropriate infrastructure, controls and systems – are
liquidity management policies, each subsidiary is further required in place to ensure the identification, assessment and management of
to maintain cash deposits with its respective central bank equal all substantial risks.
to a percentage of its deposits as directed by that central bank –
The Group is also exposed to risks relating to its fiduciary
in most cases 20%. ABG additionally holds liquid funds which are
responsibilities towards fund providers. Fiduciary risk arises from
earmarked and available for its subsidiaries in the unlikely event
the failure to perform in accordance with explicit and implicit
that they should require assistance. Liquidity management reporting
standards applicable to an Islamic bank’s fiduciary responsibilities,
conforms to all local regulations.
leading to losses in investments or failure to safeguard the interests
Equity Price Risk of the investment account holders. Group subsidiaries have in place
Equity price risk is the risk that the fair value of equities decreases appropriate mechanisms to safeguard the interests of all fund
as a result of changes in the levels of equity indices and the value of providers. Where investment account holders’ funds are commingled
individual stocks. with an ABG subsidiary’s own funds, the respective subsidiary ensures
that the basis for asset, revenue, expense and profit allocations are
Each Group subsidiary has in place appropriate strategies, risk management established, applied and reported in a manner consistent with the
and reporting processes in respect of the risk characteristics of equity Group’s fiduciary responsibilities.
investments, including Mudaraba, Musharaka and other investments.
Based on Group policies, each subsidiary ensures that its valuation
methodologies are appropriate and consistent, and assesses the
potential impact of its methods on profit calculations and allocations
mutually agreed between that subsidiary and its partners. Further,
each subsidiary has defined and established appropriate exit
strategies and risk management and reporting processes in respect of
its equity investment activities.

ANNUAL REPORT 2017
As mentioned above, Group policy dictates that the operational CAPITAL MANAGEMENT/CAPITAL ADEQUACY
functions of booking, recording and monitoring transactions are Capital is managed at ABG with a view to meeting the capital
carried out by staff independent of the staff initiating the transactions. maintenance requirements directed by the CBB and achieving
Group subsidiaries have primary responsibility for identifying and optimum utilisation in the course of carrying out its business, in
managing their own operational risks. Each subsidiary is guided by accordance with its predetermined risk appetite and intended risk
policies, procedures and controls that are relevant for each function. profile, and with the ultimate aim of maximising shareholders’
Internal control policies and procedures dictate the segregation of returns. Capital management includes pro-actively making
duties, delegation of authorities, exceptions reporting, exposures appropriate and necessary adjustments to reflect changes in the
management and reporting, and reconciliations, and are based on the economic environment or in the degree or nature of risk associated
submission of timely and reliable management reporting. with the Group’s activities, including adjustment to its dividend
Separate and independent Internal Control units carry out ongoing policy, issue of Tier 1 or Tier 2 securities by way of public issue or
monitoring of day-to-day procedures and ensure adherence to key private placement, etc.
control functions. Optimum capital management, therefore, addresses such crucial
issues as:
Information Security (Cyber Security) Risk
The Group continued with enhancing management of information • ensuring that adequate capital is held at all times to meet
security (cyber security) risk in 2017. It has assessed the risks, unexpected calls occasioned by such events as sudden withdrawals
identified controls and is implementing solutions. The Group already by depositors, earlier than expected drawdown of facilities, or
has comprehensive IT security policy and procedures, which are in unexpected losses;
line with leading industry practices. The Information Security Risk • achieving the Group’s return on capital objectives;
Management Committee at Head Office met regularly in 2017 • meeting capital adequacy ratio targets and regulatory imperatives;
and continued implementing a new Information Risk Management and
Framework and Group Policy and Guidance.
• maintaining the Group’s strong credit rating.
Compliance Risk The Group’s capital adequacy ratio as at 31 December 2017
Compliance risk is defined as the risk of legal or regulatory sanctions, was 17.27%, comfortably above the CBB’s minimum regulatory
material or financial loss or loss to reputation a bank may suffer as a requirement of 12.5% (including CCB of 2.5%).
result of its failure to comply with laws, regulations, rules, reporting
Each of ABG’s banking subsidiaries is directly regulated by its own
requirements, codes of conduct and standards. The landscape for
home regulator, which stipulates a minimum capital adequacy ratio
compliance has changed substantially in recent years. As a result,
for that subsidiary. ABG ensures that each subsidiary adheres to
ABG and its subsidiaries are continuously enhancing their compliance
these local capital adequacy requirements.
risk management framework. Please refer to separate section on
Group Compliance function. INFORMATION TECHNOLOGY
Shari’a Compliance Risk The Head Office IT Steering Committee governs and supports IT
strategies, policies, projects and initiatives across all ABG subsidiaries,
Shari’a compliance risk arises from the failure to comply with the rules
and ensures that they are consistent with the Group’s strategic aims
and principles of Shari’a and, in this respect, is akin to reputation risk.
as well as each subsidiary’s local strategy. The Group’s short, medium
It also includes the risk of legal or regulatory sanctions that the Group
and long-term IT strategies are now well established, standardised
or its subsidiaries may suffer as a result of failure to comply with
around a few carefully chosen core banking solutions that have been
laws and regulations. As mentioned above, the Group has in place a
successfully implemented across all ABG subsidiaries. The Head
Compliance Policy that provides for the assessment of compliance
Office IT Steering Committee monitors the Group’s IT strategy,
risks, the implementation of appropriate controls, monitoring of
updating it periodically to make sure it can enable ABG’s strategic
effectiveness, and correction and eradication of exceptions. Group
objectives.
subsidiaries have in place systems and controls, including their
respective Shari’a Supervisory Boards, to ensure compliance with all ABG’s web-based financial consolidation and reporting solution
Shari’a rules and principles. In accordance with CBB regulations and measures corporate performance against key performance indicators
AAOIFI Standards, the Group has been certified by the Unified Shari’a based on the Group’s strategic objectives. It is used to set benchmarks
Supervisory Board to be in compliance with Shari’a Standards and for each subsidiary and to monitor their performances continuously.
Principles. This tool captures data from each subsidiary in its local currency
and performs monthly, quarterly and annual consolidations in US
dollars. In this way, it enables the collection, processing, reporting
and analysing of data from across the various subsidiaries.

All of the Group subsidiaries have implemented core banking systems

selected from a list approved by Head Office, so meeting central
bank requirements for greater automation. The subsidiaries are now
introducing satellite systems in areas such as risk management, cyber
security, internet and mobile banking as well as many other areas.
Following the merger of Al Baraka Bank (Pakistan) Ltd and Burj Bank
Ltd in Pakistan, the two banks have started the process of adopting
one banking system as part of their integration. Broadly speaking,
the new core banking systems reduce the time to market for retail
products and campaigns. They also increase automation, leading to
greater effectiveness and efficiency.
The Head Office IT Steering Committee is working with subsidiaries
to introduce systems that automate the process of complying
with international anti-money laundering and know-your-client
regulations, as well as the Foreign Account Tax Compliance Act
(FATCA). These systems also screen transactions against the Office
of Foreign Assets Control (OFAC) sanctions list.
Each subsidiary has a disaster recovery centre, which is tested and
audited at least once a year. The Group is working towards a unified
standard of business continuity and disaster recovery, helping all
subsidiaries to adopt best practices.
A Group-level cyber security committee was set up in 2016 to
make sure that the Group and its subsidiaries have the right
people, technology and policies to guard against cyber frauds or
attacks. The cyber security committee has completed gap analysis
of information security framework in the units and is now working
with the individual units to ensure that gaps in information security
framework are rectified.

ANNUAL REPORT 2017
Sustainability and Social Responsibility
As an Islamic bank, Al Baraka Banking Group (ABG) conducts all its together, they reap the benefits of the investments. The essential
business in a sustainable and socially responsible manner. Making a difference in Islam is that the practice of profit sharing is such that
positive, sustainable impact is part of the Group’s philosophy and a wealth creation is the result of a partnership between investors
strategic business goal. and entrepreneurs. Both the risks and the rewards are shared:
returns on invested capital are based on profits actually generated
The concept of Sustainability and Social Responsibility (SSR) fits
rather than predetermined interest rates.
naturally with the business ethics of Islam and, therefore, with ABG’s
foundation philosophy and vision. 3. All contracts entered by ABG’s banking subsidiaries, and all their
relations with businesses and depositors, must comply with the
Islam and SSR ethical standards of the Shari’a.
Our philosophy is that Allah grants mankind the capacity to inherit
the land on this earth and, therefore, that mankind is not the owner The Al Baraka Sustainability and Social Responsibility Programme
of wealth but is entrusted with it. As the purpose of mankind is to In 2012, ABG established the “Al Baraka Social Responsibility
construct, embellish and build on this earth, we are therefore ordained Programme”, the first such programme to be introduced by any
to create opportunities for others. Thus, the wealth bestowed upon us Islamic banking and financial services institution. In 2017, the
must be invested in creating the wealth and opportunities in society. program has been renamed to “Al Baraka Sustainability and Social
Responsibility programme”.
As members of a banking group founded on Islamic principles and
values, we at Al Baraka believe that we have an obligation to society, The programme includes the following activities:
through patronage and sponsorship of a wide range of social projects, 1. Assessing the social impact of ABG’s business at the local and
to enhance the living conditions and quality of life of needful transactional levels.
individuals in the local communities where we operate. In making
2. Investing in and supporting socially responsible and sustainable
this commitment to society we strive to apply one of the important
businesses.
philosophical pillars of Islamic banking: the concept of E’mar Al Ardh–
3. Supervising and monitoring development of the Al Baraka
construction, or development, of land – which means adding tangible
Microfinance Programme.
value to assets (whether natural or human).
4. Supporting local economies.
This concept has a direct relevance to the development of society 5. Supporting healthcare projects and education.
and its social and economic progress. The Group seeks to apply it
6. Promoting Islamic classical arts and literature.
through active investment mediation, which complements real and
7. Promoting scholarly works of Islamic banking and finance.
value-added production, and through the exchange of commodities
and services, which enables us to offer practical alternatives to those 8. Investing in people.
financial intermediaries that provide no benefit to society at large. 9. Nurturing and encouraging local talent.
10. Promoting programmes that protect the environment by adopting
Sustainability and social responsibility is fundamental to the Group’s
various conservation strategies, such as carbon mitigation,
business model in all the countries where it operates. All the subsidiaries
reduction of paper usage, energy and water conservation.
embrace Islamic ethical principles and apply them to their banking
operations and services. Governance
A Board Committee for Sustainability and Social Responsibility
Three guiding principles oversees the AlBaraka Sustainability and Social Responsibility
These principles may be summarised as: Programme and the Department of Sustainability and Social
1. Investments may only be made in sectors and industries that meet Responsibility, which is also overseen directly by the President and CE.
ethical standards. The moral values of Islam dictate that Muslims The Department’s role is to:
must only invest in the production of, and trade in, useful and 1. Maintain the continuity of the Al Baraka Sustainability and
beneficial goods. They, therefore, forbid investment activities such Social Responsibility Programme, and update it with the most
as the production of alcoholic beverages, tobacco or weapons; or recent international research and popular strategies to enhance
those associated in any way with gambling, pornography or the Shari’a objectives.
abuse of children, women and minorities; or any other morally
2. Manage and supervise the Group’s implementation of the
questionable practices.
programme.
2. All Islamic banks and financial institutions eschew the payment 3. Ensure that the programme continues to set best practice within
of interest to depositors, consumers and businesses, as Islam the Islamic banking and finance industry, by conducting Shari’a
prohibits the paying or charging of interest. Instead ABG’s and economic analysis on the subject.
banking subsidiaries, like all Islamic banks, accept deposits on an 4. Provide appropriate guidance for the programme’s implementation.
investment basis whereby depositors share with the bank in the 5. Compile, consolidate and publish annual and periodic social
actual results of the realisation of their investments. Financing is responsibility reports.
provided to businesses in turn mainly based on instalment sale,
6. Develop and update procedures that may result in enhancing the
leasing or equity participation. In this way, ABG’s subsidiaries
adequacy and effectiveness of the programme at Group level.
and their depositors share financial risk with entrepreneurs and,

Sustainability and Social Responsibility (Continued)
7. Exercise all powers needed to achieve the programme’s objectives and clean energy (SDG 7), decent work and economic growth (SDG 8),
and to remain consistent with the Committee’s rationale. industry innovation and infrastructure (SDG 9).
8. Coordinate with other local and international social responsibility
In total, the Group pledged to contribute over US$635 million over
programmes.
the five years towards the Al Baraka Goals (2016-2020). It plans
A detailed report of the Group’s activities and progress in the area of to do so through job creation, healthcare financing and donation,
Sustainability and Social Responsibility is posted on the ABG website. education financing and donation, and other initiatives that support
Furthermore, a report covering progress over the past year will be the development of communities by actively using its financing
available annually on that website. Each of ABG’s subsidiaries will operations towards these goals.
also produce an annual report of its activities in this area, which will
During 2017, Al Baraka carried out a full impact assessment of the
similarly be available on their individual websites.
progress in 2016 against the 2016-2020 goals. Al Baraka has exceeded
all the 2016 targets of Al Baraka Goals (reporting lags by a year due to
Activities
the time taken to collect reporting data). In 2016, the Group achieved
The Al Baraka Sustainability and Social Responsibility Programme is
the following:
based on the following four pillars:
• Helped to create 14,535 jobs, 42% ahead of the 2016 target.
1. Al Baraka Philanthropic Programme: covering the promotion
• Helped to achieve US$41,596,059 of education funding / financing,
and funding of a broad spectrum of activities including the arts,
8% ahead of the 2016 target.
literature and culture, scholarly and literary works, and activities
aimed at aiding people with special needs and facilitating them • Helped to achieve US$96,826,507 of healthcare funding/financing,
in their own efforts through vocational training. 11% ahead of the 2016 target.
2. Al Baraka Economic Opportunities & Social Investments Programme: Credit approval process and Sustainability and Social
covering community development including financing and investments Responsibility
in projects supporting affordable housing and a spectrum of healthcare
We have developed an internal mechanism to ensure that our entire
and related activities, micro, small and medium-sized enterprises,
business model remains sustainable and socially responsible. We have
local and other industries.
added new procedures to our credit approval process as a result of
3. Al Baraka Qard-Hassan Programme: covering benevolent loans which we will not only encourage our existing customers to adopt
extended on a charitable or goodwill basis. the Al Baraka Sustainability and Social Responsibility Priorities, but
4. Al Baraka Time Commitment Programme: ABG units commit we will also give preference to working with such new customers who
a certain number of hours of their officers’ time in social and are equally committed to consistently adding more value to their
educational contributions to the local community. respective communities.
Al Baraka’s target is to make all our businesses sustainable and socially The future
responsible. As far as possible, we measure our progress. However, in When ABG signed up to the UN Global Compact in 2016, it set out
some areas we are still developing the right tools to do so. Based a path for the future in line with the Al Baraka Goals 2016-2020.
on the existing measurement tools, Al Baraka’s overall Sustainability Given that our business model is uniquely tailored around adding
and Social Responsibility Programme contributed US$6,021 million economic value to the communities that we serve, our contribution
in 2016 to communities in financing and donation. This was a (and as a result our economic value-added contribution to society)
significant increase on the previous year’s reported contribution due will increase in line with our growth. We hope that our example will
to a widening of reporting parameters to include for the first time kick-start a trend in the Islamic banking industry.
the economic opportunities and social investments programme in Al
Baraka Türk Participation Bank, our largest subsidiary.
Al Baraka Goals 2016-2020

The Group decided in 2016 to take our Social Responsibility
Programme to yet another level. We plan to integrate specific targets
and priorities for the next five years. Accordingly, by 2020 we would
like to impact the communities we operate in by:
• Creating 51,000 jobs across the countries where the Group operates
as a result of financing new and existing customers’ operations.
• Financing and supporting over US$191 million of educational projects.
• Financing and supporting over US$434 million of healthcare projects.
The Al Baraka Goals are directly linked to the UN Global Goals for
Sustainable Development (SDGs). In particular, our targets are focused
on the following SDGs: no poverty (SDG 1), good health and well-being
(SDG 3), quality education (SDG 4), gender equality (SDG 5), affordable

ANNUAL REPORT 2017
Unified Shari’a Supervisory Board Report
For the year ended 31 December 2017
In the name of Allah, The Beneficent, The Merciful, Ever Merciful The Units’ Shari’a Supervisory Boards, as is clear from their reports,
planned and performed reviews so as to obtain all the information
Praise be to Allah and peace be upon our Prophet Mohamed, His and explanations they considered necessary in order to provide them
Apostles and Companions with sufficient evidence to provide reasonable assurance that the
To: Al Baraka Banking Group Shareholders Group and its Units have not violated Shari’a Rules and Principles.
May peace and Allah’s Mercy and Blessings Be upon You In our opinion:
1. The Contracts, transactions and dealings entered into by the
In accordance with Article (58) of the Articles of Association of Group and its Units during the year ended 31 December 2017
Al Baraka Banking Group, we are required to submit the following are made in compliance with Shari’a Rules and Principles.
report:
2. The allocation of profit and charging of losses relating to
First: investment accounts conform to the basis that have been
We have conducted six meetings during 2017 in which we studied approved by the Units’ Shari’a Supervisory Boards in accordance
Shari’a audit reports prepared by the Group’s Shari’a Audit for the year with Shari’a Rules and Principles.
ended 31 December 2017 and gave few Shari’a related comments 3. All earnings realized from sources or by means prohibited by
on those reports. These reports were rectified through coordination Islamic Shari’a Rules and Principles have been committed by the
between Shari’a Audit and the relative local subsidiaries’ Shari’a Management to dispose it off to Charitable Causes.
Boards. In addition, the Unified Shari’a Supervisory Board replied to
requests for fatwa from the Group and subsidiaries and studies the 4. The attached Zakah calculation was prepared in accordance with
contracts entered into by the Group during the year 2017. the provisions and principles of Islamic Shari’a according to the
Net Invested Fund Method in accordance to the Shari’a Standard
Second: number (35) and the Financial Accounting Standard number (9)
We have reviewed the principles applied by the Group and reviewed issued by the Accounting and Auditing Organization for Islamic
the 2017 Shari’a reports issued by the Group Units’ Shari’a Supervisory financial Institutions and according to what was approved by the
Boards. We have also reviewed their financial statements when Unified Shari’a Supervisory Board.
needed. In addition, we examined the Group’s financial position as
As the General Assembly in its annual meeting conducted on 20
of 31 December 2017 and Statement of Income and their notes for
March 2017 empowered the Executive Management of Al Baraka
the year then ended. We have queried from some of the Technical’s
Banking Group to pay an amount of US$4,021 thousand as Zakah
on the points that need explanation and statement. We have also
on behalf of the shareholders deducted from the Retained Earnings
reviewed the process of calculating Zakah in accordance with the
for the financial year of 2016. The Group has paid and distributed
Shari’a Standard number (35) and the Financial Accounting Standard
an amount of US$3,688 thousand to those who’s entitled to
number (9) issued by the Accounting and Auditing Organization for
receive Zakah as per Shari’a boundaries and as approved by Unified
Islamic Financial Institutions and according to what was approved
Shari’a Board. The remaining amount of US$333 thousand has been
by Al Baraka Symposium1/31and by the Unified Shari’a Supervisory
allocated to be paid maximum by end of first quarter of 2018.
Board.
For the year 2018, the Group is not required to pay Zakah on behalf
Third: of the shareholders, unless there is a direct empowerment from the
The Group and Units’ management are responsible for the execution general assembly to the Group to pay Zakah on the behalf of the
and implementation of the Unified Shari’a Supervisory Board shareholders. Therefore if the shareholders have not empower the
resolutions and to bring to the attention of the Unified Shari’a Group to pay Zakah, the shareholders have to pay the Zakah related
Supervisory Board any transactions or issues that require Shari’a to their shares, which equal to US Cent 38.29 for each 100 shares . In
approval. The Unified Shari’a Supervisory Board is responsible for case of unavailability of such empowerment, then the shareholders
supervising the implementation of the resolution from a Shari’a should pay their share of Zakah as per the enclosed calculation. In
point of view and issue opinion based on the Group and Units’ Shari’a case of unavailability of liquidity, it is allowed to postpone the Zakah
reports and financial statements. and become debt until the liquidity become available.
The Unit’s Shari’a Supervisory Boards, as is clear from their report, Praise be to Allah
have supervised the Units’ business activities including examining on
test basis documentations and procedures applied by the Group and Issued on 24 Jumada Al-ULA 1439 H, corresponding to 10 February
its Units. 2018 AD.
Chairman and Members
Shaikh Dr. Abdul Sattar Abu Ghuddah

Chairman
Shaikh Dr. Abdulla bin Sulaiman Al Mannea Shaikh Dr. Abdullatif Al Mahmood
Vice Chairman Member
Shaikh Dr. Abdulaziz Al Fawzan Shaikh Dr. Ahmed Mohiyeldin Ahmed

Member Member

Zakah Calculation for the year ended 31 December 2017
US$ ‘000
Equity Attributable to Shareholders 1,739,822
Less: Investment of the parent on the shareholding of Al Baraka Bank Egypt, Al Baraka Bank Sudan and
Itqan Capital (577,063)
Net Zakatable Equity Attributable to Shareholders 1,162,759
Less:
Musharaka underlined by unzakatable assets (170,730)
Investment in Islamic Sukuk underlined by unzakatable assets (103,939)
Ijarah Muntahia Bittamleek (359,922)
Long-term investment in real estate (20,751)
Properties and equipment (259,689)

Intangible assets (75,408)
Investment in Associates (35,071)
Prepayments (16,727)
Deferred tax asset (1,255)
Add:
Shareholders share on Zakatable Assets by Associates 16,928
Sale of long-term investment in real estate during the year 5,533
Deferred tax liability 777
Employees’ end of services benefit 35,319
Zakatable amount 177,824

Zakah Percentage 2.5775%
Total Zakah due 4,583
Number of Shares (thousands) 1,197,129
Zakah per share (US$ cents) 0.38

ANNUAL REPORT 2017
Independent Auditors’ Report to the Shareholders of
Al Baraka Banking Group B.S.C.
Report on the consolidated financial statements Report on other regulatory requirements

We have audited the accompanying consolidated statement of As required by the Bahrain Commercial Companies Law and the
financial position of Al Baraka Banking Group B.S.C. (“the Bank”) Central Bank of Bahrain (CBB) Rule Book (Volume 2), we report that:
and its subsidiaries (“the Group”) as of 31 December 2017, and the
a) the Bank has maintained proper accounting records and the
related consolidated statements of income, cash flows, changes in
consolidated financial statements are in agreement therewith;
owners’ equity and changes in off-balance sheet equity of investment
and
accountholders for the year then ended. These consolidated financial
statements and the Group’s undertaking to operate in accordance b) the financial information contained in the Report of the Board
with Islamic Shari’a Rules and Principles are the responsibility of the of Directors is consistent with the consolidated financial
Board of Directors. Our responsibility is to express an opinion on statements.
these consolidated financial statements based on our audit.
We are not aware of any violations of the Bahrain Commercial
We conducted our audit in accordance with Auditing Standards for Companies Law, the Central Bank of Bahrain and Financial Institutions
Islamic Financial Institutions issued by the Accounting and Auditing Law, the CBB Rule Book (Volume 2 and applicable provisions of
Organisation for Islamic Financial Institutions (“AAOIFI”). Those Volume 6) and CBB directives, regulations and associated resolutions,
standards require that we plan and perform the audit to obtain rules and procedures of the Bahrain Bourse or the terms of the Bank’s
reasonable assurance about whether the consolidated financial memorandum and articles of association having occurred during
statements are free of material misstatement. An audit includes the year ended 31 December 2017 that might have had a material
examining, on a test basis, evidence supporting the amounts and adverse effect on the business of the Bank or on its financial position.
disclosures in the consolidated financial statements. An audit also Satisfactory explanations and information have been provided to us
includes assessing the accounting principles used and significant by management in response to all our requests. The Bank has also
estimates made by management, as well as evaluating the overall complied with the Islamic Shari’a Rules and Principles as determined
consolidated financial statements presentation. We believe that our by the Shari’a Supervisory Board of the Group.
audit provides a reasonable basis for our opinion.
Opinion
In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Group as of
31 December 2017, the results of its operations, its cash flows,
Partner’s registration no. 45
changes in owners’ equity and changes in off-balance sheet equity
of investment accountholders for the year then ended in accordance 20 February 2018
with Financial Accounting Standards issued by AAOIFI. Manama, Kingdom of Bahrain

Consolidated Statement of Financial Position
At 31 December 2017
2017 2016
Notes US$ '000 US$ '000
ASSETS
Cash and balances with banks 3 5,430,085 5,073,418
Receivables 4 12,001,050 11,423,448
Mudaraba and Musharaka financing 5 2,377,654 1,582,396
Investments 6 2,888,334 2,629,131
Ijarah Muntahia Bittamleek 7 1,856,018 1,830,339
Property and equipment 8 430,192 417,295
Other assets 9 469,878 469,238
TOTAL ASSETS 25,453,211 23,425,265
LIABILITIES, EQUITY OF INVESTMENT ACCOUNTHOLDERS AND OWNERS’ EQUITY

LIABILITIES
Customer current and other accounts 5,465,433 4,983,772
Due to banks 1,322,470 918,395
Long term financing 10 1,236,555 1,381,256
Other liabilities 11 1,035,983 856,467
Total liabilities 9,060,441 8,139,890
EQUITY OF INVESTMENT ACCOUNTHOLDERS 12 13,882,109 13,276,794
OWNERS' EQUITY
Share capital 13 1,206,679 1,149,218
Treasury shares 13 (9,550) (9,588)
Share premium 18,644 18,574
Perpetual tier 1 capital 14 400,000 -
Reserves 199,282 181,971
Cumulative changes in fair values 40,443 41,271
Foreign currency translations 13 (706,242) (666,719)
Retained earnings 530,615 497,374
Proposed appropriations 60,334 68,857
Equity attributable to parent's shareholders and Sukuk holders 1,740,205 1,280,958
Non-controlling interest 770,456 727,623
Total owners' equity 2,510,661 2,008,581
TOTAL LIABILITIES, EQUITY OF INVESTMENT ACCOUNTHOLDERS AND OWNERS' EQUITY 25,453,211 23,425,265
Saleh Abdullah Kamel Adnan Ahmed Yousif

Chairman Member of the Board and
President and Chief Executive
The attached notes 1 to 30 form part of these consolidated financial statements.

ANNUAL REPORT 2017
Consolidated Statement of Income
2017 2016
Notes US$ '000 US$ '000
INCOME
Net income from jointly financed contracts and investments 15 1,258,663 1,336,569
Return on equity of investment accountholders before Group's share as a Mudarib (1,084,420) (1,114,019)
Group's share as a Mudarib 16 377,735 396,762
Return on equity of investment accountholders (706,685) (717,257)
Group’s share of income from equity of investment accountholders (as a Mudarib and Rabalmal) 551,978 619,312
Mudarib share for managing off-balance sheet equity of investment accountholders 8,157 5,022
Net income from self financed contracts and investments 15 330,278 285,499
Other fees and commission income 17 157,894 176,837
Other operating income 18 35,383 78,859
1,083,690 1,165,529
Profit paid on long term financing 19 (85,000) (91,370)
TOTAL OPERATING INCOME 998,690 1,074,159
OPERATING EXPENSES
Staff expenses 315,047 325,501
Depreciation and amortisation 20 47,398 44,579
Other operating expenses 21 205,872 197,136
TOTAL OPERATING EXPENSES 568,317 567,216
NET OPERATING INCOME FOR THE YEAR BEFORE

PROVISIONS AND IMPAIRMENT AND TAXATION 430,373 506,943
Provisions and impairment 22 (131,807) (122,154)
NET INCOME BEFORE TAXATION 298,566 384,789
Taxation (91,647) (117,153)
NET INCOME FOR THE YEAR 206,919 267,636
Attributable to:
Equity holders of the parent 129,029 151,545
Non-controlling interest 77,890 116,091
206,919 267,636
Basic and diluted earnings per share - US cents 23 9.47 12.66
Saleh Abdullah Kamel Adnan Ahmed Yousif

Chairman Member of the Board and

Consolidated Statement of Cash Flows
2017 2016
Notes US$ '000 US$ '000
OPERATING ACTIVITIES
Net income before taxation 298,566 384,789
Adjustments for:
Depreciation and amortisation 20 47,398 44,579
Depreciation on Ijarah Muntahia Bittamleek 15.4 266,108 238,315
Unrealised loss (gain) on equity and debt-type instruments at fair value through statement of income 15.3 1,163 (152)
Gain on sale of property and equipment 18 (11,192) (14,804)
Gain on sale of investment in real estate 15.3 (104) (5,502)
Loss (gain) on sale of equity type instruments at fair value through equity 15.3 21 (3,585)
Gain on sale of equity and debt-type instruments at fair value through statement of income 15.3 (820) (667)
Income from associates 15.3 (1,537) (2,059)
Provisions and impairment 22 131,807 122,154
Operating profit before changes in operating assets and liabilities 731,410 763,068
Net changes in operating assets and liabilities:

Reserves with central banks (347,443) 859,261
Receivables (703,668) 443,093
Mudaraba and Musharaka financing (798,128) (40,793)
Ijarah Muntahia Bittamleek (291,788) (334,197)
Other assets (16,194) (24,167)
Customer current and other accounts 481,670 142,675
Due to banks 404,075 110,126
Other liabilities 192,248 10,143
Equity of investment accountholders 609,334 (1,238,504)
Taxation paid (96,516) (147,598)
Net cash from operating activities 165,000 543,107
INVESTING ACTIVITIES
Net purchase of investments (267,314) 495,992
Net purchase of property and equipment (39,195) 2,890
Dividends received from associates 659 2,329
Disposal (purchase) of investment in associate 858 (14,587)
Net cash from (used in) from investing activities (304,992) 486,624
FINANCING ACTIVITIES
Long term financing (144,702) (115,952)
Dividends paid to equity holders of the parent (11,396) (22,143)
Net movement in treasury shares 108 (212)
Issuance of Tier 1 Capial 400,000 -
Profit distributed on perpetual tier 1 capital (15,750) -
Payment of expenses related to tier 1 capital (2,780) -
Net changes in non-controlling interest (20,012) (9,018)
Net cash from (used in) from financing activities 205,468 (147,325)
Foreign currency translation adjustments (56,252) (323,137)

NET CHANGES IN CASH AND CASH EQUIVALENTS 9,224 559,269
Cash and cash equivalents at 1 January 2,851,958 2,292,689
CASH AND CASH EQUIVALENTS AT 31 DECEMBER 24 2,861,182 2,851,958

ANNUAL REPORT 2017
Consolidated Statement of Changes in Owners’ Equity
Attributable to equity holders of the parent and Sukuk holders

Cumulative changes in
Reserves fair values
Perpetual Property Foreign Proposed Non- Total
Share Treasury Share tier 1 Statutory Other and currency Retained appro- controlling owners'
capital shares premium capital reserve reserves Investments equipment translations earnings priations Total interest equity
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Balance at 1 January 2017 1,149,218 (9,588) 18,574 - 139,740 42,231 4,971 36,300 (666,719) 497,374 68,857 1,280,958 727,623 2,008,581
Dividends paid - - - - - - - - - - (11,396) (11,396) - (11,396)
Bonus shares issued (note 13) 57,461 - - - - - - - - - (57,461) - - -
Movement in treasury shares - 38 70 - - - - - - - 108 - 108
Net movement in cumulative
change in fair value for - - - - - - (828) - - - - (828) (851) (1,679)
investments
Net movement in other reserves - - - - - 4,408 - - - - - 4,408 2,533 6,941
Foreign currency translation - - - - - - - - (39,523) - - (39,523) (16,728) (56,251)
Net income for the year - - - - - - - - - 129,029 - 129,029 77,890 206,919
Transfer to statutory reserve
- - - - 12,903 - - - - (12,903) - - - -
(note 13)
Proposed dividends - - - - - - - - - (24,134) 24,134 - - -
Proposed bonus shares - - - - - - - - - (36,200) 36,200 - - -
Dividends of subsidiaries - - - - - - - - - - - - (31,941) (31,941)
Zakah paid on behalf of
- - - - - - - - - (4,021) - (4,021) - (4,021)
shareholders (note 13)
Perpetual tier 1 capital (note 14) - - - 400,000 - - - - - - - 400,000 - 400,000
Expenses related to perpetual
- - - - - - - - - (2,780) - (2,780) - (2,780)
tier 1 capital
Profit distributed on perpetual
- - - - - - - - - (15,750) - (15,750) - (15,750)
tier 1 capital
Net movement in
- - - - - - - - - - - - 11,930 11,930
non- controlling interest
Balance at 31 December 2017 1,206,679 (9,550) 18,644 400,000 152,643 46,639 4,143 36,300 (706,242) 530,615 60,334 1,740,205 770,456 2,510,661
Attributable to equity shareholders of the parent

Cumulative changes
Reserves in fair values
Property Foreign Non- Total
Share Treasury Share Statutory Other and currency Retained Proposed controlling owners'
capital shares premium reserve reserves Investments equipment translations earnings appropriations Total interest equity
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Balance at 1 January 2016 1,115,746 (8,464) 17,662 124,585 40,874 2,229 36,300 (461,948) 433,631 55,787 1,356,402 738,181 2,094,583
Dividends paid - - - - - - - - 172 (22,315) (22,143) - (22,143)
Bonus shares issued (note 13) 33,472 - - - - - - - - (33,472) - - -
Movement in treasury shares - (1,124) 912 - - - - - - - (212) - (212)
Net movement in cumulative
change in fair value for - - - - - 2,742 - - - - 2,742 579 3,321
investments
Net movement in other reserves - - - - 1,357 - - - - - 1,357 156 1,513
Foreign currency translation - - - - - - (204,771) - - (204,771) (118,366) (323,137)
Net income for the year - - - - - - - - 151,545 - 151,545 116,091 267,636
Transfer to statutory reserve - - - 15,155 - - - - (15,155) - - - -
Proposed dividends - - - - - - - - (11,396) 11,396 - - -
Proposed bonus shares - - - - - - - - (57,461) 57,461 - - -
Dividends of subsidiaries - - - - - - - - - - - (31,424) (31,424)
Zakah paid on behalf of
- - - - - - - - (3,962) - (3,962) - (3,962)
shareholders (note 13)
Net movement in
- - - - - - - - - - - 22,406 22,406
non- controlling interest
Balance at 31 December 2016 1,149,218 (9,588) 18,574 139,740 42,231 4,971 36,300 (666,719) 497,374 68,857 1,280,958 727,623 2,008,581

Consolidated Statement of Changes in Off-Balance
Sheet Equity of Investment Accountholders
Ijarah
Sales Mudaraba Investment Muntahia
Cash receivables financing in real estate Bittamleek Investments Others Total
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Balance at 1 January 2017 73,558 223,323 286,201 38,150 82,962 157,672 10,177 872,043
Deposits 209,723 235,941 193,416 10,624 48,757 78,964 63,233 840,658
Withdrawals (250,085) (299,601) (193,622) (450) (22,081) (39,760) (26,495) (832,094)
Income net of expenses - 30,793 6,662 366 3,321 1,558 (233) 42,467
Mudarib's share - (6,790) - (279) (614) (370) (104) (8,157)
Foreign exchange translations - (5,873) - - - (7,276) 1,612 (11,537)
Balance at 31 December 2017 33,196 177,793 292,657 48,411 112,345 190,788 48,190 903,380
Balance at 1 January 2016 11,579 170,139 257,719 38,277 81,173 200,535 18,537 777,959
Deposits 203,295 218,488 493,715 889 22,485 34,223 29,845 1,002,940
Withdrawals (141,316) (165,701) (474,455) (1,474) (27,893) (78,255) (31,333) (920,427)
Income net of expenses - 22,922 9,664 495 7,782 3,653 (690) 43,826
Mudarib's share - (3,452) (442) (37) (585) (365) (141) (5,022)
Foreign exchange translations - (19,073) - - - (2,119) (6,041) (27,233)
Balance at 31 December 2016 73,558 223,323 286,201 38,150 82,962 157,672 10,177 872,043

ANNUAL REPORT 2017
Notes to the Consolidated Financial Statements
At 31 December 2017
1. CORPORATE INFORMATION AND ACTIVITIES

Al Baraka Banking Group B.S.C. (“the Bank”) is a joint stock company incorporated in the Kingdom of Bahrain on 27 June 2002, under Commercial
Registration (CR) number 48915. The Bank is engaged in banking activities in the Middle East, Europe, North African and South African region. The address
of the Bank’s registered office is Bahrain Bay, P.O. Box 1882, Manama, Kingdom of Bahrain. The Bank is listed on Bahrain Bourse and NASDAQ Dubai.
The Bank operates under an Islamic wholesale banking license issued by the Central Bank of Bahrain (‘the CBB’).
The principal activities of the Bank and its subsidiaries (“the Group”) comprise of international and commercial banking, financing, treasury and investment
activities. The Bank is supervised and regulated by the CBB.
The consolidated financial statements were approved by the Board of Directors on 20 February 2018.
2. ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements have been prepared on a historical cost basis, except for investment in real estate, equity and debt-type instruments
at fair value through statement of income, equity-type instruments at fair value through equity and land occupied by the Group (classified as property
and equipment) that have been measured at fair value. The consolidated financial statements are presented in United States Dollars (‘US$’) being the
functional and reporting currency of the Group. All values are rounded to the nearest US$ thousand (‘US$ ‘000’) unless otherwise indicated.
Statement of compliance
The consolidated financial statements have been prepared in accordance with Financial Accounting Standards (‘FAS’) issued by the Accounting and
Auditing Organisation for Islamic Financial Institutions (‘AAOIFI’), the Shari’a Rules and Principles as determined by the Shari’a Supervisory Board of the
Group, the Bahrain Commercial Companies Law, the Central Bank of Bahrain and Financial Institutions Law, the CBB Rule Book (Volume 2 and applicable
provisions of Volume 6) and CBB directives, regulations and associated resolutions, rules and procedures of the Bahrain Bourse or the terms of the Bank’s
memorandum and articles of association. In accordance with the requirements of AAOIFI, for matters for which no AAOIFI standard exists, the Group
uses the relevant International Financial Reporting Standards (‘the IFRS’) as issued by the International Accounting Standards Board (the ‘IASB’), given
it does not contradict with Shari’a Rules and Principles and the conceptual framework of AAOIFI.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Bank and its subsidiaries as at and for the year ended 31 December each
year. The financial statements of the subsidiaries are prepared for the same reporting year as the Bank, using consistent accounting policies.
All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions are eliminated in full.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until
the date that control ceases. Control is achieved where the Group has the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities.
Non-controlling interest in a subsidiary’s net assets is reported as a separate item in the Group’s owners’ equity. In the consolidated statement of income,
non-controlling interest is included in net profit, and shown separately from that of the shareholders.
Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling interests’
share of changes in owners’ equity since the date of combination. Losses applicable to the non-controlling interest in excess of the non-controlling
interest in a subsidiary’s owners’ equity are allocated against the interests of the Group except to the extent that the non-controlling interest has a
binding obligation and is able to make an additional investment to cover the losses. Changes in the ownership interest in a subsidiary that do not result
in a loss of control are accounted for as an owners’ equity transaction.

At 31 December 2017
2. ACCOUNTING POLICIES (Continued)
Basis of consolidation (Continued)

The following are the principal subsidiaries of the Bank, which are consolidated in these consolidated financial statements:
No. of
branches/
offices at
Ownership Ownership Year of Country of 31 December
for 2017 for 2016 incorporation incorporation 2017
Held directly by the Bank
Banque Al Baraka D’Algerie (BAA) 55.90% 55.90% 1991 Algeria 29
Al Baraka Islamic Bank - Bahrain (AIB) 91.12% 91.12% 1984 Bahrain 196
Al Baraka Bank Tunis (ABT) 78.40% 78.40% 1983 Tunisia 37
Al Baraka Bank Egypt (ABE) 73.68% 73.68% 1980 Egypt 32
Al Baraka Bank Lebanon (ABBL) 98.94% 98.94% 1991 Lebanon 7
Jordan Islamic Bank (JIB) 66.01% 66.01% 1978 Jordan 100
Al Baraka Turk Participation Bank (ATPB) 56.64% 56.64% 1985 Turkey 220
Al Baraka Bank Limited (ABL) 64.51% 64.51% 1989 South Africa 12
Al Baraka Bank Sudan (ABS) 75.73% 75.73% 1984 Sudan 27
Al Baraka Bank Syria (ABBS) * 23.00% 23.00% 2009 Syria 13
BTI Bank 49.00% 0% 2017 Morocco 1
* During December 2017, BTI Bank was established in Morocco. The Group consolidate BTI Bank (49% ownership), Al Baraka Bank Syria (23% ownership)
and Al Baraka Sukuk Limited SPV (0% ownership) due to the Group’s control through the power to govern their financial and operating policies.
The following are the subsidiaries held indirectly through the principal subsidiaries of the Bank:
Subsidiary Effective Effective
held Ownership Ownership Year of Country of
through for 2017 for 2016 incorporation incorporation
Held indirectly by the Bank
Al Baraka Bank (Pakistan) Limited AIB 53.88% 52.30% 2010 Pakistan
Itqan Capital AIB 75.69% 75.69% 2007 Saudi Arabia
Al-Omariya School Company JIB 65.61% 65.61% 1987 Jordan
Al-Samaha Real Estate Company JIB 66.01% 66.01% 1998 Jordan
Future Applied Computer Technology Company JIB 66.01% 66.01% 1998 Jordan
Sanable Alkhair for Financial Investment JIB 66.01% 66.01% 2006 Jordan
Al Baraka Properties (Pty) Ltd. ABL 64.51% 64.51% 1991 South Africa
Significant accounting policies

The significant accounting policies adopted in the preparation of the consolidated financial statements are consistent with those of the previous financial
year, except for the adoption of new standards and interpretations effective as of 1 January 2017:
New standards, interpretations and amendments adopted by the Group

FAS 30 Impairment, credit losses and onerous commitments
Implementation Strategy
In November 2017, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) issued Financial Accounting Standard (FAS) 30
- Impairment, credit losses and onerous commitments, the standard supersedes the earlier FAS 11 “Provisions and Reserves” effective from the financial
periods beginning on or after 1 January 2020, with early adoption permitted. The Group considers it as a significant project and therefore has set up a
multidisciplinary implementation team with members from its Credit risk and Modeling, Finance, IT, Operations, and respective businesses to achieve a
successful and robust implementation. The project is managed by a dedicated committee, chaired by the Head of Finance and vice chaired by the Head
of Credit and Risk Management.
Credit losses approach

The Group will recognize credit losses allowances based on a forward looking Expected Credit Loss (ECL) approach on all established receivables and off-
balance sheet exposures including guarantees, letters of credit, promise-based foreign exchange and other similar positions.

ANNUAL REPORT 2017
At 31 December 2017
Significant accounting policies (continued)

Credit losses approach (continued)
The Group will categorizes its assets subject to credit losses into the following three stages in accordance with the FAS 30 methodology
• Stage 1 – Performing assets: asset(s) that are not significantly deteriorated in credit quality since origination. The impairment allowance will be
recorded based on 12 months ECL
• Stage 2 – Underperforming assets: asset(s) that has significantly deteriorated in credit quality since origination. The credit losses will be recorded
based on life time ECL.
• Stage 3 – Impaired assets: For asset(s) that are impaired, the Bank will recognize the impairment allowance based on life time ECL.
The Group will also consider the forward-looking information in its assessment of significant deterioration in credit risk since origination as well as the
measurement of ECLs.
The forward-looking information will include the elements such as macroeconomic factors (e.g., fiscal deficit, GDP growth, inflation, government spending,
profit rates and oil prices) and economic forecasts obtained through internal and external sources.
To evaluate a range of possible outcomes, the Group intends to formulate various scenarios. For each scenario, the Group will derive an ECL and apply a
probability weighted approach to determine the impairment allowance in accordance with the accounting standards requirements.
The Group will early adopt FAS 30 during 2018 and currently in the final phase of implementation, where by parallel run exercise is currently in under
process together with various level of validation.
Impairment approach
The Group will recognize impairment losses on all other financing and investment assets and exposures subject to risks other than credit risk (other than
inventories), other than investments carried at fair value through income statement.
The impairment losses will be measured by which the carrying amount of an asset exceeds its recoverable amount. The recoverable amount will be the
higher of its fair value less costs of disposal and its value in use
Net realizable value approach

The Group will recognize impairment on inventories recognized as a result of financial transactions which are based on a trade based structure e.g.
deferred payment sales including Murabaha, installment sales, Salam or Istisna’a.
The Group subsequent to the initial recognition, all inventories will be measured at the lower of cost and net realizable value. The net realisable value, is
the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale,
considering the factors specific to the Group.
Provision for onerous contract or commitment to acquire an asset
The Group will recognize provision when the Group is obligated to acquire an asset under a future commitment or contracts permissible to be entered
in the future, and it is expected that the obligation under the contract or commitment is higher than the economic benefits expected to flow through
acquisition of such asset. In such situation, the Group will create a provision on this account reflecting the expected losses arising on such transaction.
Expected Impact
The Group has reviewed its assets and is expecting the following impact from the early adoption of the FAS 30 on January 1, 2018:
• According to transitional provisions for initial application of FAS 30, the Group is allowed to recognised any difference between previous carrying
amount under FAS 11 and the carrying amount of losses that is attributable to the shareholders at the beginning of the annual reporting period that
includes the date of initial application in opening retained earnings, and the cumulative charge attributable to participatory stakeholders, including
unrestricted investment account holders related to previous periods, shall be adjusted with an allocation from the respective Investment Risk Reserve
with due Shari’ah approvals. And in case of a shortfall, an allocation may be made from the respective Profit Equalization Reserve with due Shari’ah
approvals. In case of still a shortfall, a temporary transfer with Shari’ah approval may be made from shareholders’ equity.
Accordingly, the effect is approximated to be US$50 million on the date of initial application in opening retained earnings.
• The new standard also introduces disclosure requirements and changes in presentation. These are expected to change the nature and extent of the
Group’s disclosures about its financial instruments particularly in the year of the adoption of the new standard.

At 31 December 2017
Significant accounting policies (Continued)

Governance and controls
The Group has a centrally managed FAS 30 committee chaired by the Group’s Head of Finance and vice chaired by Head of Credit and Risk Management
and includes subject matter experts on methodology, data sourcing and modelling, IT processing and reporting. The Group’s work to date has covered
performing and developing an impairment methodology to support the calculation of the Expected Credit Loss (ECL) allowance. Specifically, during
2017 the Group developed its approach for assessing significant increase in credit risk (“SICR”), incorporating forward looking information, including
macro-economic factors and preparing the required IT systems and process architecture. The Group has performed a full end to end parallel run based on
[31 December 2017] data to assess procedural readiness. Overall governance of the program’s implementation is through the FAS 30 Steering Committee
and includes representation from Finance, Risk and IT. The Group is in the process of enhancing its governance framework to implement appropriate
validations and controls over new key processes and significant areas of judgment such as SICR determining and applying forward looking information in
multiple economic scenarios and computation of ECL.
The estimated decrease in shareholders’ equity includes the impact of both balance sheet changes and the increase to credit impairment provisions
compared to those applied at 31 December 2017 under FAS 11. The assessment above is a point in time estimate and is not a forecast. The actual effect
of the implementation of FAS 30 on the Group could vary significantly from this estimate. The Group continues to refine models, methodologies and
controls, and monitor developments in regulatory rule-making in advance of FAS 30 early adoption on 1 January 2018. Although parallel runs were carried
out in the second half of 2017, the new systems and associated controls in place have not been operational for a more extended time. As a result, the
Group has not finalized the testing and assessment of controls over its new IT systems and changes to its governance framework. All estimates are based
on the Group’s current interpretation of the requirements of FAS 30, reflecting industry guidance and discussions to date.
Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below:
a. Cash and cash equivalents

Cash and cash equivalents as referred to in the consolidated statement of cash flows comprise cash and cash in transit, balances with central banks
excluding mandatory reserves and balances with other banks with an original maturity of three months or less.
b. Receivables
Receivables comprise Sales (Murabaha) receivables, Ijarah receivables, Salam receivables and Istisna’a receivables.
Sales (Murabaha) receivables

Sales (Murabaha) receivables consist mainly of murabaha and international commodities stated net of deferred profits and provision for doubtful amount.
The Group considers promise made in sales (murabaha) receivables to the purchase orderer as obligatory.
Ijarah receivables
Ijarah receivables is the outstanding rental at the end of the year less any provision for doubtful amount.
Salam receivables
Salam receivables is the outstanding amount at the end of the year less any provision for doubtful amount.
Istisna’a receivables
Istisna’a receivables is the outstanding amount at the end of the year less any provision for doubtful amount.
c. Mudaraba and Musharaka financing

Mudaraba and Musharaka financing are partnerships in which the Bank contributes capital. These are stated at the fair value of consideration given less
impairment.
d. Investments
Investments comprise equity and debt-type instruments at fair value through statement of income, equity-type instruments at fair value through equity,
debt-type instruments at amortised cost, investment in real estate and investment in associates.
Investment in real estate

Properties held for rental, or for capital appreciation purposes, or both, are classified as investment in real estate. Investments in real estate are initially
recorded at cost, being the fair value of the consideration given and acquisition charges associated with the property. Subsequent to initial recognition,
investments in real estate are re-measured at fair value and changes in fair value (only gains) are recognised as property fair value reserve in the
consolidated statement of changes in owners’ equity.

ANNUAL REPORT 2017
At 31 December 2017
d. Investments ( continued)
Investment in real estate (continued)
Losses arising from changes in the fair values of investment in real estate are firstly adjusted against the property fair value reserve to the extent of
the available balance and then the remaining losses are recognised in the consolidated statement of income. If there are unrealised losses that have
been recognised in the consolidated statement of income in the previous financial periods, the current period unrealised gain shall be recognised in the
consolidated statement of income to the extent of crediting back such previous losses in the consolidated statement of income. When the property is
disposed of, the cumulative gain previously transferred to the property fair value reserve, is transferred to the consolidated statement of income.
Investment in associates
The Group’s investment in associates is accounted for under the equity method of accounting. An associate is an entity in which the Group has significant
influence and which is neither a subsidiary nor a joint venture. Under the equity method, the investment in the associate is carried in the consolidated
statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to an associate
is included in the carrying amount of the investment and is not amortised. The consolidated statement of income reflects the Group’s share of the results
of operations of the associate. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of any
changes and discloses this, when applicable, in the consolidated statement of changes in owners’ equity. Profits and losses resulting from transactions
between the Group and the associate are eliminated to the extent of the interest in the associate.
The reporting dates of the associates and the Group are identical and the associates accounting policies conform to those used by the Group for like
transactions and events in similar circumstances.
Equity and debt-type instruments at fair value through statement of income

This includes instruments held for trading purposes to gain profits from market fluctuations in the short term. These are initially recognised at cost, being
the fair value of the consideration given excluding acquisition costs. These are subsequently re-measured at fair value. All related realised and unrealised
gains or losses are included in the consolidated statement of income.
All other investments are initially recognised at cost, being the fair value of the consideration given including acquisition costs.
Equity-type instruments at fair value through equity

This includes all instruments that are not covered above. Subsequent to acquisition, investments designated at fair value through equity are re-measured
at fair value with unrealised gains or losses recognised proportionately in owners’ equity and equity of investment accountholders until the investment
is derecognised or determined to be impaired at which time the cumulative gain or loss previously recorded in owners’ equity or equity of investment
accountholders is recognised in consolidated statement of income.
Debt-type instruments at amortised cost

Debt-type instruments which are managed on a contractual yield basis and are not held for trading and has not been designated at fair value through
statement of income are classified as debt-type instruments at amortised cost. Such investments are carried at amortised cost, less provision for
impairment in value. Amortised cost is calculated by taking into account any premium or discount on acquisition. Any gain or loss on such investment is
recognised in the consolidated statement of income, when the investment is de-recognised or impaired.
e. Ijarah Muntahia Bittamleek

Assets acquired for leasing (Ijarah) are stated at cost, less accumulated depreciation.
Depreciation is provided on the straight line method over the useful life of the asset or the period of the lease, whichever is lower.
f. Property and equipment

Property and equipment are initially recognised at cost. Subsequent to initial recognition property and equipment are stated at cost less accumulated
depreciation and accumulated impairment in value, except for land which is carried at fair value. The cost of additions and major improvements are
capitalised; maintenance and repairs are charged to the consolidated statement of income as incurred. Gains or losses on disposal are reflected in other
operating income. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets other than freehold land, which is
deemed to have an indefinite life.
The calculation of depreciation is on the following basis:
Buildings 30 - 50 years
Office furniture and equipment 4 - 10 years
Vehicles 3 years
Others 4 - 5 years

At 31 December 2017

g. Fair values
For investments actively traded in organised financial markets, fair value is determined by reference to quoted market bid prices.
For investment where there is no quoted market price, a reasonable estimate of the fair value is determined by reference to the current market value of
another instrument, which is substantially the same or is based on the assessment of future cash flows. The cash equivalent values are determined by the
Group at current profit rates for contracts with similar term and risk characteristics.
For Sales (Murabaha) receivables the fair value is determined at the Bank or subsidiary level at the end of the financial period at their cash equivalent
value.
h. Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group’s
interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate
that the carrying value may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the cash-generating units,
or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities
of the acquiree are assigned to those units or groups of units.
Impairment is determined by assessing the recoverable amount of the cash-generating unit, to which the goodwill relates. Where the recoverable amount
of the cash-generating unit is less than the carrying amount, an impairment loss is recognised.
i. Intangible assets
Intangible assets comprise principally the value of computer software. Intangible assets acquired are measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.
j. Collateral pending sale

Collateral acquired in settlement of certain financing facilities is stated at the lower of the net realisable value of the related financing facilities and the
current fair value of such assets. Gains or losses on disposal, and revaluation losses, are recognised in the consolidated statement of income.
k. Employees’ end of service benefits

The Group provides for end of service benefits to its employees. Entitlement to these benefits is based upon the employees’ length of service and the
completion of a minimum service period. The expected costs of these benefits are accrued for over the period of employment.
l. Provision
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that outflow of
resources embodying economic benefits will be required to settle the obligations and a reliable estimate can be made of the amount of the obligation.
m. Dividends
Dividends to shareholders are recognised as liabilities in the year in which they are declared.
n. Equity of investment accountholders

All equity of investment accountholders are carried at cost plus accrued profit and related reserves. Investment risk reserves and profit equalisation
reserves are made at the Bank or subsidiary level.
o. Investment risk reserve

Investment risk reserves are amounts appropriated out of the income of equity of investment accountholders, after allocating the mudarib share, in order
to cater against future losses for equity of investment accountholders.
p. Profit equalisation reserve

Profit equalisation reserves are amounts appropriated out of the Mudaraba income, before allocating the mudarib share, in order to maintain a certain
level of return on investments for equity of investment accountholders.
q. Sukuk
Sukuk issued by the Group are treated based on the underlying contracts and structure.
r. Off-balance sheet equity of investment accountholders

Off-balance sheet equity of investment accountholders represent funds received by the Group from third parties for investment in specified products as
directed by them. These products are managed in a fiduciary capacity and the Group has no entitlement to these products. Third parties bear all of the
risks and earn all of the rewards on these products. Off-balance sheet equity of investment accountholders are not included in the consolidated statement
of financial position since the Group does not have the right to use or dispose these products except within the conditions of the contract between the
Group and third parties.

ANNUAL REPORT 2017
At 31 December 2017

s. Treasury shares
Own equity instruments which are reacquired (treasury shares) are deducted from equity of the parent and accounted for at weighted average cost.
Consideration paid or received on the purchase, sale, issue or cancellation of the Group’s own equity instruments is recognised directly in equity of the
parent. No gain or loss is recognised in consolidated statement of income on the purchase, sale, issue or cancellation of own equity instruments.
t. Revenue recognition
Profit from Sales (Murabaha) receivables is recognised when the income is both contractually determinable and quantifiable at the commencement
of the transaction. Such income is recognised on time-apportioned basis over the period of the transaction. Where the income from a contract is not
contractually determinable or quantifiable, it is recognised when the realisation is reasonably certain or when actually realised. Income related to accounts
that are 90 days overdue is excluded from the consolidated statement of income.
Salam and Istisna’a receivables
Income on Salam and Istisna’a is recognised on time-apportioned basis when the income from a contract is contractually determinable or quantifiable.
Mudaraba and Musharaka financing

Income on Mudaraba and Musharaka financing is recognised when the right to receive payment is established or on distribution by the Mudarib. Income
related to accounts that are 90 days overdue is excluded from the consolidated statement of income.
Ijarah Muntahia Bittamleek
Income net of depreciation is recognised on a time-apportioned basis over the lease term.
Fee and commission income
Fee and commission income is recognised when earned.
Other income
Other income on investments is recognised when the right to receive payment is established..
Group’s share as a Mudarib

The Group’s share of profit as a Mudarib for managing equity of investment accountholders is based on the terms and conditions of the related mudarib
agreements.
Mudarib’s share of off-balance sheet equity of investment accountholders

The Group shares profit for managing off-balance sheet equity of investment accountholders based on the terms and conditions of related contracts.
u. Return on equity of investment accountholders

Equity of investment accountholders’ share of income is calculated based on the applicable local laws and based on the underlining individual Mudaraba
contract. It represents the income generated from joint investment accounts and after deducting other expenses. Other expenses include all expenses
incurred by the Group including specific provisions. The Group’s share is deducted before distributing such income.
v. Joint and self financed
Investments, financing and receivables that are jointly owned by the Group and the equity of investment accountholders are classified under the caption
“jointly financed” in the consolidated financial statements. Investments, financing and receivables that are financed solely by the Group are classified
under “self financed”.
w. Taxation
There is no tax on corporate income in the Kingdom of Bahrain. Taxation on foreign operations is provided in accordance with the fiscal regulations of
the respective countries in which the subsidiaries operate. The Group accounts for its share of associates profit after accounting for corporate taxation.
Deferred income tax is provided using the liability method on temporary differences at the financial position date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
x. Shari’a supervisory board

The Group’s business activities are subject to the supervision of a Shari’a supervisory board consisting of five members appointed by the general assembly.
y. Zakah
The article of association of Al Baraka Banking Group is not empowering the Group for paying Zakah on behalf of the shareholders and there is no such law
in Kingdom of Bahrain requiring the Group to pay Zakah on behalf of the shareholders, unless there is a direct empowerment from the general assembly
to the Group to pay Zakah on behalf of the shareholders.
z. Earnings prohibited by Shari’a
The Group is committed to avoid recognising any income generated from non-Islamic source. Accordingly, all non-Islamic income is credited to a charity
account where the Group uses these funds for various social welfare activities.
aa. Impairment of financial assets
An assessment is made at each financial position date to determine whether there is objective evidence that a specific financial asset or a group of
financial assets may be impaired. If such evidence exists, the estimated recoverable amount of that asset is determined and any impairment loss, based
on the assessment by the Group of the estimated cash equivalent value, is recognised in the consolidated statement of income. Specific provisions are
created to reduce all impaired financial contracts to their realisable cash equivalent value. Financial assets are written off only in circumstances where
effectively all possible means of recovery have been exhausted.

At 31 December 2017
aa. Impairmenrt of fianncial assets (continued)

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment value was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in
the consolidated statement of income.
In addition, the Group maintains a provision to reflect a potential loss that may occur as a result of currently unidentifiable risks in relation to receivables,
financings or investment assets. The amount reflects estimated losses affecting these assets attributable to events that have already occurred at the date
of the financial statements, and not estimated losses attributable to future events.
bb. Offsetting
Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities
simultaneously.
cc. Foreign currencies

Foreign currency transactions at the subsidiary level
Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of the transaction. The monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of exchange ruling at the financial position date. All differences are taken to income
statement at the entity level.
Foreign currency translations

As at the reporting date, the assets and liabilities in foreign currencies are translated into the presentation currency of the Group (United States Dollars)
at the rate of exchange ruling at the financial position date and their income statements are translated at the average exchange rates for the year. The
exchange differences arising on the translation are taken directly to a separate component of owners’ equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in owners’ equity relating to that particular foreign entity is recognised in
the consolidated statement of income.
dd. Judgments
In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which
affects the amounts recognised in the consolidated financial statements:
Classification of investments
Management decides on acquisition of an investment whether it should be classified as equity and debt-type instrument at fair value through statement
of income, equity-type instrument at fair value through equity or debt-type instrument at amortised cost.
Going concern
The Group’s management has made an assessment of the Group’s ability to continue as a going concern and is satisfied that the Group has the resources
to continue in business for the foreseeable future. Furthermore, the management is not aware of any material uncertainties that may cast significant
doubt upon the Group’s ability to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis.
ee. Use of estimates in preparation of the consolidated financial statements

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts
of financial assets and liabilities at the date of the consolidated financial statements. The use of estimates is used primarily to the determination of
provisions for sales (Murabaha) receivable, mudaraba financing, musharaka financing, equity-type instrument at fair value through equity, debt-type
instrument at amortised cost, ijarah receivable and other assets.
ff. Derecognition
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:
(i) the right to receive cash flows from the asset has expired;
(ii) the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without
material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the
asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability
is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the consolidated statement of income.
3. CASH AND BALANCES WITH BANKS

2017 2016
US$ '000 US$ '000
Balances with central banks* 4,102,938 3,883,925
Balances with other banks 602,517 585,491
Cash and cash in transit 724,630 604,002
5,430,085 5,073,418
* Balances with central banks include mandatory reserves amounting to US$ 2,568,903 thousand (2016: US$ 2,221,460 thousand). These amounts are
not available for use in the Group’s day-to-day operations.

ANNUAL REPORT 2017
At 31 December 2017
4. RECEIVABLES
2017 2016
US$ '000 US$ '000
Sales (Murabaha) receivables (note 4.1) 11,627,669 11,119,981
Ijarah receivables (note 4.2) 68,620 57,086
Salam receivables (note 4.3) 188,035 154,649
Istisna'a receivables (note 4.4) 116,726 91,732
12,001,050 11,423,448
4.1 Sales (Murabaha) receivables

2017 2016
Self Jointly Self Jointly
financed financed Total financed financed Total
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
International commodity murabaha 85,430 395,079 480,509 22,247 299,812 322,059
Other murabaha 2,385,059 10,853,317 13,238,376 2,273,439 10,430,331 12,703,770
Gross sales (murabaha) receivables 2,470,489 11,248,396 13,718,885 2,295,686 10,730,143 13,025,829
Deferred profits (392,657) (1,329,298) (1,721,955) (340,823) (1,210,482) (1,551,305)
2,077,832 9,919,098 11,996,930 1,954,863 9,519,661 11,474,524
Provisions (note 22) (100,883) (268,378) (369,261) (79,487) (275,056) (354,543)
Net sales (murabaha) receivables 1,976,949 9,650,720 11,627,669 1,875,376 9,244,605 11,119,981
2017 2016
US$ '000 US$ '000
Non-performing 587,323 564,550
4.2 Ijarah receivables

2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Gross ijarah receivables - 81,970 81,970 - 69,557 69,557
Provisions (note 22) - (13,350) (13,350) - (12,471) (12,471)
Net ijarah receivables - 68,620 68,620 - 57,086 57,086
2017 2016
US$ '000 US$ '000
4.3 Salam receivables

2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Gross salam receivables - 193,910 193,910 - 160,603 160,603
Provisions (note 22) - (5,875) (5,875) - (5,954) (5,954)
Net salam receivables - 188,035 188,035 - 154,649 154,649
2017 2016
US$ '000 US$ '000

At 31 December 2017
4. RECEIVABLES (Continued)
4.4 Istisna’a receivables
2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Gross istisna'a receivables - 118,116 118,116 - 94,007 94,007
Provisions (note 22) - (1,390) (1,390) - (2,275) (2,275)
Net istisna'a receivables - 116,726 116,726 - 91,732 91,732
2017 2016
US$ '000 US$ '000
5. MUDARABA AND MUSHARAKA FINANCING

2017 2016
US$ '000 US$ '000
Mudaraba financing (note 5.1) 1,400,598 821,729
Musharaka financing (note 5.2) 977,056 760,667
2,377,654 1,582,396
5.1 Mudaraba financing

2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Gross mudaraba financing 549,551 863,985 1,413,536 277,816 555,861 833,677
Provisions (note 22) - (12,938) (12,938) - (11,948) (11,948)
Net mudaraba financing 549,551 851,047 1,400,598 277,816 543,913 821,729
2017 2016
US$ '000 US$ '000
5.2 Musharaka financing

2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Gross musharaka financing 280,969 705,216 986,185 146,365 620,903 767,268
Provisions (note 22) (235) (8,894) (9,129) - (6,601) (6,601)
Net musharaka financing 280,734 696,322 977,056 146,365 614,302 760,667
2017 2016
US$ '000 US$ '000

ANNUAL REPORT 2017
At 31 December 2017
6. INVESTMENTS
2017 2016
US$ '000 US$ '000
Equity and debt-type instruments at fair value through statement of income (note 6.1) 271,096 27,842
Equity-type instruments at fair value through equity (note 6.2) 103,818 107,225
Debt-type instruments at amortised cost (note 6.3) 2,250,552 2,250,764
2,625,466 2,385,831
Investment in real estate (note 6.4) 211,157 191,565
Investment in associates (note 6.5) 51,711 51,735
2,888,334 2,629,131
6.1 Equity and debt-type instruments at fair value through statement of income
2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Quoted investments
Debts 6,797 515 7,312 6,865 1,504 8,369
Equities 262,880 775 263,655 286 642 928
269,677 1,290 270,967 7,151 2,146 9,297
Unquoted investments
Debts 7 - 7 - - -
Equities 122 - 122 18,545 - 18,545
129 - 129 18,545 - 18,545
269,806 1,290 271,096 25,696 2,146 27,842
6.2 Equity-type instruments at fair value through equity

2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Quoted investments
Equities 13,129 32,932 46,061 12,009 34,467 46,476
Managed funds 7,274 4,636 11,910 11,842 6,636 18,478
20,403 37,568 57,971 23,851 41,103 64,954
Equities 28,743 8,389 37,132 26,987 7,779 34,766
Managed funds 932 12,492 13,424 668 9,735 10,403
29,675 20,881 50,556 27,655 17,514 45,169
Provisions (note 21) (2,461) (2,248) (4,709) (774) (2,124) (2,898)
47,617 56,201 103,818 50,732 56,493 107,225

At 31 December 2017
6. INVESTMENTS (Continued)
6.3 Debt-type instruments at amortised cost
2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Quoted investments
Sukuk and similar items 581,817 711,564 1,293,381 607,418 604,812 1,212,230
Sukuk and similar items 120,838 843,320 964,158 136,078 906,718 1,042,796
Provisions (note 22) (2,500) (4,487) (6,987) (2,500) (1,762) (4,262)
700,155 1,550,397 2,250,552 740,996 1,509,768 2,250,764
6.4 Investment in real estate

2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Land 1,311 128,936 130,247 756 106,559 107,315
Buildings 7,376 73,534 80,910 7,994 76,256 84,250
8,687 202,470 211,157 8,750 182,815 191,565
The following is a reconciliation between carrying amounts of investment in real estate at the beginning and end of the year:
2017 2016
US$ '000 US$ '000
Beginning balance of the year 191,565 187,412
Acquisitions 24,698 14,479
Net gain (loss) from fair value adjustments 5,503 1,253
Disposals (4,016) (8,660)
Foreign exchange translation / others - net (6,593) (2,919)
19,592 4,153
Ending balance of the year 211,157 191,565
6.5 Investment in associates

Investment in associates comprise the following:
2017
Self Jointly Market
financed financed Total value
US$ '000 US$ '000 US$ '000 US$ '000
Quoted associates - 11,824 11,824 11,410
Unquoted associates 39,887 - 39,887
39,887 11,824 51,711
2016
Self Jointly Market
financed financed Total value
US$ '000 US$ '000 US$ '000 US$ '000
Quoted associates - 10,802 10,802 9,729
Unquoted associates 40,814 119 40,933
40,814 10,921 51,735

ANNUAL REPORT 2017
At 31 December 2017
7. IJARAH MUNTAHIA BITTAMLEEK

2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Land and building
Cost 142,061 1,786,674 1,928,735 179,444 1,730,599 1,910,043
Accumulated depreciation (26,822) (365,554) (392,376) (27,795) (472,851) (500,646)
Net book value 115,239 1,421,120 1,536,359 151,649 1,257,748 1,409,397
Equipment
Cost 134,129 296,447 430,576 130,730 368,355 499,085
Accumulated depreciation (38,696) (93,756) (132,452) (22,326) (90,333) (112,659)
Net book value 95,433 202,691 298,124 108,404 278,022 386,426
Others
Cost - 34,677 34,677 - 56,469 56,469
Accumulated depreciation - (13,142) (13,142) - (21,953) (21,953)
Net book value - 21,535 21,535 - 34,516 34,516
TOTAL
Cost 276,190 2,117,798 2,393,988 310,174 2,155,423 2,465,597
Accumulated depreciation (65,518) (472,452) (537,970) (50,121) (5,85,137) (635,258)
Net book value 210,672 1,645,346 1,856,018 260,053 1,570,286 1,830,339
8. PROPERTY AND EQUIPMENT

Office
furniture and
Buildings Lands equipment Vehicles Others Total
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Cost:
At 1 January 2016 176,895 162,936 209,975 11,634 100,891 662,331
Additions 46,288 20,618 19,450 1,282 23,135 110,773
Disposals (2,319) (654) (1,507) (872) (52,979) (58,331)
Foreign exchange translations (20,948) (19,834) (20,708) (1,248) (12,559) (75,297)
At 31 December 2016 199,916 163,066 207,210 10,796 58,488 639,476
Additions 19,120 26,471 28,846 1,414 30,154 106,005
Disposals (14,047) (1,193) (2,151) (744) (23,778) (41,913)
Foreign exchange translations (2,461) (8,617) (5,138) (670) (2,794) (19,680)
At 31 December 2017 202,528 179,727 228,767 10,796 62,070 683,888
Depreciation:
At 1 January 2016 61,744 - 132,019 5,453 18,507 217,723
Provided during the year (note 20) 9,750 - 22,217 1,265 5,996 39,228
Relating to disposals (677) - (835) (573) (565) (2,650)
Foreign exchange translations (18,766) - (8,956) (668) (3,730) (32,120)
At 31 December 2016 52,051 - 144,445 5,477 20,208 222,181
Provided during the year (note 20) 13,693 - 19,540 869 3,387 37,489
Relating to disposals (1,021) - (1,959) (242) (278) (3,500)
Foreign exchange translations (1,733) - 778 (358) (1,161) (2,474)
At 31 December 2017 62,990 - 162,804 5,746 22,156 253,696
Net book values:
At 31 December 2017 139,538 179,727 65,963 5,050 39,914 430,192
At 31 December 2016 147,865 163,066 62,765 5,319 38,280 417,295

At 31 December 2017
9. OTHER ASSETS
2017 2016
US$ '000 US$ '000
Bills receivables 149,661 144,327
Goodwill and intangible assets (note 9 (a)) 86,837 91,735
Collateral pending sale 73,222 62,151
Good faith qard 20,254 19,136
Deferred taxation 35,808 34,693
Prepayments 41,039 40,540
Others 78,252 91,485
485,073 484,067
Provisions (note 22) (15,195) (14,829)
469,878 469,238
9 (a) Goodwill and intangible assets

2017 2016
Intangible Intangible
Goodwill assets Total Goodwill assets Total
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
At 1 January 70,166 21,569 91,735 72,781 29,503 102,284
Additions - 14,860 14,860 10,498 9,134 19,632
Amortisation charge for the year (note 20) - (9,909) (9,909) - (5,351) (5,351)
Impairment loss for the year - - - (9,082) - (9,082)
Foreign exchange translations (8,827) (1,022) (9,849) (4,031) (11,717) (15,748)
At 31 December 61,339 25,498 86,837 70,166 21,569 91,735
Goodwill acquired through business combinations with indefinite lives have been allocated to four individual cash-generating units. The carrying amount
of goodwill allocated to each of the cash-generating units is as follows:
2017 2016
US$ '000 US$ '000
Al Baraka Turk Participation Bank 13,531 14,572
Al Barak Bank Egypt 824 767
Jordan Islamic Bank 26,646 26,646
Al Baraka Bank (Pakistan) Limited 20,338 28,181
61,339 70,166
The recoverable amounts of the cash-generating units were determined based on value in use calculation using cash flow projections from financial
budgets approved by the Group’s senior management covering a five year period. Management determined budgeted spreads based on the cash-
generating units’ past performance and its expectation of market development.
10. LONG TERM FINANCING

2017 2016
US$ '000 US$ '000
Murabaha financing 622,006 762,752
Subordinated financing obtained by a subsidiary 453,416 456,600
Wakala 161,133 161,904
1,236,555 1,381,256
Murabaha financing and wakala

During 2014, ATPB issued sukuk listed in Irish Stock Exchange for a tenure of 5 years with an expected profit rate of 6.25%, through its fully owned
subsidiary Bereket Varlık Kiralama A.S., amounting to US$ 350 million. The sukuk subscriptions to an extent of not less than 51% will be utilised to
purchase asset portfolio based on wakala contract, while the remaining portion to an extent of not more than 49% will be utilised as commodity
murabaha.

ANNUAL REPORT 2017
At 31 December 2017
10. LONG TERM FINANCING (Continued)

Subordinated financing obtained by a subsidiary
During 2015, ATPB obtained US$ 225 million subordinated financing with an annual profit rate of 10.5% for a period of 10 years. Further included in
Subordinated financing US$ 200 million obtained by ATPB during 2013 with an annual profit rate of 7.75%, for a period of ten years. These subordinated
financing are obtained in US$ and are considered part of Tier II capital in the capital adequacy calculation of ATPB as per the banking regulations in the
Republic of Turkey.
11. OTHER LIABILITIES

2017 2016
US$ '000 US$ '000
Payables 301,293 299,433
Cash margins 393,240 222,008
Managers' cheques 92,046 103,969
Other provisions (note 22) * 8,731 11,091
Current taxation ** 73,978 68,055
Deferred taxation ** 3,256 12,933
Accrued expenses 89,212 71,303
Charity fund 18,805 10,658
Others 55,422 57,017
1,035,983 856,467
* Other provisions mainly comprise of general provisions and specific provisions on commitment and contingent items.
** In view of operations of the Group being subject to various tax jurisdictions and regulations, it is not practical to provide a reconciliation between the
accounting and taxable profits together with details of effective tax rates.
12. EQUITY OF INVESTMENT ACCOUNTHOLDERS (IAH)

2017 2016
US$ '000 US$ '000
Equity of investment accountholders * 13,680,020 13,081,209
Profit equalisation reserve (note 12.1) 6,006 6,091
Investment risk reserve (note 12.2) 187,149 176,583
Cumulative changes in fair value attributable to equity of investment accountholders - net (note 12.3) 8,934 12,911
13,882,109 13,276,794
* Medium term Sukuk
This includes unsecured, sub-ordinated and privately placed unrestricted mudaraba sukuk amounting to US$ 24,478 thousand (2016: US$ 13,923
thousand) issued by Al Baraka Bank (Pakistan) Limited (ABPL) during 2014. The issuance of sukuk is intended to comply with regulatory requirements
related to capital adequacy ratio of ABPL. The tenure of the sukuk is seven years maturing in 2021. The principal repayment, started after six months of
the drawdown date and is being made semi-annually on a straight line basis.
12.1 Profit equalisation reserve

The following shows the movement in profit equalisation reserve:
2017 2016
US$ '000 US$ '000
Balance at 1 January 6,091 10,037
Amount apportioned from income allocable to equity of investment accountholders 910 297
Amount used during the year (976) (3,580)
Foreign exchange translations (19) (663)
Balance at 31 December 6,006 6,091

At 31 December 2017
12. EQUITY OF INVESTMENT ACCOUNTHOLDERS (IAH) (Continued)

12.2 Investment risk reserve
The following shows the movement in investment risk reserve:
2017 2016
US$ '000 US$ '000
Amount appropriated to provision (note 22) (8,069) 7,324
Amount apportioned from income allocable to equity of investment accountholders 21,895 1,057
Foreign exchange translations (3,260) (11,036)
Balance at 31 December 187,149 176,583
12.3 Movement in cumulative changes in fair value attributable to equity of investment accountholders - net
2017 2016
US$ '000 US$ '000
Change in fair values during the year (3,480) 3,840
Realised gain transferred to consolidated statement of income (48) (3,210)
Deferred taxation effect 1,235 (221)
Transfer to shareholders equity (1,684) 262
8,934 12,911
Attributable to investment in real estate 8,695 11,256

Attributable to equity-type instruments at fair value through equity 239 1,655
8,934 12,911
13. OWNERS’ EQUITY

2017 2016
US$ '000 US$ '000
Share capital
Authorised: 1,500,000,000 (2015: 1,500,000,000) ordinary shares of US$ 1 each 1,500,000 1,500,000
2017 2016
US$ '000 US$ '000
Issued and fully paid up:
At beginning of the year
1,149,218,451 (2016: 1,115,746,069) shares of US$1 each 1,149,218 1,115,746
Issued during the year
57,460,923 bonus shares (2016: 33,472,382) of US$1 each 57,461 33,472
At end of the year
1,206,679,374 (2016: 1,149,218,451) shares of US$1 each 1,206,679 1,149,218
Proposed appropriations
At the Annual General Meeting held on 20 March 2017 (2016: 20 March 2016), the shareholders of the Group resolved to distribute US$11,396 thousand
(2016: US$22,315 thousand) as cash dividends and US$57,461 thousand (2016: US$33,472 thousand) as bonus shares.

ANNUAL REPORT 2017
At 31 December 2017
13. OWNERS’ EQUITY (Continued)

Treasury shares
Number of 2017 2016
shares ('000) US$ '000 US$ '000
At 1 January 9,588 9,588 8,464
Purchase of treasury shares 1,346 1,346 1,714
Sale of treasury shares (1,384) (1,384) (590)
At 31 December 9,550 9,550 9,588
The market value of the treasury shares is US$ 3,581 thousand (2016: US$ 4,698 thousand) and it represents 0.8% (2016: 0.8%) of the outstanding
shares.
Additional information on shareholding pattern

i) Names and nationalities of the major shareholders and the number of shares in which they have an interest of 5% or more of outstanding shares:
At 31 December 2017
Nationality/ Number
Names Incorporation of shares % holding
Saleh Abdullah Kamel Saudi 363,336,867 30.11%
Dallah AlBaraka Holding Company E.C. Bahrain 297,276,402 24.64%
Altawfeek Company For Investment Funds Cayman Island 233,177,723 19.32%
Abdulla AbdulAziz AlRajihi Saudi 84,770,095 7.03%
At 31 December 2016
Nationality/ Number
Names Incorporation of shares % holding
Saleh Abdullah Kamel Saudi 346,035,112 30.11%
Dallah AlBaraka Holding Company E.C. Bahrain 283,120,383 24.64%
Altawfeek Company For Investment Funds Cayman Island 222,074,022 19.32%
Abdulla AbdulAziz AlRajihi Saudi 80,733,424 7.03%
ii) The Bank has only one class of shares and the holders of these shares have equal voting rights.
iii) Distribution schedule of shares, setting out the number and percentage of holders in the following categories:
At 31 December 2017
% of total
Number Number of outstanding
Categories: of shares shareholders shares
Less than 1% 120,600,222 1,088 9.99%
1% up to less than 5% 107,518,065 4 8.91%
5% up to less than 10% 84,770,095 1 7.03%
10% up to less than 20% 233,177,723 1 19.32%
20% up to less than 50% 660,613,269 2 54.75%
1,206,679,374 1,096 100.00%
At 31 December 2016
% of total
Number Number of outstanding
Categories: of shares shareholders shares
Less than 1% 86,408,191 1,092 7.52%
1% up to less than 5% 130,847,319 6 11.38%
5% up to less than 10% 80,733,424 1 7.03%
10% up to less than 20% 222,074,022 1 19.32%
20% up to less than 50% 629,155,495 2 54.75%
1,149,218,451 1,102 100.00%

At 31 December 2017

a. Share premium/Equity transaction cost
Amounts collected in excess of the par value of the issued share capital during any new issue of shares, net of issue costs, are treated as share premium.
This amount is not available for distribution, but can be utilised as stipulated in the Bahrain Commercial Companies Law (BCCL).
Equity transaction cost, represent costs incurred by the Bank that are directly related to raising capital and have been incurred in cash.
b. Statutory reserve
In accordance with the BCCL and the Bank’s articles of association, 10% of the parent’s share of the net income for the year is transferred to the statutory
reserve until such time as the reserve reaches 50% of the Bank’s paid-up share capital. The reserve is not distributable except in such circumstances as
stipulated in the Bahrain Commercial Companies Law. During the year US$ 12,903 thousand (2016: US$ 15,155 thousand) was transferred to statutory
reserve.
c. Cumulative changes in fair values

This represents the net unrealised fair value gains and losses relating to the equity of the parent on equity-type instruments at fair value through equity,
investment in real estate and land occupied by the Group (classified as property and equipment).
d. Foreign currency translations

The foreign currency translations are used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.
The following table summarises the subsidiary wise foreign currency translation reserve as at 31 December:
2017 2016
Subsidiary Currency US$ '000 US$ '000
Banque Al Baraka D’Algerie (BAA) Algerian Dinar 54,401 50,617
Al Baraka Bank (Pakistan) Limited Pakistani Rupees 12,078 7,890
Al Baraka Bank Egypt (ABE) Egyptian Pound 138,837 144,651
Al Baraka Turk Participation Bank (ATPB) Turkish Lira 378,186 350,455
Al Baraka Bank Limited (ABL) South African Rand 13,857 17,279
Al Baraka Bank Sudan (ABS) Sudanese Pound 49,719 36,901
Al Baraka Bank Tunis (ABT) Tunisian Dinar 25,859 23,166
Al Baraka Bank Syria (ABBS) Syrian Pound 33,454 35,760
BTI Bank Moroccan Dirham (149) -
706,242 666,719
e. Other reserves
Other reserves mainly consist of general banking risk reserves maintained by the subsidiaries in accordance with local regulations.
f. Zakah paid on behalf of shareholders

The General Assembly in its annual meeting conducted on 20 March 2017 empowered the Executive Management of Al Baraka Banking Group to pay an
amount of US$4,021 thousand as Zakah on behalf of the shareholders deducted from the Retained Earnings for the financial year of 2016. The Group has
paid and distributed an amount of US$3,688 thousand to those who’s entitled to receive Zakah as per Shari’a boundaries and as approved by the Unified
Shari’a Board. The remaining amount of US$333 thousand has been allocated to be paid maximum by end of first quarter of 2018.
2017 2016
US$ '000 US$ '000
Zakah to be paid on behalf of shareholders for the year 4,021 3,962
Uses of Zakah:
Zakah for the poor and needy 2,604 1,650
Zakah for welfare - 143
Zakah for new converts to Islam 80 177
Scholarships 1,004 1,100
Others - 8
Total uses 3,688 3,078
Remaining Zakah to be paid 333 884

ANNUAL REPORT 2017
At 31 December 2017

g. Proposed Appropriations
2017 2016
US$ '000 US$ '000
Cash dividend 2% (2016: 1%) 24,134 11,396
Bonus shares 36,200 57,461
60,334 68,857
The above proposed appropriations exclude appropriations to the statutory reserve as mentioned above and will be submitted for formal approval at the
Annual General Meeting subject to regulatory approval.
The Bank proposed issuance of bonus shares from the retained earnings at three bonus shares for each 100 shares held (2016: one bonus share for each
20 shares held). This will be submitted for formal approval at the Annual General Meeting subject to regulatory approval.
The proposed appropriations for the year 2016 was approved at the Annual General Meeting on 20 March 2017 and was effected in 2017 following the
approval.
h. Net movement in non-controlling interest

This mainly includes the effect of changes in capital of subsidiaries, buying (selling) by the non-controlling interest from (to) the Group.
14. PERPETUAL TIER 1 CAPITAL

On 31 May 2017, the Bank completed an issuance of US$ 400 million Additional Tier 1 Mudaraba Sukuk in compliance with CBB regulations; listed on
Irish Stock Exchange. Profit shall be payable subject to and in accordance with terms and conditions on the outstanding nominal amount of the Sukuk
at an expected profit of 7.875% per annum, payable on semi-annual basis. These Sukuks are recognised under equity in the consolidated statement of
financial position and the corresponding Profit payable on those Sukuk are accounted as appropriation of profits. Expenses relating to the issuance have
been included in the retained earnings. As per the terms and conditions, the Sukuk holders will not have a right to claim the profit and such event of non-
payment of profit will not be considered as event of default.
15. NET INCOME FROM JOINTLY AND SELF FINANCED CONTRACTS AND INVESTMENTS
2017 2016
US$ '000 US$ '000
Receivables (note 15.1) 1,035,429 1,099,779
Mudaraba and Musharaka financing (note 15.2) 210,776 126,248
Investments (note 15.3) 234,610 293,096
Ijarah Muntahia Bittamleek (note 15.4) 138,989 135,999
Others 652 3,532
1,620,456 1,658,654
Net income from jointly financed contracts and investments 1,258,663 1,336,569
Gross income from self financed contracts and investments 361,793 322,085
1,620,456 1,658,654
Gross income from self financed contracts and investments 361,793 322,085
Profit paid on wakala financing (31,515) (36,586)
Net income from self financed contracts and investments 330,278 285,499
15.1 Receivables
2017 2016
US$ '000 US$ '000
Sales (Murabaha) receivables 1,025,789 1,085,461
Salam receivables 6,598 9,980
Istisna'a receivables 3,042 4,338
1,035,429 1,099,779

At 31 December 2017
15. NET INCOME FROM JOINTLY AND SELF FINANCED CONTRACTS AND INVESTMENTS (Continued)
15.2 Mudaraba and Musharaka financing
2017 2016
US$ '000 US$ '000
Mudaraba financing 87,773 64,789
Musharaka financing 123,003 61,459
210,776 126,248
15.3 Investments
2017 2016
US$ '000 US$ '000
Equity-type instruments at fair value through equity 7,061 4,357
Debt-type instruments at amortised cost 224,776 275,095
Unrealised (loss) gain on equity and debt-type instruments at fair value through statement of income (1,163) 152
(Loss) gain on sale of equity-type instruments at fair value through equity (21) 3,585
Gain on sale of equity and debt-type instruments at fair value through statement of income 820 667
Rental income 1,496 1,679
Income from associates 1,537 2,059
Gain on sale of investment in real estate 104 5,502
234,610 293,096
15.4 Ijarah Muntahia Bittamleek

2017 2016
US$ '000 US$ '000
Income from Ijarah Muntahia Bittamleek 405,097 374,314
Depreciation on Ijarah Muntahia Bittamleek (266,108) (238,315)
138,989 135,999
16. GROUP’S SHARE AS A MUDARIB

Group’s share as a Mudarib is determined at the level of each subsidiary and is based on the terms and conditions of the related agreements.
17. OTHER FEES AND COMMISSION INCOME

2017 2016
US$ '000 US$ '000
Banking fees and commissions 90,459 95,393
Letters of credit 25,189 30,623
Guarantees 34,209 41,597
Acceptances 8,037 9,224
157,894 176,837
18. OTHER OPERATING INCOME

2017 2016
US$ '000 US$ '000
Foreign exchange gain 24,191 64,055
Gain on sale of property and equipment 11,192 14,804
35,383 78,859

ANNUAL REPORT 2017
At 31 December 2017
19. PROFIT PAID ON LONG TERM FINANCING

2017 2016
US$ '000 US$ '000
Murabaha financing 15,637 16,280
Subordinated financing obtained by a subsidiary 47,888 45,469
Wakala 21,475 29,621
85,000 91,370
20. DEPRECIATION AND AMORTISATION

2017 2016
US$ '000 US$ '000
Property and equipment depreciation (note 8) 37,489 39,228
Intangible assets amortisation (note 9 (a)) 9,909 5,351
47,398 44,579
21. OTHER OPERATING EXPENSES

2017 2016
US$ '000 US$ '000
General and administration expenses 103,251 102,807
Professional and business expenses 34,179 29,777
Premises related expenses 68,442 64,552
205,872 197,136
22. PROVISIONS AND IMPAIRMENT

Sales
(Murabaha) Ijarah Salam Istisna'a Mudaraba Musharaka Investments Other Other
receivables receivables receivables receivables financing financing US$ '000 assets liabilities
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 (note 6.2 & US$ '000 US$ '000 Total
2017 (note 4.1) (note 4.2) (note 4.3) (note 4.4) (note 5.1) (note 5.2) 6.3) (note 9) (note 11) US$ '000
Provisions at 1 January 354,543 12,471 5,954 2,275 11,948 6,601 7,160 14,829 11,091 426,872
Charged during the year 150,521 3,798 1,355 200 103 3,460 2,317 1,677 1,666 165,097
Written back during the year (24,391) (3,442) (1,048) (929) - (694) (305) (666) (1,974) (33,449)
126,130 356 307 (729) 103 2,766 2,012 1,011 (308) 131,648
480,673 12,827 6,261 1,546 12,051 9,367 9,172 15,840 10,783 558,520
Written off during the year (119,333) - - - - - - - (550) (119,883)
Amount appropriated
from investment risk
reserve (note 12.2) 5,169 283 - - - 52 2,565 - - 8,069
Foreign exchange
translations/others - net 2,752 240 (386) (156) 887 (290) (41) (645) (1,502) 859
Provisions at 31 December 369,261 13,350 5,875 1,390 12,938 9,129 11,696 15,195 8,731 447,565
During the year, an impairment loss of US$159 thousand (2016: US$9,134 thousand) was charged against investments and goodwill.

At 31 December 2017
22. PROVISIONS AND IMPAIRMENT (Continued)

Sales
Provisions at 1 January 379,269 10,232 5,467 410 11,262 4,237 8,494 12,370 13,809 445,550
Charged during the year 113,131 3,455 1,453 1,192 18,388 795 1,040 4,756 1,480 145,690
Written back during the year (22,518) (3,157) (747) (300) - (2,195) (1,302) (1,636) (815) (32,670)
90,613 298 706 892 18,388 (1,400) (262) 3,120 665 113,020
469,882 10,530 6,173 1,302 29,650 2,837 8,232 15,490 14,474 558,570
Written off during the year (33,282) (36) (131) - (21,817) (37) (465) (737) (968) (57,473)
Amount appropriated
from investment risk
reserve (note 12.2) (7,472) 144 - - - 4 - - - (7,324)
Foreign exchange
translations/others - net (74,585) 1,833 (88) 973 4,115 3,797 (607) 76 (2,415) (66,901)
Provisions at 31 December 354,543 12,471 5,954 2,275 11,948 6,601 7,160 14,829 11,091 426,872
The provisions relate to the following geographical areas:

Sales
Middle East 157,954 2,996 - - 12,938 535 8,940 6,362 7,520 197,245
North Africa 18,576 6,359 1,868 52 - 12 1,292 1,327 1,211 30,697
Europe 162,720 - - - - - - 2,271 - 164,991
Others 30,011 3,995 4,007 1,338 - 8,582 1,464 5,235 - 54,632
Total 369,261 13,350 5,875 1,390 12,938 9,129 11,696 15,195 8,731 447,565
2016
Middle East 153,603 2,438 - - 11,948 248 6,215 6,342 10,798 191,592
North Africa 17,434 6,265 1,493 79 - 6 490 972 293 27,032
Europe 148,934 - - - - - - 2,104 - 151,038
Others 34,572 3,768 4,461 2,196 - 6,347 455 5,411 - 57,210
Total 354,543 12,471 5,954 2,275 11,948 6,601 7,160 14,829 11,091 426,872
The fair value of collateral the Group holds relating to non-performing facilities as at 31 December 2017 amounts to US$639.2 million (2016: US$ 554.1
million). The collateral consists of cash margin, securities and properties. The utilisation of the collaterals will be on customer by customer basis and will
be limited to the customer’s total exposure.
23. BASIC AND DILUTED EARNINGS PER SHARE

Basic and diluted earnings per share amounts are calculated by dividing net income for the year attributable to equity holders of the parent by the
weighted average number of shares outstanding during the year as follows:
2017 2016
Net income attributable to the equity shareholders of the parent for the year - US$ ‘000 129,029 151,545
Less: Profit distributed on perpetual tier 1 capital (15,750) -
Net income attributable to the shareholders equity 113,279 151,545
Number of shares outstanding at the beginning of the year (in thousands) 1,206,679 1,140,818
Treasury shares effect (in thousands) (10,194) (610)
Bonus shares effect during the year (in thousands)* - 57,041
Weighted average number of shares outstanding at the end of the year (in thousands) 1,196,485 1,197,249
Earnings per share - US cents 9.47 12.66
*The weighted average number of shares of the previous year has been adjusted on account of the bonus share issue made in 2017 (note 13).

ANNUAL REPORT 2017
At 31 December 2017
24. CASH AND CASH EQUIVALENTS
2017 2016
US$ '000 US$ '000
Balances with central banks excluding mandatory reserve 1,534,035 1,662,465
Cash and cash in transit 724,630 604,002
2,861,182 2,851,958
25. RELATED PARTY TRANSACTIONS

Related parties comprise major shareholders, directors of the Group, entities owned or controlled, jointly controlled or significantly influenced by them,
companies affiliated by virtue of shareholding in common with that of the Group and Shari’a supervisory board members.
The income and expenses in respect of related parties were as follows:

Directors
and key Other
Associated Major management related
companies shareholders personnel parties 2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Net income from jointly financed contracts
and investments 1,940 - 61 - 2,001 2,091
Net income from self financed contracts
and investments - 2 - - 2 764
Return on equity of investment accountholders 176 50 11 2 239 268
Other fees and commission income 487 - - - 487 418
Compensation of key management personnel of the Bank, included in consolidated statement of income, is as follows:
2017 2016
US$ '000 US$ '000
Short term benefits 8,814 8,164
Long term benefits 1,473 1,398
Short term benefits includes basic salaries, bonuses, allowances and other benefits paid during the year and long term benefits includes indemnity, social
insurance benefits and investment scheme.
Director’s remuneration accrued for the year ended 31 December 2017 amounted to US$ 1.5 million (2016: US$ 1.5 million).
The balances with related parties at 31 December were as follows:

Directors
and key Other
Associated Major management related
companies shareholders personnel parties 2017 2016
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Assets:
Receivables 2,006 - 609 - 2,615 2,768
Investments 37,848 - - - 37,848 63,555
Ijarah Muntahia Bittamleek - - 382 - 382 559
Other assets - 1 586 - 587 1,881
Liabilities:
Customer current and other accounts 4,260 4,833 1,186 73 10,352 9,076
Other liabilities - - - - - 2
Equity of investment accountholders 17,677 2,058 734 68 20,537 25,071
Off-balance sheet equity of investment
accountholders 17,267 9,100 7,059 - 33,426 29,114
All related party exposures are performing and are free of any provision for possible credit losses.

At 31 December 2017
25. RELATED PARTY TRANSACTIONS (Continued)

Details of Directors’ and Executive Management’s direct and indirect interests in the Bank’s shares as at the end of the year were:
2016 Transaction 2017*
Number of Number of Number of
Name of directors Position Nationality shares shares shares
Saleh Abdulla Kamel Chairman Saudi 629,155,495 - 660,613,269
Abdulla Ammar Saudi Vice Chairman Bahraini 616,136 - 646,942
Abdulla Saleh Kamel Vice Chairman Saudi 313,082 - 328,736
Mohydin Saleh Kamel Board Member Saudi 654,625 - 687,356
AbdulElah Sabbahi Board Member Saudi 208,877 - 219,320
Adnan Ahmed Yousif Board Member (President & Chief Executive) Bahraini 336 - 352
Abdulrahman Shehab Executive Vice President, Head of Operations
and Administration Bahraini 125,976 100,000 232,274
* Includes the effect of the Bank’s issuance of bonus shares at one bonus share for each 20 shares held as per the approval of the shareholders at the
Annual General Meeting on 20 March 2017.
26. COMMITMENTS AND CONTINGENCIES

2017 2016
US$ '000 US$ '000
Letters of credit 853,547 704,307
Guarantees 2,343,883 2,680,992
Acceptances 76,755 53,791
Undrawn commitments 1,150,183 834,915
Sharia’a compliant promise contracts 300,365 323,915
Others 277 321
4,725,010 4,598,241
27. SEGMENTAL ANALYSIS

Segmental information is presented in respect of the Group’s geographical segments. The geographical segments are based upon the location of the
units responsible for recording the transactions and reflects the manner in which financial information is evaluated by the Group’s management and the
Board of Directors.
For financial reporting purposes, the Group is divided into the following geographic segments:
• Middle East
• North Africa
• Europe
• Others
The results reported for the geographic segments are based on the Group’s internal financial reporting systems. The accounting policies of the segments
are the same as those applied in the preparation of the Group’s consolidated financial statements as set out in Note 2. Transactions between segments
are conducted at estimated market rates on an arm’s length basis.
No business segment are presented as that is not applicable to the Group.

ANNUAL REPORT 2017
At 31 December 2017
27. SEGMENTAL ANALYSIS (Continued)

Segment assets, liabilities and equity of investment accountholders were as follows:
2017 2016
Assets Liabilities IAH Assets Liabilities IAH
Segment US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Middle East 11,154,872 2,976,028 6,827,712 9,710,447 2,782,561 6,057,888
North Africa 2,691,890 1,355,042 1,042,965 2,419,901 1,171,716 974,704
Europe 9,538,495 4,034,513 4,847,691 9,304,781 3,546,164 5,103,850
Others 2,067,954 694,858 1,163,741 1,990,136 639,449 1,140,352
25,453,211 9,060,441 13,882,109 23,425,265 8,139,890 13,276,794
Segment operating income, net operating income and net income were as follows:
2017 2016
Total Net Total Net
operating operating Net operating operating Net
income income income income income income
Segment US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Middle East 370,546 175,270 101,964 446,026 223,014 119,332
North Africa 103,291 41,437 22,265 103,411 48,527 34,413
Europe 407,474 185,536 60,534 425,986 203,709 90,022
Others 117,379 28,130 22,156 98,736 31,693 23,869
998,690 430,373 206,919 1,074,159 506,943 267,636
28. RISK MANAGEMENT

Risk management is an integral part of the Group’s decision-making process. The management risk committee and executive committees guide and assist
with overall management of the Group’s balance sheet risks. The Group manages exposures by setting limits approved by the Board of Directors. These
risks and the processes to mitigate these risks have not significantly altered from the previous year.
The most important types of risk are liquidity risk, credit risk, concentration risk, market risk and other operational risk. Market risk includes profit rate
risk, equity price risk and foreign exchange risk.
a) Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its payment obligations when they fall due under normal and stress circumstances. To limit
this risk, management has arranged diversified funding sources, manages assets with liquidity in mind, and monitors liquidity on regular basis. Each of the
Group’s subsidiaries has a documented and implemented domestic and foreign currency liquidity policy appropriate to the nature and complexity of its
business. The policy addresses the subsidiaries’ goal of protecting financial strength even for stressful events.
The table next page summarises the maturity profile of the Group’s assets and liabilities based on contractual repayment arrangements. The contractual
maturities of assets and liabilities have been determined on the basis of the remaining period at the financial position date to the contractual maturity
date and do not take account of the effective maturities as indicated by the Group’s retention history of its investment account holders and the
availability of bank lines.

At 31 December 2017
28. RISK MANAGEMENT (Continued)

a) Liquidity risk (Continued)
The maturity profile at 31 December 2017 was as follows:
Up to 1 to 3 3 to 6 6 months 1 to 3 3 to 5 5 to 10 10 to 20 20 years
1 month months months to 1 year years years years years and above Undated Total
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Assets
Cash and balances with
banks 4,526,154 11,283 26,786 1,500 260,469 9,199 - - - 594,694 5,430,085
Receivables 1,760,393 1,028,586 1,094,874 1,832,313 3,408,176 1,959,133 644,964 271,318 1,293 - 12,001,050
Mudaraba and Musharaka
financing 1,293,318 17,945 9,318 44,780 369,236 399,121 211,589 32,347 - - 2,377,654
Investments 780,464 258,370 84,935 301,480 337,693 363,669 304,625 143,385 - 313,713 2,888,334
Ijarah Muntahia Bittamleek 24,629 30,722 63,549 113,525 471,467 359,037 399,815 307,508 85,766 - 1,856,018
Property and equipment - - - - - - - - - 430,192 430,192
Other assets 220,021 43,457 28,289 37,710 23,965 61,127 4,339 1,877 - 49,093 469,878
Total assets 8,604,979 1,390,363 1,307,751 2,331,308 4,871,006 3,151,286 1,565,332 756,435 87,059 1,387,692 25,453,211
Liabilities
Customer current and
other accounts 5,465,433 - - - - - - - - - 5,465,433
Due to banks 544,658 422,803 183,128 127,097 22,000 - - 22,784 - - 1,322,470
Long term financing - 4,564 98 390,926 46,956 381,200 412,811 - - - 1,236,555
Other liabilities 771,932 106,551 82,139 36,533 15,321 11,941 206 11,360 - - 1,035,983
Total liabilities 6,782,023 533,918 265,365 554,556 84,277 393,141 413,017 34,144 - - 9,060,441
Equity of investment
accountholders 6,071,194 1,342,695 1,019,310 1,475,506 1,351,345 2,383,841 95,329 142,889 - - 13,882,109
Total liabilities and
equity of investment
accountholders 12,853,217 1,876,613 1,284,675 2,030,062 1,435,622 2,776,982 508,346 177,033 - - 22,942,550
Net liquidity gap (4,248,238) (486,250) 23,076 301,246 3,435,384 374,304 1,056,986 579,402 87,059 1,387,692 2,510,661
Cumulative net
liquidity gap (4,248,238) (4,734,488) (4,711,412) (4,410,166) (974,782) (600,478) 456,508 1,035,910 1,122,969 2,510,661 -
Off-balance sheet
accountholders 172,138 113,533 85,724 372,931 74,077 58,345 26,154 478 - - 903,380

ANNUAL REPORT 2017
At 31 December 2017

a) Liquidity risk (Continued)
The maturity profile at 31 December 2016 was as follows:
Up to 1 to 3 3 to 6 6 months 1 to 3 3 to 5 5 to 10 10 to 20 20 years
1 month months months to 1 year years years years years and above Undated Total
Assets
Cash and balances with
banks 3,909,408 - 24,107 10,000 174,568 7,303 - - - 948,032 5,073,418
Receivables 1,504,074 810,358 1,378,701 2,087,664 3,126,846 1,861,219 463,466 190,549 571 - 11,423,448
Mudaraba and Musharaka
financing 691,754 15,944 11,995 29,133 217,576 334,008 241,125 40,861 - - 1,582,396
Investments 833,342 242,353 238,977 224,864 384,115 261,045 131,311 42,864 - 270,260 2,629,131
Ijarah Muntahia Bittamleek 96,173 61,860 56,550 81,838 412,325 305,851 382,191 418,041 15,510 - 1,830,339
Property and equipment - - - - - - - - - 417,295 417,295
Other assets 89,262 44,747 19,492 42,513 27,030 50,777 774 - 1,865 192,778 469,238
Total assets 7,124,013 1,175,262 1,729,822 2,476,012 4,342,460 2,820,203 1,218,867 692,315 17,946 1,828,365 23,425,265
Liabilities
Customer current and
other accounts 4,983,772 - - - - - - - - - 4,983,772
Due to banks 324,835 203,088 114,013 21,899 60,000 - - 194,560 - - 918,395
Long term financing - - 269,171 258,670 359,452 33,405 460,558 - - - 1,381,256
Other liabilities 296,977 83,044 64,699 57,579 22,444 26,147 205 305,372 - - 856,467
Total liabilities 5,605,584 286,132 447,883 338,148 441,896 59,552 460,763 499,932 - - 8,139,890
Equity of investment
accountholders 5,330,813 1,480,775 1,110,258 1,494,765 1,378,054 2,249,865 84,222 148,042 - - 13,276,794
Total liabilities and
accountholders 10,936,397 1,766,907 1,558,141 1,832,913 1,819,950 2,309,417 544,985 647,974 - - 21,416,684
Net liquidity gap (3,812,384) (591,645) 171,681 643,099 2,522,510 510,786 673,882 44,341 17,946 1,828,365 2,008,581
Cumulative net
liquidity gap (3,812,384) (4,404,029) (4,232,348) (3,589,249) (1,066,739) (555,953) 117,929 162,270 180,216 2,008,581 -
Off-balance sheet
accountholders 140,557 154,324 105,977 351,537 71,373 47,561 180 534 - - 872,043
b) Credit risk
Credit risk is the risk that one party to a financial contract will fail to discharge an obligation and cause the other party to incur a financial loss. The Group
controls credit risk by monitoring credit exposures, and continually assessing the creditworthiness of counterparties. Financing contracts are mostly
secured by the personal guarantees of individuals who own the counterparty, by collateral in form of mortgage of the objects financed or other types of
tangible security.
Type of credit risk

Financing contracts mainly comprise Sales (Murabaha) receivables, Salam receivables, Istisna’a receivables, Mudaraba financing, Musharaka financing and
Ijarah Muntahia Bittamleek.

The Group finances these transactions through buying a commodity which represents the object of the Murabaha and then resells this commodity to
the murabeh (beneficiary) at a profit. The sale price (cost plus the profit margin) is repaid in instalments by the murabeh over the agreed period. The
transactions are secured at times by the object of the Murabaha (in case of real estate finance) and other times by a total collateral package securing all
the facilities given to the client.

At 31 December 2017

b) Credit risk (Continued)
Salam receivables
Salam is a contract whereby the Group makes an immediate payment to a seller for the future delivery of a commodity. To protect itself from risk
associated with the commodity the Group simultaneously enters into Parallel Salam contract whereby it sells the commodity for deferred delivery for
immediate payment.
Istisna’a receivables
Istisna’a is a sale agreement between the Group as the seller and the customer as the ultimate purchaser whereby the Group undertakes to have
manufactured (or acquire) goods and sell it to the customer for an agreed upon price on completion at future date.
Mudaraba financing
The Group enters into Mudaraba contracts by investing in funds managed primarily by other banks and financial institutions for a definite period of time.
Musharaka financing
An agreement between the Group and a customer to contribute to a certain investment enterprise, whether existing or new, or the ownership of a certain
property either permanently or according to a diminishing arrangement ending up with the acquisition by the customer of the full ownership. The profit
is shared as per the agreement set between both parties while the loss is shared in proportion to their shares of capital or the enterprise.
Maximum exposure to credit risk before collateral held or other credit enhancements
Maximum exposure
2017 2016
US$ '000 US$ '000
Balances with central banks 4,102,938 3,883,925
Receivables 12,001,050 11,423,448
Mudaraba and Musharaka financing 2,377,654 1,582,396
Investments 2,888,334 2,629,131
Other assets 232,972 240,119
Total 22,205,465 20,344,510
Commitments and contingencies 4,725,010 4,598,241

26,930,475 24,942,751
Credit quality by type of islamic financing contracts

The table below shows the credit quality by type of islamic financing contracts, based on the Group’s credit rating system as of:
31 December 2017
Non
Neither performing
past due Past due islamic
nor non but financing
performing performing contracts Total
Type of Islamic Financing Contracts US$ '000 US$ '000 US$ '000 US$ '000
Receivables 11,100,608 622,324 667,994 12,390,926
Mudaraba and Musharaka financing 2,324,682 42,602 32,437 2,399,721
Other assets 235,009 3,070 10,088 248,167
13,660,299 667,996 710,519 15,038,814

ANNUAL REPORT 2017
At 31 December 2017

Credit quality by type of islamic financing contracts (Continued)
31 December 2016
Non
Neither performing
past due Past due islamic
nor non but financing
performing performing contracts Total
Receivables 10,563,395 590,576 644,720 11,798,691
Mudaraba and Musharaka financing 1,542,585 25,855 32,505 1,600,945
Other assets 244,934 311 9,703 254,948
12,350,914 616,742 686,928 13,654,584
Aging analysis of past due but performing Islamic financing contracts

The following table summarises the aging of past due but performing islamic financing contracts as of:
31 December 2017
Less than 31 to 60 61 to 90
30 days days days Total
Receivables 327,326 172,809 122,189 622,324
Mudaraba and Musharaka financing 33,334 6,886 2,382 42,602
Other assets 3,029 5 36 3,070
363,689 179,700 124,607 667,996
31 December 2016
Less than 31 to 60 61 to 90
30 days days days Total
Receivables 235,857 160,144 194,575 590,576
Mudaraba and Musharaka financing 20,067 4,296 1,492 25,855
Other assets 309 1 1 311
256,233 164,441 196,068 616,742
Credit Risk Mitigation

All the Group’s subsidiaries, with exposures secured by real estate or other collateral carry out regular and periodic collateral verification and evaluation.
This collateral verification and valuation is conducted by an independent qualified assessor or Collateral Analyst at the subsidiary. The frequency of such
collateral verification is determined as a part of the credit or investment policy and approval process. The Group’s subsidiaries allow cars, ships, aircraft,
satellites, railcars, and fleets as collateral for a credit and investment product but do not accept perishable assets or any other assets with depreciable
life of less than five years. Subsidiaries do not accept any assets as collateral if the assets are susceptible for obsolescence in case they are moved (e.g.
furniture). Subsidiaries also ensure that these assets are insured in order to be accepted as collateral.
Third party cheques are accepted as collateral by the Group’s subsidiaries. The Group’s subsidiaries accept commercial papers as qualifying collateral if
they are issued by banks or corporations of good credit standing. Since the maturity tenure of the commercial papers are generally short in nature, they
are not accepted as collateral for long–term facilities (i.e. the financing tenure should not exceed the commercial papers maturity tenure). The subsidiaries
do not accept vehicle or equipments, if new, as qualifying collateral for more than 80% of its market value. No vehicles or equipments, if used, are
accepted as qualifying collateral for more than 50% of its insured value.

At 31 December 2017

Credit Risk Mitigation (Continued)
Collaterals listed hereunder may attract capital relief from capital adequacy requirements as per the Central Bank of Bahrain’s stipulations:
1) Hamish Jiddiyyah (Good faith deposit): Subsidiaries take this type of collateral in the transactions for which non-binding promises to perform is given
by the customer. If a customer does not honor his promise to perform, the subsidiary has recourse to the deposit.
2) Third party guarantee: The subsidiary should have recourse to the guarantor in case of customer’s default. In order to qualify as eligible collateral, the
guarantee should be unconditional and irrevocable. The guarantor must be solvent and, if applicable of investment grade rating.
3) Urbon: This is the amount that should be taken from a purchaser or lessee when a contract is established and it is the first line of defense for the
subsidiary if the purchaser or lessee breaches the contract.
4) Underlying assets of the lease contract: The underlying asset must be of monetary value and the subsidiary must have legal access to it, own it and
sell it to cover the open exposure with the customers in question. The assets have also to be free of any of any kind of encumbrance.
Any excess amount resulting from the closure of the pledge by the subsidiary should be returned to the customer (pledger). The subsidiary should
conduct at least annual evaluation of the pledged assets and keep adequate documentation of this evaluation.
5) Cash deposit free from any legal encumbrance with the subsidiary either in the form of equity of investment accountholders or off-balance sheet
equity of investment accountholders.
6) Rated and unrated senior sukuk issued by first class financial institutions or by GCC sovereigns.
Credit Quality
Credit Risk Management at the Group will be based upon the creation and maintenance of a Credit Rating System (CRS) for the non-retail business. All
the Group’s units are to incorporate into their respective credit policies the CRS as the framework for credit management taking into consideration the
methodology requirements of their local central banks, in this respect. The methodology for obligor (issuer) rating will reflect the specifics of the Group’s
main business and the geographical diversity of its operations. Ratings of countries, governments and financial institutions are carried out in centralised
fashion at the Bank in Bahrain whereas rating of corporates is done at the subsidiaries level, unless the exposure to the corporate involves cross-border
risk, in which case, that rating will also be at the Bank as part of the credit limit approval.
The CRS at the Bank has also been designed to be comparable to the rating system of major international rating agencies (Moody’s, Standard & Poor’s,
Fitch) in respect of their foreign currency rating of countries, governments and financial institutions.
Accordingly, countries, governments and financial Institutions will be rated on the basis of their unsecured medium term foreign currency obligations. This
means that for governments and financial institutions the cross-border risk will also be part of the rating and the country’s rating will be, in most cases,
the ceiling on the financial institution’s rating.
The basic approach of the major credit rating agencies to rating is the same as what the Group credit policies require i.e. a comprehensive fundamental
analysis of all relevant quantitative and non quantitative factors aimed at identifying actual and potential vulnerability. Credit rating will be applied to
countries and single obligors. Single obligors, in turn are categorised as financial institutions, corporates, governments and retail. CRS therefore rates
obligors (issuers) and not facilities. The obligor rating of countries and single obligors will identify the relative probability of default but will not take into
account the impact of collateral security and other mitigants in the event of default. Facility ratings by contrast, combine both the probability of default
and loss severity in case of defaults. However, initially the Group wide policy will be to set up obligor ratings only (which does not prevent individual
subsidiaries internally to also rate facilities if they so wish).
100 ALANNUAL
BARAKA BANKING GROUP
REPORT 2017
At 31 December 2017

c) Concentration risk
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have
similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other
conditions. Concentrations indicate the relative sensitivity of the Group’s performance to developments affecting a particular industry or geographical
location.
In order to avoid excessive concentrations of risk, the Group policies and procedures include specific guidelines to focus on country and counter party
limits and maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
The distribution of assets, liabilities and equity of investment accountholders items by economic sectors was as follows:
2017 2016
Assets Liabilities IAH Assets Liabilities IAH
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Manufacturing 4,272,944 219,771 202,767 3,922,073 240,393 173,444
Mining and quarrying 182,855 6,902 27,252 169,465 1,498 27,218
Agriculture 127,190 7,246 7,294 149,542 11,922 9,644
Construction and real estate 3,259,085 21,663 36,223 3,211,074 22,924 39,222
Financial 3,646,634 2,703,293 1,759,254 2,377,485 2,388,226 1,672,165
Trade 1,622,738 222,384 161,548 1,451,128 193,639 153,379
Personal and consumer finance 2,926,192 4,025,988 9,716,539 2,620,213 3,705,500 9,486,208
Government 6,177,308 78,584 164,559 6,592,359 84,263 149,594
Other Services 3,238,265 1,774,610 1,806,673 2,931,926 1,491,525 1,565,920
25,453,211 9,060,441 13,882,109 23,425,265 8,139,890 13,276,794
d) Market risk
Market risk arises from fluctuations in profit rates, equity prices and foreign exchange rates. Under Market Risk Policies currently implemented by
management of the Group, have set certain limits on the level of risk that may be accepted. This is monitored by local management at the subsidiary level.
Profit rate risk

Profit rate risk is the risk that the Group will incur a financial loss as a result of mismatch in the profit rate on the Group’s assets and on equity of
investment accountholders. The profit distribution to equity of investment accountholders is based on profit sharing agreements. Therefore, the Group
is not subject to any significant profit rate risk.
However, the profit sharing agreements will result in displaced commercial risk when the Group’s results do not allow the Group to distribute profits in
line with the market rates.
Equity price risk

Equity price risk is the risk that the fair values of equities decrease as the result of changes in the levels of equity indices and the value of individual
stocks. The equity price risk exposure arises from the investment portfolio. The Group manages this risk through diversification of investments in terms
of geographical distribution and industry concentration.
The Group has total equity portfolio of US$ 367,595 thousand (2016: US$ 126,698 thousand) comprising of equity-type instruments at fair value through
equity amounting to US$ 103,818 thousand (2016: US$ 107,225 thousand) and equity-type instruments at fair value through statement of income
amounting to US$ 263,777 thousand (2016: US$ 19,473 thousand). Variation of 10% increase or decrease in the portfolio value will not have a significant
impact on the Group’s consolidated net income or owners’ equity.

At 31 December 2017

d) Market risk (Continued)
Foreign exchange risk
Foreign exchange risk arise from the movement of the rate of exchange over a period of time. Positions are monitored on a regular basis to ensure
positions are maintained within established approved limits.
Following is the Group’s exposure to different currencies in equivalent US dollars:
2017
Operational Strategic Total
equivalent equivalent equivalent
Long Long Long
(Short) (Short) (Short)
Currency US$ '000 US$ '000 US$ '000
Turkish Lira 86,609 371,753 458,362
Jordanian Dinar 28,456 376,638 405,094
Egyptian Pound 1,211 108,894 110,105
Sudanese Pound 1,193 48,083 49,276
Algerian Dinar (186) 112,093 111,907
Lebanese Pound 5,890 16,953 22,843
Pound Sterling (4,110) - (4,110)
Tunisian Dinar (855) 50,945 50,090
Euro 71,279 - 71,279
South African Rand - 34,466 34,466
Pakistani Rupees 4,919 84,475 89,394
Syrian Pound 3,146 14,720 17,866
Moroccan Dirham - 13,904 13,904
Others 78,435 - 78,435
2016
Operational Strategic Total
equivalent equivalent equivalent
Long Long Long
(Short) (Short) (Short)
Currency US$ '000 US$ '000 US$ '000
Turkish Lira (9,102) 370,890 361,788
Jordanian Dinar 11,512 346,283 357,795
Egyptian Pound (22,903) 76,503 53,600
Sudanese Pound 2,998 47,434 50,432
Algerian Dinar (189) 113,815 113,626
Lebanese Pound 3,983 19,097 23,080
Pound Sterling (3,143) - (3,143)
Tunisia Dinar (982) 54,779 53,797
Euro 2,510 - 2,510
South African Rand (567) 29,276 28,709
Pakistani Rupees 9,609 82,936 92,545
Syrian Pound 40,267 11,846 52,113
Moroccan Dirham - - -
Others 139,238 - 139,238
The strategic currency risk represents the amount of equity of the subsidiaries.
102 ALANNUAL
REPORT 2017
At 31 December 2017

Foreign currency risk sensitivity analysis
In order to measure its exposures to currency risk, the Group stress tests its exposures following the standard shocks adopted by Derivatives Policy Group
in this respect which calculates the effect on assets and income of the Group as a result of appreciation and depreciation in foreign currencies in relation
to the reporting currency of the Group. This is done using various percentages based upon the judgment of the management of the Group.
Following is the sensitivity analysis that calculates the effect of a reasonable possible movement of the currency exchange rate against the US Dollar with
all other variables held constant on the consolidated statement of income and the consolidated statement of owners’ equity.
At 31 December 2017
Change in net Change in
income and net income
Maximum owners' Maximum and owners'
Exposures expected equity expected equity
Currency Particular in US$ '000 decrease % US$ '000 increase % US$ '000
Algerian Dinar Net Income 27,450 -15% (3,580) 5% 1,445
Total owners' equity 200,526 -15% (26,156) 5% 10,554
Egyptian Pound Net Income 36,068 -20% (6,011) 5% 1,898
Turkish Lira Net Income 60,534 -20% (10,089) 5% 3,186
Sudanese Pound Net Income 20,965 -130% (11,850) 5% 1,103
S.African Rand Net Income 3,948 -15% (515) 5% 208
Syrian Pound Net Income 3,889 -20% (648) 5% 205
Pakistani Rupees Net Income (2,757) -10% 251 5% (145)
Tunisian Dinar Net Income (1,441) -10% 131 5% (76)
Moroccan Dirham Net Income (3,744) -20% 624 5% (197)

At 31 December 2017

At 31 December 2016
Change in net Change in
income and net income
Maximum owners' Maximum and owners'
Exposures expected equity expected equity
Currency Particular in US$ '000 decrease % US$ '000 increase % US$ '000
Algerian Dinar Net Income 33,231 -15% (4,334) 5% 1,749
Egyptian Pound Net Income 50,860 -20% (8,477) 5% 2,677
Turkish Lira Net Income 90,022 -20% (15,004) 5% 4,738
Sudanese Pound Net Income 21,652 -20% (3,609) 5% 1,140
S.African Rand Net Income 2,803 -15% (366) 5% 148
Syrian Pound Net Income 8,467 -20% (1,411) 5% 446
Pakistani Rupees Net Income (588) -10% 53 5% (31)
Tunisian Dinar Net Income 1,183 -10% (108) 5% 62
e) Operational Risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This
definition includes legal risk, but excludes strategic and reputational risk.
Operational Risk Management Framework

The Group guidelines have the following sections: (1) Operational Risk Appetite, (2) Operational Risk Management – Structure and Rules, (3) Risk and
Control Assessment, (4) Internal Audit, (5) Operational Risk and Basel II and (6) Operational Risk Capital Requirement.
The Group’s Operational Risk Appetite is defined as the level of risk which the Group chooses to accept in its identified risk categories. Operational risk
appetite is expressed in terms of both impact (direct loss) and the probability of occurrence.
The Operational Risk framework is subject to periodic Internal Audit.
The Group categorizes operational risk loss events into the following categories:
Infrastructure Risks
Availability of information technology is of paramount importance to the Group’s infrastructure. The operations of the Group and the subsidiaries might
be disrupted and severe operational risks could occur.
In order to hedge the subsidiaries from the infrastructure risk as outlined above, every subsidiary must take all the necessary measures indicated in the
Business Continuity Plan and/or Disaster Recovery Plan (BCP and DRP) to cater for these risks.
Information Technology Risks

The main risks that the Group is exposed to in this context is from inadequate software and hardware quality, unauthorized access by third parties or
employees, etc.
Staff risk
The main risks that arises from staff risks are risks due to larceny, fraud, corruption, crime, etc. In order to prevent these risks from occurring, the Group
has established Group Human Resources Policies and Code of Conduct which entails constructive ways in dealing with mistakes and frauds. The Group
has also established approval control steps in business processes as well as creating separate internal control processes. Further, the Group has established
measures of organizational structure in terms of segregation of duties as well as diverse training measures to reduce human errors and frauds, etc.
104 ALANNUAL
REPORT 2017
At 31 December 2017

e) Operational Risk (Continued)
Business risk
This risk may take on the following forms:
1. Processes without clear definitions, for example, when insufficient time was spent on documenting or updating the already documented processes.
2. Outdated process descriptions in cases where “reality” already strongly differs from the guidelines laid down in the past.
3. The extreme case of a completely missing documentation. To hedge this risk, the Group adopts sound documentation policies of business processes
as it is a basic requirement for a well functioning process organization. The process description are up to date and clear; furthermore, it is accessible
to all employees.
f) Corporate governance
Board of Directors
The Board of Directors is responsible for approving the Group’s overall business strategy, monitoring its operations and taking critical business decisions.
In line with international leading practices, the Board has instituted corporate governance measures to ensure that the interests of the shareholders are
protected, including the appointment to the Board of four independent non-executive directors as defined in the Rule Book of the CBB.
The Bank is administered by a Board of Directors consisting of not less than five and not more than fifteen members. However, subject to the provisions
of the law, the shareholders at an Ordinary General Meeting may determine that the number of directors shall exceed fifteen in certain circumstances.
Members of the Board of Directors hold office for a three-year renewable term, although the term of office may be extended at the request of the Board
for a period not exceeding six months by resolution of the Bahrain Minister of Industry and Commerce.
There are currently thirteen Directors on the Board, who have varied backgrounds and experience and who individually and collectively exercise
independent and objective judgment. Other than the President and Chief Executive, all Directors are non-executive. The posts of Chairman and President
and Chief Executive are held by different Directors and each has separate, clearly defined responsibilities.
The Board of Directors meets regularly (usually four times a year) and has a formal schedule of matters reserved to it, considering key aspects of the
Group’s affairs referred to it for decision. The Board reviews the Group’s strategy and financial plans, all proposed material changes to the Group’s policies,
structure and organisation, reports provided to it on the operations of the Group (with emphasis on organisational development, risk management and
information technology development) and the performance of executive management. The Board and its committees are supplied with full and timely
information to enable them to discharge their responsibilities. All Directors have access to the advice and services of the secretary, who is responsible for
ensuring that the Board procedures and applicable rules and regulations are observed.
The Board of Directors has overall responsibility for the Group’s system of internal control and its effectiveness. There are established and ongoing
procedures in place for identifying, evaluating and managing significant risks faced by the Group, which are regularly reviewed by the Board. The Group’s
system of internal control provides for a documented and auditable trail of accountability and applies across its operations, is designed to ensure effective
and efficient operation and compliance with all applicable laws and regulations, and seeks to manage risk with a view to avoiding material errors, losses
and fraud.
29. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the value representing the estimate of the amount of cash or cash equivalent that would be received for an asset sold or the amount of cash or
cash equivalent paid for a liability extinguished or transferred in an orderly transaction between a willing buyer and a willing seller at the measurement date.
Quoted equity type instruments are investments which are fair valued using quoted prices in active markets for identical instruments and unquoted
equity type instruments are investments that are fair valued using directly or indirectly observable inputs.
The Group’s investments in sukuk held at amortised cost have fair values amounting to US$2,289 million (2016: US$ 2,275 million).
Also included under investments are unquoted equity-type instruments at fair value through equity amounting to US$50,556 thousand
(2016: US$ 45,169 thousand) which are carried at cost due to lack of other reliable methods for arriving at a reliable fair value for these investments.
The fair values of other on-balance sheet financial instruments are not significantly different from the carrying values included in the consolidated
financial statements.
30. EARNINGS PROHIBITED BY SHARI’A

Earnings realised during the year from transactions that were not permitted by Shari’a amounted to US$ 12 million (2016: US$ 8 million). This amount
has been taken to charity.

Additional Public Disclosures and Regulatory Capital Disclosures
At 31 December 2017
(UNAUDITED)
106 ALANNUAL
REPORT 2017
Additional Public Disclosures
At 31 December 2017
1. CAPITAL STRUCTURE AND CAPITAL ADEQUACY

The primary objectives of the Group’s capital management are to ensure that the Group complies with externally imposed capital requirements and that
the Group maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholders’ value.
The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its
activities. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividend payment to shareholders, return capital to
shareholders or issue capital securities.
The Group’s capital structure is primarily made of its paid-up capital, including the share premium and reserves. From regulation’s perspective, the
significant amount of the Group’s capital are in Tier I as defined by the CBB, i.e., most of the consolidated capital are of permanent nature.
To assess its capital adequacy requirements in accordance with the CBB requirements, the Group adopts the standardised approach for its Credit Risk,
Basic Indicator Approach for its Operational Risk and Standardised Measurement Approach for its Market Risk. To calculate its capital adequacy, the Group
follows the accepted approaches approved by the CBB Rulebook. The Group consolidates all subsidiaries for Capital Adequacy Ratio (CAR) calculation.
The Group strives to sustain reasonably higher capital cushion that strikes the balance between its business conduct and the regulatory requirements
stipulated in the CBB capital adequacy requirements as a minimum accepted level of capital adequacy.
Table – 1. Capital Structure (PD-1.3.12 & 1.3.14)

The following table summarises the eligible capital as of:
31 December 2017
CET 1 AT1 T2
US$ '000 US$ '000 US$ '000
Tier 1 Capital
Common Equity Tier 1 (CET1)
Issued and fully paid up ordinary shares 1,206,679 - -
Less: Treasury Shares 9,550 - -
Legal / statutory reserves 152,641 - -
Share premium 18,644 - -
Retained earnings 461,918 - -
Current net income 130,192 - -
Unrealized gains and losses on available for sale financial instruments (509) - -
Gains and losses resulting from converting foreign currency subsidiaries to the parent currency (706,239) - -
All other reserves 46,639 - -
Unrealized gains and losses from fair valuing equities (1,163) - -
Total CET1 capital before minority interest 1,299,252 - -
Total minority interest in banking subsidiaries given recognition in CET1 capital 547,670 - -
Total CET1 capital prior to regulatory adjustments 1,846,922 - -
Less:
Goodwill 61,340 - -
Intangibles other than mortgage servicing rights 15,299 - -
Deferred tax assets 19,731 - -
Total Common Equity Tier 1 capital after the regulatory adjustments above (CET1 d) 1,750,552 - -
Other Capital (AT1 & T2)
Instruments issued by parent company 400,000
Instruments issued by banking subsidiaries to third parties 40,498 57,459
Assets revaluation reserve - property, plant, and equipment - 40,951
General financing loss provision - 46,061
Total Available AT1 & T2 Capital 440,498 144,471
Net Available Capital after regulatory adjustments before Applying Haircut 440,498 144,471
Net Available Capital after Applying Haircut 1,750,552 440,498 144,471
Total Tier 1 2,191,050
Total Capital 2,335,521

At 31 December 2017
1. CAPITAL STRUCTURE AND CAPITAL ADEQUACY (Continued)

Table – 2. Capital requirement for different type of risks (PD - 1.3.18, 1.3.19)
The following table summarises the capital requirements for credit risk, market risk and operational risk as of:
31 December 2017
Risk Minimum
weighted capital
assets requirements
US$ '000 US$ '000
Credit Risk 10,147,015 1,268,377

Market Risk 1,515,425 189,428
Operational Risk 1,920,251 240,031
Total risk weighted exposures 13,582,691 1,697,836
Investment risk reserve ( 30% only) (56,145) (7,018)

Profit equalization reserve (30% only) (1,802) (225)
13,524,744 1,690,593
Table – 3. Capital requirement by type of Islamic financing contracts (PD-1.3.17)

The following table summarises the capital requirements by type of Islamic financing contracts as of:
31 December 2017
Risk Minimum
weighted capital
assets requirements
US$ '000 US$ '000
Islamic financing contracts
Receivables 5,485,503 685,688
Mudaraba and Musharaka financing 1,016,773 127,097
Ijarah Muntahia Bittamleek 909,497 113,687
7,411,773 926,472
Table – 4. Capital Adequacy Ratios (PD-1.3.20 (a))

The following are capital adequacy ratios for Total capital and Tier 1 capital as of:
31 December 2017
Total capital ratio 17.27%
Tier 1 capital ratio 16.20%
108 ALANNUAL
REPORT 2017
At 31 December 2017
1. CAPITAL STRUCTURE AND CAPITAL ADEQUACY (Continued)

Table - 5. The Group’s Subsidiaries Capital Adequacy Ratios (PD-1.3.20 (b))
The following are the Group’s subsidiaries capital adequacy ratio prepared on the basis of the CBB requirements, which may differ form the local
requirements of the countries in which the subsidiaries operate, as of:
31 December 2017
Tier 1 capital Total capital
ratio ratio
Banque Al Baraka D’Algerie 21.81% 22.68%
Al Baraka Islamic Bank * 9.59% 11.59%
Al Baraka Bank Tunis 20.44% 20.71%
Al Baraka Bank Egypt 17.90% 18.88%
Al Baraka Bank Lebanon 11.37% 11.37%
Jordan Islamic Bank 27.59% 27.59%
Al Baraka Turk Participation Bank 9.82% 11.82%
Al Baraka Bank Limited 23.20% 23.94%
Al Baraka Bank Sudan 14.67% 16.79%
Al Baraka Bank Syria 17.78% 17.78%
BTI Bank 452.10% 452.10%
* These ratios represents the consolidated ratios and Al Baraka Pakistan has tier 1 capital ratio of 16.18% and total capital ratio of 21.85%.
Legal restrictions on capital and income mobility (PD-1.3.6 (c))

There are no major restrictions in distributing profits by the subsidiaries to the Bank. Such distribution should go through the legal and regulatory channels
applicable in each jurisdiction. Mobilisation of capital, reserves and equivalent funds out of the subsidiaries to the parent is subject to the local rules and
regulations. The parent is not subject to any restriction to support its subsidiary in the form of deposits or capital. However, as a procedure, a prior written
approval has to be obtained from the CBB for increasing investments in subsidiaries.
Table – 6. Distribution of ownership of shares by nationality (PD-1.3.10(i))

The following table summarises the distribution of ownership of shares by nationality/ incorporation as of:
31 December 2017
% holding
Nationality/ Incorporation
Bahraini 27.26
Saudi 41.78
Cayman Islands 19.32
Emirati 6.93
Others 4.71
2. RISK MANAGEMENT
The Group’s risk management strategies have been effectively implemented and the objectives outlined at the beginning of year 2017 across subsidiaries
were successfully achieved. The Group is striving to bolster and instil the best practices of risk management in subsidiaries’ risk management functions
for the next reporting period by ensuring prudent implementation of risk management policies which entails risk identification, limit controls, monitoring
and reporting.
The Group’s risk management has the following objectives:
a. Unified Group-wide risk management to enable the Group to produce risk adjusted return on capital.
b. Creation of professional risk management culture throughout the Group with prudent, disciplined approach to risk taking based on comprehensive
Group-wide policies, processes and limits.
c. Professionally qualified staff and ongoing credit training.
d. Investing in technology and systems for best practice risk management.
e. Throughout the Group, strict segregation of duties and reporting lines between personnel transacting business and personnel processing that business.
f. Strict compliance with all Shari’a and legal requirements and regulatory directives.
g. Maintaining clear, well documented policies via Group Risk Management Manual and also Risk Management Manuals by each of the Group’s
subsidiaries which incorporate the uniform policies and procedures of the Group in addition to the local requirements.

At 31 December 2017

a) Liquidity risk
The liquidity management policy at a minimum includes the following:
a. Provide clear guidance on the composition and role of the asset/liability committee or such other committee or department responsible for managing
liquidity.
b. Establish approval processes to ensure adherence to liquidity risk management processes.
c. Require periodic calculations to determine the extent to which the subsidiary is funding long-term assets with short-term liabilities.
d. Establish liquidity ratio benchmarks, e.g. parameters for the funding of long-term assets with short-term liabilities to guide liquidity management and
the method for computing liquidity indicators.
e. Establish limits on the degree of concentrations that are deemed acceptable. This should:
i) Ensure diversification of funding by origin and term structure by, for example, guarding against concentration by individuals or groups of depositors,
types of deposit instruments, market sources of deposit, geographical sources, term to maturity, and deposit currencies. Where concentrations occur,
the Group’s subsidiaries manage their assets and liquidity profile to mitigate the risk; and
ii) Set procedures for the orderly restoration of the liquidity position in the event of loss of funding where such concentrations are unavoidable. In
addition, the Group’s subsidiaries conduct an impact analysis on its dependency on any such concentrations.
f. Periodic review of the deposit structure. The review should include the volume and trend of various types of deposits offered, maturity distributions
of time deposits, profit rate paid on each type of deposit, prevailing market profit rate, limits on large time deposits, public funds, and non-resident
deposits.
g. Review of alternate funding sources including stand-by facilities and lines of credit.
h. Establish a framework for the composition of assets.
i. Assess the acceptable mismatch in combination with currency commitments. The Group’s subsidiaries undertake separate analysis of their strategy
for each currency individually. They set and regularly review limits on the size of cash flow mismatches over particular time horizons for foreign
currencies in aggregate, and for each significant currency.
Table – 7. Liquidity Ratios (PD-1.3.37)

The following table summarises the liquidity ratios as of:
31 December 2017
Short term assets to short term liabilities 76%
Liquid assets to total assets 25%
b) Credit risk
General credit policies and guiding principles
The following principles summarise the Group’s financing and investing policies and form the framework of all financing decisions:
a) Financing will be extended when the Group can confidently expect that it will be repaid by the customer as agreed. This necessitates a thorough
knowledge of the customer and clear understanding of the risks underlying the credit requests.
b) Financing should be extended where there are at least two clear sources of repayments.
c) It is generally preferred that the repayments are from cash generated by the customers’ productive and ongoing income or activities.
d) Amounts, profits/other charges and terms under the prevailing market conditions for any proposed financing are to be consistent with the perceived
quality of the risk being undertaken.
e) Financing should generally be extended where the Group’s seniority as creditors is pari passu or better than any other financing.
f) Financing should be structured appropriately considering the purpose of the credit and the source of repayment.
g) Financing needs to be assessed on a stand alone basis as well as on portfolio basis to assess its impact on the total financing portfolio.
h) Compliance with all applicable local statutory and regulatory directives guidelines should be ensured in all cases.
i) Propriety and ethical standards should be taken into account in all financing decisions.
110 ALANNUAL
REPORT 2017
At 31 December 2017

Table - 8. Gross funded and unfunded exposure (PD-1.3.23(a))
The Group’s assets are funded by equity of investment accountholders (IAH) as well as the Group’s own capital and current accounts (Self). The percentage
of funding varies for each of the Group’s subsidiary based on market conditions and applicable rules and regulations. However, at the Group level the
percentage of funding of self financed represent 45% and of IAH represent 55%.
The following table summarises the amount of gross funded and unfunded credit exposure and average gross funded and unfunded exposure as of:
31 December 2017
Self financed Financed by IAH Total
*Average *Average
gross credit gross credit Total
Total gross exposure Total gross exposure self financed
credit over the credit over the and financed
exposure year exposure year by IAH
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Funded Exposure
Receivables 3,262,635 3,098,369 8,738,415 8,767,495 12,001,050
Mudaraba and Musharaka financing 1,139,715 1,039,592 1,237,939 922,928 2,377,654
Investments 1,652,902 1,714,866 1,235,432 1,253,572 2,888,334
Ijarah Muntahia Bittamleek 673,119 641,599 1,182,899 1,217,545 1,856,018
Other assets 115,648 133,439 117,324 114,479 232,972
Unfunded Exposure
Commitments and contingencies 4,725,010 4,516,751 - - 4,725,010
11,569,029 12,512,009 24,081,038
*Average Balances are computed based on quarter-end balances.
Table - 9. Geographic distribution of the gross funded exposure (PD-1.3.23(b))

The following table summarises the geographic distribution of gross funded exposure as of 31 December 2017, broken down into significant areas by
major types of credit exposure:
IAH & Self

Self financed Financed by IAH financed
Middle North Middle North
East Africa Europe Others Total East Africa Europe Others Total Total
Receivables 516,574 516,449 1,987,598 242,014 3,262,635 3,813,554 376,649 4,211,590 336,622 8,738,415 12,001,050
Mudaraba and Musharaka financing 632,060 45,290 278,459 183,906 1,139,715 733,746 42,264 - 461,929 1,237,939 2,377,654
Investments 567,989 65,671 776,541 242,701 1,652,902 1,120,585 48,982 - 65,865 1,235,432 2,888,334
Ijarah Muntahia Bittamleek 140,342 339,565 184,382 8,830 673,119 940,928 216,862 10,613 14,496 1,182,899 1,856,018
Other Assets 55,904 10,715 4,971 44,058 115,648 57,431 6,820 4,972 48,101 117,324 232,972
1,912,869 977,690 3,231,951 721,509 6,844,019 6,666,244 691,577 4,227,175 927,013 12,512,009 19,356,028

At 31 December 2017

b) Credit risk (continued)
Table - 10. Exposure by counterparty type (PD-1.3.23(c))

The following table summarises the distribution of funded and unfunded exposure by counterparty type, broken down by major types of credit exposures
as of 31 December 2017:
Funded and
Funded Unfunded Unfunded
Exposures Exposures Exposures
Mudaraba and Commitments
Musharaka Ijarah Muntahia Other and
Receivables financing Investments Bittamleek Assets contingencies Total
Self IAH Self IAH Self IAH Self IAH Self IAH Self IAH Self IAH
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Claims on sovereigns 193,200 787,218 52,615 504,868 996,430 899,029 26,291 - - - 10,240 - 1,278,776 2,191,115
Claims on
International
Organizations - - - - 176 1,468 - - - - - - 176 1,468
Claims on MDBs 2,034 10,958 - - - - - - - - - - 2,034 10,958
Claim on PSEs - - 11,514 6,097 - - - - - - - - 11,514 6,097
Claims on banks 114,256 329,899 510,697 246,917 52,385 70,797 10,708 6,846 - - 162,373 - 850,419 654,459
Claims on corporates 1,782,183 3,815,670 326,552 314,160 63,150 49,864 328,024 371,876 - - 3,364,967 - 5,864,876 4,551,570
Claims on investment
- - 402 - - - - - - - - - 402 -
firms
Claims on retail 762,717 2,607,185 - 74,742 - - 36,607 14,990 - - 931,153 - 1,730,477 2,696,917
Mortgage 310,924 991,346 - - - - 271,489 785,551 - - 160,478 - 742,891 1,776,897
Past due receivables 97,321 196,139 2,178 12,854 - - - 3,636 - - 5,852 - 105,351 212,629
Equity investment - - - - 476,974 40,845 - - - - - - 476,974 40,845
Investment in funds - - - - 12,219 3,461 - - - - - - 12,219 3,461
Specialized lending - - 235,757 78,301 - - - - - - 89,947 - 325,704 78,301
Other assets - - - - 51,568 169,968 - - 115,648 117,324 - - 167,216 287,292
Total 3,262,635 8,738,415 1,139,715 1,237,939 1,652,902 1,235,432 673,119 1,182,899 115,648 117,324 4,725,010 - 11,569,029 12,512,009
Large Credit Exposure (PD - 1.3.23 (f))

The Group follows the CBB’s guidelines with respect to the definition and measurement of large exposures at the consolidated level as stipulated in the
CBB Rulebook for Islamic Banks.
There are no large exposures to individual counterparties where the exposure is in excess of the 15% individual obligor limit that qualifies for extra risk
weight as per CBB’s guidelines.
Past due, non-performing Islamic financing contracts and provisions (PD-1.3.22 (a))
Past due represents instalments that are not received on the contractual repayments date. The Group considers non-performing Islamic financing contracts
as the contracts that are overdue for a period of 90 or more days. These exposures are placed on a non-accrual status with profit being recognised to the
extent that it is actually received. It is the Group’s policy that when an exposure is overdue for a period of 90 or more days, the whole financing facility
extended is considered as past due, not only overdue instalments/payments.
112 ALANNUAL
REPORT 2017
At 31 December 2017

Table -11. Credit quality of Islamic financing contracts by counterparty type (PD-1.3.23(h), 1.3.24 (b))
The following table summarises the total past due, non performing and neither past due nor non performing Islamic financing contracts and aging of non
performing Islamic financing contracts disclosed by counterparty type as of 31 December 2017:
Non Aging of non performing Islamic

Neither performing financing contracts
past due Past due Islamic
nor non but financing 90 days to 1 year to Over 3
Total performing performing contracts 1 year 3 years years
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Sovereign 962,795 955,610 7,185 - - - -
Bank 1,622,055 1,619,965 936 1,154 - - 1,154
Investment Firms 17,420 1,689 238 15,493 5,415 10,078 -
Corporates 8,534,638 7,438,671 563,938 532,029 223,655 244,675 63,699
Retail 3,901,906 3,644,364 95,699 161,843 37,652 46,151 78,040
15,038,814 13,660,299 667,996 710,519 266,722 300,904 142,893
Table -12. Specific provisions by counterparty type (PD-1.3.23 (h), 1.3.24 (d))
The following table summarises the total specific provisions disclosed by counterparty type as of 31 December 2017:
Specific provisions
Foreign
Charged Write-back Write-offs Appropriation exchange Balance at
Opening during the during the during the from IAH translations/ the end of
balance year year year during the year others - net the year
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Bank 1,499 - - - - (853) 646
Investment Firms 22,244 436 (3,208) (2,544) - 397 17,325
Corporates 241,053 144,206 (18,873) (113,018) 2,703 6,884 262,955
Retail 123,570 5,840 (7,491) (3,760) 5,366 (2,947) 120,578
388,366 150,482 (29,572) (119,322) 8,069 3,481 401,504
Table -13. General provisions movement (PD-1.3.23 (h), 1.3.24 (d))

The following table summarises the movement of general provisions during the year ended:
31 December 2017
US$ '000
Opening balance 38,507
Charged during the year 14,615
Write-back during the year (3,875)
Write-offs during the year (561)
Foreign exchange translations/ others (2,625)
Balance at the end of the year 46,061
This represents collective provision against exposures which, although not specifically identified, have a greater risk of default than when originally granted.

At 31 December 2017

Table - 14. Past due and non-performing Islamic financing contracts and provisions by geographic areas (PD-1.3.23(i), PD-1.3.24(c))
The following table summarises the total past due and non performing Islamic financing contracts and provisions disclosed by geographical area as of:
31 December 2017
Past due and
non performing
Islamic financing Specific General
contracts provision provision
US$ '000 US$ '000 US$ '000
Middle East 275,862 175,425 21,820
North Africa 82,016 28,688 2,009
Europe 852,045 145,953 19,038
Others 168,592 51,438 3,194
1,378,515 401,504 46,061
Table - 15. Renegotiated Islamic financing contracts (PD-1.3.23(j))

31 December 2017
US$ '000
Renegotiated Islamic financing contracts 461,874
There is no significant impact of the renegotiated Islamic financing contracts on the provisions as well as present and future earnings. In addition, the
magnitude of the restructuring activities is immaterial. These facilities has been renegotiated mainly to enter into new contracts with different tenor,
profit or enhance the collaterals.
Others (PD-1.3.23(k), (l), PD-1.3.25(b) & (c))

The Group has no significant obligations with respect to recourse transaction.
The Group has not imposed any material penalties on customers for defaults.
The Group does not make use of eligible collaterals and guarantees in its credit risk analysis.
Table - 16. Counterparty Credit (PD-1.3.26 (b))

The following table summarises the counterparty credit risk exposure covered by collateral after the application of haircuts as of:
31 December 2017
US$ '000
Gross positive fair value of contracts 19,123,056
Netting Benefits -
Netted Current Credit Exposure 19,123,056
Collateral held:
Cash 626,334
Others 5,919,248
Real Estate 14,217,480
20,763,062
The utilisation of the collaterals will be on a customer by customer basis and will be limited to the customer’s total exposure.
c) Market risk
Market risk includes profit rate risk, displaced commercial risk, equity price risk and foreign exchange rate risk. The management of the Group have set
limits on the level of risk that may be accepted. This is monitored by the local management at the subsidiary level.
114 ALANNUAL
REPORT 2017
At 31 December 2017

c) Market risk (continued)
Table – 17. Market Risk Capital Requirements (PD-1.3.27 (b))

The following table summarises the capital requirement for each category of market risk as of:
31 December 2017
Equity Foreign
position exchange
risk risk
US$ '000 US$ '000
Risk weighted exposure (RWE) - 1,515,425

Capital requirements (12.5%) - 189,428
Maximum value of RWE - 1,515,425
Minimum value of RWE - 1,438,175
Profit rate risk

Profit rate risk is the risk that the Group will incur a financial loss as a result of mismatch in the profit rate on the Group’s assets and IAH. The profit
distribution to IAH is based on profit sharing agreements. Therefore, the Group is not subject to any significant profit rate risk.
Displaced Commercial Risk

The Group is exposed to displaced commercial risk in the event of having IAH profit rates that are lower than market rates. The Group has partially
mitigated this risk through the setting up of reserves that will be used in case of a drop in IAH profit rates. The policies and procedures for displaced
commercial risk are formulated and implemented at the individual subsidiary level.
Equity price risk

Equity price risk is the risk that the fair values of equities decrease as the result of changes in the levels of equity indices and the value of individual stocks.
The equity price risk exposure arises from the Group’s investment portfolio.
Equity-type instruments at fair value through equity and investments in real estate are kept for capital gain purposes.
If financial instruments qualify to be included in the trading book, these must not exceed 25% of the total subsidiary’s assets portfolio. For equity
securities, the subsidiaries are required to observe the sectoral concentration limits outlined by the Group and/or their local requirement in this respect.
Since trading securities in the trading book would be under marked-to-market requirement, the Risk Manager at the subsidiary level should immediately
bring to the Credit and Risk Management at the Group as well as the subsidiary’s asset/liability committee any volatility of position’s value that is 15%
or higher than the subsidiary’s eligible capital to decide upon the appropriate course of action.
Table – 18. Investments in Banking Book (PD-1.3.31 (b) (c) & (f))
The following table summarises the total and average gross exposure of equity based financing structures by types of financing contracts and investments
as of 31 December 2017:
Average
gross
Total exposure
gross over the Publicly Privately Capital
exposure year held held requirement
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Sukuk and similar items 2,257,871 2,332,145 1,300,693 957,178 39,636
Equity Investment 395,117 340,033 321,540 73,577 52,708
Managed funds 24,189 49,873 11,910 12,279 1,960
2,677,177 2,722,051 1,634,143 1,043,034 94,304

At 31 December 2017

c) Market risk (continued)
Table – 19. Equity gains or losses in banking book (PD-1.3.31 (d) and (e))
The following table summarises the cumulative realised and unrealised gains or losses during the year ended:
31 December 2017
US$ '000
Cumulative realised gains arising from sales or liquidations in the reporting year 820
Total unrealized losses recognised in the consolidated statement of financial positions but not through consolidated
statement of income (21)
Foreign exchange risk

Foreign exchange risk arise from the movement of the rate of exchange over a period of time. Positions are monitored on a regular basis to ensure
positions are maintained within established approved limits.
d) Operational Risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This
definition includes legal risk, but excludes strategic and reputational risk.
Table - 20. Operational risk exposure (PD-1.3.30 (a), (b) & (c))
The following table summarises the amount of exposure subject to basic indicator approach of operational risk and related capital requirements:
Gross income
2017 2016 2015
US$ '000 US$ '000 US$ '000
Total Gross Income 998,690 1,074,158 999,553
2017
Indicators of operational risk
Average Gross income (US$ '000) 1,024,134
Multiplier 12.5
12,801,671
Eligible Portion for the purpose of the calculation 15%
TOTAL OPERATIONAL RISK WEIGHTED EXPOSURE (US$ '000) 1,920,251
The Group has no material legal contingencies including pending legal action.
The Group guidelines have the following sections: (1) Operational Risk Appetite, (2) Operational Risk Management – Structure and Rules (3) Risk and
Control Assessment (4) Internal Audit (5) Operational Risk and Basel II (6) Operational Risk Capital Requirement.
The Group’s Operational Risk Appetite is defined as the level of risk which the Group chooses to accept in its identified risk categories. Operational risk
appetite is expressed in terms of both impact (direct loss) and the probability of occurrence.
The Group’s policy also lays out the Operational Risk Management structure and the roles of all staff associated with operational risk. The major functional
roles are defined for:
− Risk Management Committee
− Head of Credit and Risk Management
− Head of Operational, Liquidity and Market Risk
− Various departments
The Risk Control Self Assessment exercise is viewed as an important part of the Group’s Operational Risk Framework. It is proposed to be conducted every
year by the Risk Management Department in coordination with the Internal Audit Department. In addition, the assessment shall also be based on the
severity of the residual risks identified through Internal Audit reviews.
The Key processes identified in a Risk Control Self Assessment are:
− Risk and Control Identification Process
− Measurement of Operational Risk Exposures
− Identifying Unacceptable Risk Exposures
− Risk Action Plans.
The Operational Risk framework will be subject to periodic internal audit.
116 ALANNUAL
REPORT 2017
At 31 December 2017
3. CORPORATE GOVERNANCE
Code of business conduct and ethics for members of the board of directors
Purpose:
The primary objectives of the following Code of Business Conduct and Ethics ( the “Code”) is to enable each Director to focus on areas of ethical risks,
to help them recognize and deal with ethical issues, to provide mechanisms for reporting unethical conduct, and to foster a culture of honesty and
accountability within the Group.
Conflict of interest:
Each Director must avoid any situation which may give rise to a conflict between their interests and those of the Group. Any situation which either will or
may involve, a conflict of interest should be disclosed promptly to the Board of Directors in writing in advance of the meeting or verbally in the meeting
itself. The concerned Director shall abstain from any discussion or decision on the matter of question. A conflict of interest can occur when a Director’s
personal interest is adverse to, or appears to be, adverse to the interests of the Group. Conflicts of interest also arise when a Director, or a member of their
immediate family, receives an improper personal benefit as a result of their position as a Director of the Group. Common conflicts which Directors must
endeavor to avoid include, but are not limited to, the following:
1 Engagement in any conduct or activity which may conflict with the best interests of the Group, or which may disrupt or impair Group’s standing with
any person or entity with whom or which the Group has to proposes to enter into a business or contractual relationship.
2 Acceptance of compensation (in any form) for services performed in relation to the Group from any source other than from the Group.
3 Acceptance by them or any member of their family of gifts from persons or entities who or which deal with the Group where acceptance of such gifts
could generate a sense of obligation and thereby create a potential conflict of interest.
4 Utilization of the Group’s assets, employees or information for personal use without obtaining the prior approval of the Board of Directors.
Confidentiality:
Confidential information includes all non-public information relating to the Group, whether in written or in oral form. Directors are under continuous
obligation to maintain the confidentiality of information entrusted directly to them by the Group and any other confidential information about the
Group which comes to them, from whatever source, in their capacity as a Director. Directors may disclose confidential information if such disclosures are
mandated by the law.
Compliance with Rules, Laws and Regulation:

Directors shall, at all times, comply with all laws, rules and regulations applicable to the Group, including insider trading laws.
Remuneration
The Group incentivise its Board members, executives and senior management and its Shari’a Board members in accordance to the remuneration policies
and procedures approved by the Board. This policy links the incentives to the performance appraisal. The Group’s corporate governance policy details the
performance appraisal for the Board members.
The following table summarises remuneration of the Group’s Directors, Shari’a Committee members, President & Chief Executive, Deputy Chief Executive
and the Department Heads at Group Headquarters during the year ended:
31 December 2017
US$ '000
Directors remuneration 1,500
Executive Management
Salary and other remuneration, including meeting allowance 6,835
Fees 475
Bonuses 1,231
Benefits-in-kind 1,746
10,287
Shari'a Committee Members fee and remuneration 249,189
260,976
Complaints
The Group has adopted a special media approach to ensure that all the Group’s stakeholders are well channelled through to the management. The
contracted special media watch detect any news or complaints related to the Group and bring them to the attention of the Group’s executive management.

At 31 December 2017
3. CORPORATE GOVERNANCE (Continued)

Financial Penalty
During the year a financial penalty of USD 3,183 (BD 1,200) was paid to the CBB on account of late submission by one working day of Large Exposures
Report (form BR-19) pertaining to 31 December 2016.
Related party transactions

Related party transactions are governed by the Group corporate governance policy and individual subsidiaries’ local rules and regulations. All related party
transactions were conducted at arm’s length.
External Auditors
The Board Audit Committee has continued to review the work carried out by the external auditors during the year, in particular timeliness of reporting,
quality of work and related fees. Overall the Audit Committee believes that the work of the external auditors has been of a sufficiently high standard and
that the fees are reasonable and therefore recommended to the Board and accordingly to the annual general meeting (AGM) to re-appoint the external
auditors as auditor for the 2017 financial year. The AGM has approved the reappointment of the external auditor for the year 2017 on 20 March 2017
and the related regulatory approval were taken.
For the year 2017, annual audit and quarterly review services amounted to US$212,865, other attestation services amounted to US$103,451 and other
non-audit services amounted to US$239,894.
4. EQUITY OF INVESTMENT ACCOUNTHOLDERS

The Group is exposed to some of the price risk on assets funded by IAH. The CBB requires the Group to maintain capital to cover the price risk arising from
30% of assets funded by IAH on a pro-rata basis.
The Group invests its own funds separately or jointly with amount received from Equity of Investment Account Holders. These funds received are managed
in accordance with Shari’ a requirements and standard of prudence is applied in the context of managing the overall portfolios to enable the Group to
exercise its responsibilities. The Group is authorised by Equity of Investment Accountholders to invest the funds on the basis of Mudaraba, Murabaha,
Salam, Ijarah transactions and other forms of contract in a manner which the Group deems appropriate without laying down any restrictions as to where,
how and for what purpose the funds should be invested. Those investment accounts are available for different type of customers and investors ranging
from retail to corporate.
The composition, characteristics, diversification, and concentration of portfolios are monitored within appropriate risk limits and indicators detailed in the
Group’s credit risk, liquidity risk, and other risks policies of the group. The strategic objectives of the investments of the funds are:
a) Targeted returns;
b) Compliance with credit and Investment policy and overall business plan; and
c) Diversified portfolio.
Funds are invested in Shari’ a compliant commercial or consumer financing as well as short, medium, and long term investments excluding strategic
investments. A due diligence process is in place which is consistent with business and risk policy guidelines of the Group after deduction of mandatory
reserves and making allowance for short-term liquidity requirements.
Under all the aforesaid arrangement the Group can commingle the IAH funds with its own funds (Self-Financed). Some of the assets right from inception
is designated exclusively as Self Financed by the Group.
The Group’s share of profit as a Mudarib for managing equity of IAH and their share of income is based on the terms and conditions of the related Mudarib
agreements. These funds are invested in Islamic modes of financing and investments including murabaha, musharaka, mudaraba and ijarah. There are no
separate designations for portfolio managers, investment advisors and trustee. IAH accounts are managed at subsidiary levels by relevant departments.
Investors’ share of income is calculated based on the income generated from joint investment accounts after deducting the expenses related to investment
pool “mudarib share”. Mudarib expenses include all expenses incurred by the Group, including specific provisions, but excluding staff cost and depreciation.
The Group’s “mudarib profit” is deducted from investors’ share of income before distributing such income. In some cases, equity of IAH withdrawn before
maturity are not entitled to any income and might be subject to charges. The practice varies for each subsidiary based on the business model, local market
practices and prudential requirements for each subsidiary.
The basis applied by the Group in arriving at the investment account holders share of income varies for each subsidiary based on the business model, local
market practices and prudential requirements for each subsidiary.
118 ALANNUAL
REPORT 2017
At 31 December 2017
4. EQUITY OF INVESTMENT ACCOUNTHOLDERS (Continued)

Table – 21. Equity of IAH (PD-1.3.33 (a), (b) & (c))
The following table summarises the breakdown of IAH and return on IAH as of:
31 December 2017
US$ '000
IAH - Banks 366,033
IAH - Non-banks 13,313,987
Profit equalisation reserve (PER) - Banks 162
Profit equalisation reserve (PER) - Non-banks 5,844
Investment risk reserve (IRR) - Banks 5,060
Investment risk reserve (IRR) - Non-banks 182,089
Cumulative changes in fair value attributable to IAH 8,934
13,882,109
Table – 22. Return on average IAH (PD-1.3.33 (d))

2017
%
Return on average IAH Equity 8.0
Return on average IAH Assets 5.2
Table – 23. Ratio by type of IAH (PD-1.3.33 (g))

31 December 2017
%
IAH - Banks 3
IAH - Non-banks 97
The appropriation percentage of IAH into profit equalisation reserve and investment risk reserve varies between each of the Group’s subsidiary based on
market conditions and applicable rules and regulations.
Table – 24. IAH by Islamic financing product type (PD-1.3.33 (h))

The following table summarises the percentage of IAH financing for each type of Shari’a-compliant contract to total IAH financing as of:
31 December 2017
%
Receivables 78
Mudaraba and Musharaka financing 11
Ijarah Muntahia Bittamleek 11
Table – 25. IAH by Counterparty Type (PD-1.3.33 (i))

The following table summarises the percentage of financing for each category of counterparty to total financing as of:
31 December 2017
%
Sovereign 10
Bank 10
Corporates 40
Retail 40

At 31 December 2017

IAH Share of Profit (PD-1.3.33 (e) & (q))
The Group’s share of profit as a Mudarib for managing IAH and the IAHs’ share of income is based on the terms and conditions of the related Mudaraba
agreements. These Mudaraba agreements are done at the individual subsidiary level. The rates and return are highly variable based on each of the
subsidiaries’ local environment as well as local rules and regulations. Detailed disclosures on IAH returns are analysed at the local level.
Table – 26. IAH by type of Assets (PD-1.3.33 (r) & (s))

The following table summarises the types of assets in which the funds are invested, the actual allocation among various types of assets and the changes
in the asset allocation in the last six months of the year ended:
31 December 2017
Opening Closing
actual actual
allocation Movement allocation
US$ '000 US$ '000 US$ '000
Cash and balances with banks 1,283,427 16,687 1,300,114
Receivables 8,966,377 (227,962) 8,738,415
Mudaraba and Musharaka financing 852,247 385,692 1,237,939
Investments 1,241,210 (5,778) 1,235,432
Ijarah Muntahia Bittamleek 1,320,333 (137,434) 1,182,899
Other assets 179,038 8,272 187,310
13,842,632 39,477 13,882,109
Table – 27. Treatment of Assets financed by Equity of IAH (PD-1.3.33 (v))

The following table summarises the treatment of assets financed by IAH in the calculation of risk weighted assets (RWA) for capital adequacy purposes
as of:
31 December 2017
RWA for
capital
adequacy Capital
RWA purposes charges
US$ '000 US$ '000 US$ '000
Type of Claims
Claims on Sovereign 671,951 201,585 25,198
Claims on PSEs 6,099 1,830 229
Claims on MDBs 5,479 1,644 206
Claims on Banks 399,263 119,779 14,972
Claims on Corporates 4,189,085 1,256,726 157,091
Regulatory Retail Portfolio 1,915,843 574,753 71,844
Mortgage 1,583,046 474,914 59,364
Past due facilities 267,328 80,198 10,025
Investment in securities 56,420 16,926 2,116
Holding of Real Estates 534,414 160,324 20,041
Other Assets 379,943 113,983 14,248
10,008,871 3,002,662 375,334
120 ALANNUAL
REPORT 2017
At 31 December 2017

Table – 28. Historical data over past five years related to IAH (PD-1.3.41 (b),(c),(d),(e),(f) & (g))
2017 2016 2015 2014 2013
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
The profit available for shareholders before smoothing 174,243 222,550 196,848 147,945 118,939
The profit available for IAH before smoothing 1,084,420 1,114,019 1,026,367 1,018,827 912,092
The profit available for sharing between IAH and shareholders before smoothing 1,258,663 1,336,569 1,223,215 1,166,772 1,031,031
The percentage of profit available for shareholders 1% 1% 1% 1% 1%
The percentage of profit available for IAH 7% 7% 6% 7% 6%
The profit available for shareholders after smoothing 174,243 222,550 196,848 147,945 118,939
The profit available for IAH after smoothing 1,084,505 1,117,965 1,029,375 1,017,908 909,410
The profit available for sharing between IAH and shareholders after smoothing 1,258,748 1,340,515 1,226,223 1,165,853 1,028,349
The percentage of profit available for shareholders 1% 1% 1% 1% 1%
The percentage of profit available for IAH 7% 7% 6% 7% 6%
Profit equalisation reserve

Balance at 1 January 6,091 10,037 13,045 12,126 9,444
Amount apportioned from income allocable to equity of IAH 910 297 49 2,377 2,643
Amount used during the year (976) (3,580) (1,229) - -
Foreign exchange translations (19) (663) (1,828) (1,458) 39
Balance at 31 December 6,006 6,091 10,037 13,045 12,126
Investment risk reserve

Balance at 1 January 176,583 179,238 198,559 110,424 98,429
Amount appropriated to provision (8,069) 7,324 (9,549) (5,288) (21,807)
Amount apportioned from income allocable to equity of IAH 21,895 1,057 10,711 102,728 48,634
Foreign exchange translations (3,260) (11,036) (20,483) (9,305) (14,832)
Balance at 31 December 187,149 176,583 179,238 198,559 110,424
The market benchmark rates for Equity of IAH for the Group differ at the subsidiaries’ level based on local market environments.
5.OFF-BALANCE SHEET EQUITY OF INVESTMENT ACCOUNTHOLDERS

Off-balance sheet equity of investment accountholders funds are invested and managed in accordance with Shari’a requirements.
The Group as fund manager will manage and administer the investment account in a proper, diligent and efficient manner in accordance with applicable
laws and local regulations.
The Group has appropriate procedures and controls in place commensurate to the size of its portfolio which includes:
(a) Organizing its internal affairs in a responsible manner, ensuring it has appropriate internal controls and risk management systems and procedures and
controls designed to mitigate and manage such risks;
(b) Observing high standards of integrity and fair dealing in managing the scheme to the best interest of its investors; and
(c) Ensuring that the Group has the requisite level of knowledge and experience for the tasks that is undertaken and is competent for the work undertaken.
The range and measures of risks facing off balance sheet IAH are similar to those risks and measures for the relevant type of investment as disclosed by
the Group.

At 31 December 2017
5. OFF-BALANCE SHEET EQUITY OF INVESTMENT ACCOUNTHOLDERS (Continued)

Table – 29. Off-balance sheet equity of IAH by Islamic Financing product type (PD-1.3.33 (h))
The following table summarises the percentage of financing for each type of Shari’a-compliant contract to total financing as of:
31 December 2017
%
Receivables 31
Mudaraba and Musharaka financing 50
Ijarah Muntahia Bittamleek 19
Table – 30. Off-balance sheet equity of IAH by Counterparty Type (PD-1.3.33 (i))
The following table summarises the percentage of financing for each category of counterparty to total financing as of:
31 December 2017
%
Sovereign 7
Investment Firms 9
Bank 23
Corporates 21
Retail 40
Off-Balance Sheet Equity of IAH Share of Profit (PD-1.3.33 (e) & (q))
The Group’s share of profit as a Mudarib for managing IAH and off-balance sheet IAH’s share of income is based on the terms and conditions of the related
mudaraba agreements. These mudaraba agreements are done at the individual subsidiary level. The rates and return are highly variable based on each of
the subsidiaries’ local environment as well as local rules and regulations. Detailed disclosures on off-balance sheet equity of investment accountholders’
returns and local market benchmark return are analysed at the local level.
Table – 31. Historical return on off-balance sheet equity of IAH over the past five years (PD-1.3.35 (b))
2017 2016 2015 2014 2013
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Return on off-balance sheet equity of IAH net of expenses 42,467 43,826 30,426 28,201 22,512
122 ALANNUAL
REPORT 2017
Regulatory Capital Disclosures
At 31 December 2017
Composition of Capital Disclosure Requirements
Statement of
Financial Position as Consolidated
in published financial PIRI data
statements 31 December
31 December 2017 2017
US$ ‘000 US$ ‘000 Reference
Assets
Cash and balances at central banks 5,430,085 5,430,085
Trading portfolio assets 271,096 271,096
Murabaha 11,627,669 11,669,029
Ijarah assets 1,856,018 1,856,018
Ijarah installment receivables 68,620 68,632
Mudarabah 1,400,598 1,403,873
Musharakah 977,056 978,463
Salam 188,035 188,035
Istisna'a 116,726 116,731
Held to maturity 2,250,552 2,250,552
Available for sale financial investments 103,818 103,818
Investment in real estate 211,157 211,157
Prepayments, accrued income and other assets 383,041 363,310
Current and deferred tax assets - 19,731 H
Investments in associates and joint ventures 51,711 51,711
Goodwill 61,340 61,340 F
Other intangible assets 25,497 25,497 G
Property, Plant and Equipment 430,192 430,192
Total Assets 25,453,211 25,499,270
Liabilities
Deposits or placement from banks 1,322,470 1,322,470
Customer accounts 5,465,433 5,465,433
Accruals, deferred income and other liabilities 958,749 958,749
Current and deferred tax liabilities 77,234 77,234
Long term financing 1,236,555 1,236,555
Total liabilities 9,060,441 9,060,441
Equity of Investment Account Holders 13,882,109 13,882,109

Shareholders' Equity
Paid-in share capital 1,197,129 1,197,129 A
Share premium 18,644 18,644 C1
Retained earnings 590,949 590,949 B
Reserves (466,517) (507,470) C2
Tier 1 Sukuk 400,000 400,000 L
Assets revaluation reserve - property, plant, and equipment - 40,951 K2
Collective impairment provisions - 46,061 K1
Non controlling interest 770,456 770,456
NCI - CET1 - 547,670 D
NCI -AT1 - 40,498 I
NCI-T2 - 57,459 J
124,829
Total Shareholders' Equity 2,510,661 2,556,720
Total Liabilities, URIA and shareholders' equity 25,453,211 25,499,270

At 31 December 2017
Amounts
31 December Subject To
2017 Pre-2015
US$ ‘000 Treatment Reference
Common Equity Tier 1 capital: instruments and reserve
1 Directly issued qualifying common share capital (and equivalent for non-joint stock companies) plus
1,197,129 A
related stock surplus
2 Retained earnings 590,949 B
3 Accumulated other comprehensive income (and other reserves) (488,826) C1+C2
5 Common share capital issued by subsidiaries and held by third parties (amount allowed in group CET1) 547,670 770,456 D
6 Common Equity Tier 1 capital before regulatory adjustments 1,846,922
Common Equity Tier 1 capital: regulatory adjustments
8 Goodwill (net of related tax liability) 61,340 F
9 Other intangibles other than mortgage-servicing rights (net of related tax liability) 15,299 25,497 G
10 Deferred tax assets that rely on future profitability excluding those arising from temporary differences
19,731 H
(net of related tax liability)
28 Total regulatory adjustments to Common equity Tier 1 96,370
29 Common Equity Tier 1 capital (CET1) 1,750,552
Additional Tier 1 capital: instrument
30 Directly issued qualifying Additional Tier 1 instruments plus related stock surplus 400,000 L
34 Additional Tier 1 instruments (and CET1 instruments not included in row 5) issued by subsidiaries and
40,498 I
held by third parties (amount allowed in group AT1)
36 Additional Tier 1 capital before regulatory adjustments 440,498
Additional Tier 1 capital: regulatory adjustments
44 Additional Tier 1 capital (AT1) 440,498
45 Tier 1 capital (T1 = CET1 + AT1) 2,191,050
Tier 2 capital: instruments and provisions
48 Tier 2 instruments (and CET1 and AT1 instruments not included in rows 5 or 34) issued by subsidiaries
57,459 J
and held by third parties (amount allowed in group Tier 2)
50 Provisions & Assets revaluation reserve - property, plant, and equipment 87,012 K1+K2
51 Tier 2 capital before regulatory adjustments 144,471
Tier 2 capital: regulatory adjustments
58 Tier 2 capital (T2) 144,471
59 Total capital (TC = T1 + T2) 2,335,521
60 Total risk weighted assets 13,524,747
Capital ratios
61 Common Equity Tier 1 (as a percentage of risk weighted assets) 12.94%
62 Tier 1 (as a percentage of risk weighted assets) 16.20%
63 Total capital (as a percentage of risk weighted assets) 17.27%
National minima including CCB (if different from Basel 3)
69 CBB Common Equity Tier 1 minimum ratio 9.0%
70 CBB Tier 1 minimum ratio 10.5%
71 CBB total capital minimum ratio 12.5%
Amounts below the thresholds for deduction (before risk weighting)
73 Significant investments in the common stock of financials 9,916
Applicable caps on the inclusion of provisions in Tier 2
76 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to standardized approach (prior 46,061 K1
to application of cap)
77 Cap on inclusion of provisions in Tier 2 under standardized approach 126,838
124 ALANNUAL
REPORT 2017
At 31 December 2017
Main features of regulatory capital instruments

1 Issuer Al Baraka Banking Group ABG Sukuk Limited Al Baraka Bank
(Pakistan)
Limited
2 Unique identifier (e.g. CUSIP, ISIN or Bloomberg identifier BARKA - Bahrain Bourse Irish stock exchange NA
for private placement) & Nasdaq Dubai
3 Governing law(s) of the instrument All applicable laws English law All applicable
and regulations of the laws and
Kingdom of Bahrain regulations
of the Islamic
Republic of
Pakistan
Regulatory treatment
4 Transitional CBB rules Common Equity Tier 1 Additional Tier 1 Tier 2
5 Post-transitional CBB rules Common Equity Tier 1 Additional Tier 1 Tier 2
6 Eligible at solo/group/group&solo GROUP & SOLO GROUP & SOLO GROUP
7 Instrument type (types to be specified by each jurisdiction) Common Equity Shares Mudaraba Sukuk Unrestricted
Mudaraba Sukuk
8 Amount recognized in regulatory capital (US$ in mil, as of 1,197 400 24
most recent reporting date)
9 Par value of instrument US$ 1 US$ 1,000 NA
10 Accounting classification Shareholders' equity Shareholders' equity Liability -
amortized cost
11 Original date of issuance Various dates 31-May-17 2014
12 Perpetual or dated Perpetual Perpetual Dated
13 Original maturity date No maturity No maturity 2021
14 Issuer call subject to prior supervisory approval NA Yes No
15 Optional call date, contingent call dates and redemption amount NA 31-May-22 NA
16 Subsequent call dates, if applicable NA Each periodic distribution date thereafter NA
Coupons / dividends
17 Fixed or floating dividend/coupon NA Floating Floating
18 Coupon rate and any related index NA 7.875%, 5Y US$ mid-swap rate KIBOR
19 Existence of a dividend stopper NA Yes NA
20 Fully discretionary, partially discretionary or mandatory NA Fully discretionary NA
21 Existence of step up or other incentive to redeem NA No NA
22 Noncumulative or cumulative Non cumulative Non cumulative Non cumulative
23 Convertible or non-convertible NA Non convertible NA
24 If convertible, conversion trigger (s) NA NA NA
25 If convertible, fully or partially NA NA NA
26 If convertible, conversion rate NA NA NA
27 If convertible, mandatory or optional conversion NA NA NA
28 If convertible, specify instrument type convertible into NA NA NA
29 If convertible, specify issuer of instrument it converts into NA NA NA
30 Write-down feature No Yes No
31 If write-down, write-down trigger(s) NA A write-down of the Certificates (in NA
whole or in part, as applicable) will take
place if (i) the Obligor is instructed by the
financial regulator to write-off or cancel
such instruments on the grounds of non-
viability or (ii) an immediate injection
of capital is required, by way of an
emergency intervention, without which
the Obligor would become non-viable,
as detailed in the Preliminary Prospectus.
32 If write-down, full or partial NA Full NA
33 If write-down, permanent or temporary NA Permanent NA
34 If temporary write-down, description of write-up mechanismNA NA NA
35 Position in subordination hierarchy in liquidation (specify Subordinated to all Senior to only common equity Subordinate to
instrument type immediately senior to instrument) depositors & creditors of shareholders all liabilities
the bank
36 Non-compliant transitioned features NA NA NA
37 If yes, specify non-compliant features NA NA NA

ABG Head Office Management
P&CE OFFICE

INTERNAL AUDIT CREDIT & RISK MANAGEMENT

Mr. Majeed H. Alawi Mr. Jozsef Peter Szalay
Executive Vice President - Head of Internal Audit Senior Vice President - Head of Credit & Risk Management
Mr. Mohammed Al Alawi Mr. Amr Ehab Tantawi
First Vice President - Internal Audit First Vice President - Credit & Risk Management
Mr. Hassan Y. Al Banna Mr. Salah Y. Al Busaiteeni
First Vice President - Internal Audit First Vice President - Credit & Risk Management
Mr. Ebrahim A. Aziz Al Zayani Dr. Jaffar M. Al-Omran
First Vice President - IT Auditor First Vice President - Credit & Risk Management
Dr. Hala Radwan
SHARI’A INTERNAL AUDIT First Vice President - Credit & Risk Management
Mr. Mohammed Abdul Latif Al-Mahmood Mr. Ayhan Keser
First Vice President - Head of Shari’a Internal Audit First Vice President - Credit & Risk Management
STRATEGIC PLANNING LEGAL AFFAIRS

Mr. K. Krishnamoorthy Mr. Salah Othman Abuzaid
Executive Vice President - Head of Strategic Planning Senior Vice President - Head of Legal Affairs
Mr. Ayman Ahmed Mohammad Dr. Adel Basha
First Vice President - Research & Development First Vice President - Legal Affairs
Dr. Mohamed Mustapha Khemira
First Vice President - Strategic Planning COMMERCIAL BANKING
Mr. Mohammed El Qaq
OPERATIONS & ADMINISTRATION Senior Vice President - Head of Commercial Banking
Mr. Abdulrahman Shehab
Executive Vice President - Head of Operations & Administration TREASURY, INVESTMENTS & FINANCIAL
INSTITUTIONS
Mr. Ahmed Albalooshi
First Vice President - Information Technology Mr. Khalid Al Qattan
Senior Vice President - Head of Treasury, Investments
Mr. Ahmed AbdulGhaffar
& Financial Institutions
Vice President - Investors Relations
Mr. Fouad Janahi
Mr. Hassan Hassani
Vice President - Financial Institutions
Vice President - Corporate Communications & PR
GROUP COMPLIANCE
FINANCE
Mr. Qutub Yousafali
Mr. Hamad Abdulla Al Oqab
Executive Vice President - Head of Finance
Mr. Ali Asghar Mandasorwala
SUSTAINABILITY AND SOCIAL RESPONSIBILITY
First Vice President - Finance
Dr. Ali Adnan Ibrahim
Mr. Mohsin Dashti
First Vice President - Head of Sustainability and Social
Responsibility
Mr. Mahmood Taheri
126 ALANNUAL
REPORT 2017
Al Baraka Global Network
AL BARAKA TÜRK AL BARAKA BANK AL BARAKA BANK LEBANON S.A.L.

PARTICIPATION BANK (PAKISTAN) LIMITED Justinian Street
Saray Mahallesi Al Baraka House BAC Center, 12th Floor
Dr. Adnan Büyükdeniz Caddesi,No. 6 162 Bangalore Town Sanayeh, near Chamber of Com & Inds.
34768 Ümraniye Main Shahrah-e- Faisal Beirut, Lebanon
Istanbul, Turkey Karachi, Pakistan Tel: +96117 48061 - 65
Tel: +90 216 666 01 01 Tel: +92 21 34307000 Fax: +96117 48061 - 65 Ext: 700
Fax: +90 216 666 16 00 Fax: +92 21 34530981 al-baraka.com
albaraka.com.tr albaraka.com.pk
Iraq Branch: ITQAN CAPITAL – SAUDI ARABIA
60Mt Street - Arbil, Iraq AL BARAKA BANK TUNISIA The Headquarters Business Park-
Tel: +964 750 370 98 90 88, Avenue Hedi Chaker 1002 West Tower - 15th Floor, Corniche Road
Tunis, Tunisia P.O. Box 8021, Jeddah 21482
JORDAN ISLAMIC BANK Tel: +216 71 186 500 / +216 71 186 600 Kingdom of Saudi Arabia
P.O. Box 926225 Fax: +216 71 780 235 / +216 71 908 170 Tel: +966 12 510 6030
Amman 11190 albarakabank.com.tn Fax: +966 12 510 6033
Jordan itqancapital.com
Tel: +9626 567 7377 AL BARAKA BANK SYRIA S.A.
Fax: +9626 566 6326
jordanislamicbank.com Alshahbander Street BTI BANK – MOROCCO
P.O.Box 100 157, Avenue Hassan ll
Damascus, Syria Casablanca 20 000
AL BARAKA BANK EGYPT Tel: +963 11 4437 8 20 Morocco
60, Mohie Elddin Abu Elezz Street Fax: +963 11 4437 8 10 Tel: +212 5 20 51 51 51
P.O. Box 455, Dokki albarakasyria.com btibank.ma
Giza, Egypt
Tel: +2023 748 1222 AL BARAKA BANK SUDAN
Fax: +2023 761 1436/7 AL BARAKA BANKING GROUP
albaraka-bank.com.eg Al Baraka Tower REPRESENTATIVE OFFICE,
P.O.Box 3583 INDONESIA
Qasr Street Ravindo Building, 10th Floor
BANQUE AL BARAKA Khartoum, Sudan Jalan Kebon Sirih, No. 75
D’ALGERIE S.P.A. Tel: +249187 112 000 Jakarta Pusat 10340
Hai Bouteldja Houidef, Villa No. 1 Fax: +249183 788 585 Indonesia
Rocade Sud, Ben Aknoun albaraka.com.sd
Tel: +62 21 316 1345
Algiers, Algeria Fax: +62 21 316 1074
Tel: +213 23 38 12 73 albaraka.com
AL BARAKA BANK LIMITED
Fax: +213 23 38 12 76/77 SOUTH AFRICA
albaraka-bank.com 2 Kingsmead Boulevard
Kingsmead Office Park AL BARAKA BANKING GROUP
Stalwart Simelane Street REPRESENTATIVE OFFICE, LIBYA
AL BARAKA ISLAMIC BANK B.S.C. (C)
P.O.Box 4395 Tripoli Tower, Tower 1
BAHRAIN
Durban 4000 14th Floor, Office No. 144
Al Baraka Headquarters - Bahrain Bay
South Africa P.O.Box 93271
P.O.Box 1882
Manama, Kingdom of Bahrain Tel: +27 31 364 9000 Tripoli, Libya
Fax: +27 31 364 9001 Tel: +218 (21) 3362310
Tel: +973 17 535 300 albaraka.co.za +218 (21) 3362311
Fax: +973 17533 993 Fax: +218(21) 3362312
albaraka.bh albaraka.com

Contacts
HEAD OFFICE:
Al Baraka Banking Group B.S.C.
Al Baraka Headquarters - Bahrain Bay
P.O. Box 1882
Manama, Kingdom of Bahrain
Tel: +973 17 541 122
Fax: +973 17 536 533
C.R.: 48915
(Licensed as an Islamic Wholesale Bank by CBB)
SHARES REGISTRAR:
Karvy Computershare W.L.L.
Office 74, 7th Floor, AlZamil Tower
P.O. Box 514, Manama, Kingdom of Bahrain
Tel: +973 17215080
Fax: +973 17212055
Email: bahrain.helpdesk@karvy.com
INVESTORS’ RELATIONS:
Mr. Ahmed AbdulGhaffar
Vice President - Investors Relations
Al Baraka Banking Group
Manama, Kingdom of Bahrain
Tel: +973 17520701 / 17541122
Fax: +973 17910911
Email: aghaffar@albaraka.com
128 ALANNUAL
REPORT 2017
albaraka.com

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A nnu al Report 2017

IMPACTING LIVES THROUGH PARTNERSHIPS

(Click text below to open page link)

61 Sustainability and Social Responsibility 126 ABG Head Ofﬁce Management

63 Uniﬁed Shari’a Supervisory Board Report 127 Al Baraka Global Network

65 Independent Auditors’ report to the Shareholders 128 Contacts

Your Partner Bank

The purpose of Man, by the commandment of Allah, The Almighty,

Therefore, we must apply Shari’a rules related to the ownership

Shaikh Saleh Abdullah Kamel

02 AL BARAKA BANKING GROUP

We believe society needs To meet the ﬁnancial needs of communities

AL BARAKA BANKING GROUP

2017 2016 2015 2014 2013

FINANCIAL POSITION (US$MILLIONS)

FINANCIAL POSITION RATIOS

* Adjusted for treasury and bonus shares.

25,453 2,511 20,670

TOTAL FINANCING & INVESTMENTS TOTAL OPERATING INCOME NET INCOME

TOTAL NUMBER TOTAL NUMBER

Mr. Abdulla A. Saudi ¢ Shaikh Dr. Abdulla Bin Sulaiman Al Mannea

Mr. Abdullah Saleh Kamel p Shaikh Dr. Abdullatif Al Mahmood

Mr. Adnan Ahmed Yousif  Dr. Ahmed Mohiyeldin Ahmed

Mr. Abdul Elah Sabbahi 

Mr. Jamal Bin Ghalaita ¢

Mr. Yousef Ali Fadil Bin Fadil ¢p

Dr. Bassem Awadallah ¢p

Mr. Mohyedin Saleh Kamel 

Mr. Saud Saleh Al Saleh ¢p

Dr. Khaled Abdulla Ateeq 

Mr. Salah Othman Abuzaid

COMMITTEE NAME CHAIRMAN OF THE COMMITTEE MEMBER OF THE COMMITTEE

Board Executive Committee p 

06 AL BARAKA BANKING GROUP

Mr. Adnan Ahmed Yousif

Mr. Majeed H. Alawi *

Mr. Abdulrahman Shehab

Mr. Hamad Abdulla Al Oqab

Mr. Jozsef Peter Szalay **

Mr. Salah Othman Abuzaid

Mr. Mohammed A. El Qaq

Mr. Khalid Al Qattan

Mr. Qutub Yousafali

Dr. Ali Adnan Ibrahim

AL BARAKA BANKING GROUP

BOARD AUDIT &

HEAD OF HEAD OF HEAD OF HEAD OF TREAS.,

AL BARAKA BANKING GROUP

Shaikh Saleh Abdullah Kamel

12 AL BARAKA BANKING GROUP

AL BARAKA BANKING GROUP

Mr. Adnan Ahmed Yousif

(All ﬁgures in US Dollars unless Stated otherwise)

16 AL BARAKA BANKING GROUP

AL BARAKA BANKING GROUP

Unit Head: Mr. Meliksah Utku

20 AL BARAKA BANKING GROUP

Unit Head: Mr. Musa Shihadeh

Mr. Adnan Ahmed Yousif Dr. Ahmed Mohiyeldin Ahmed

Mr. Abdul Elah Sabbahi

Mr. Jamal Bin Ghalaita ¢

Mr. Yousef Ali Fadil Bin Fadil ¢p

Dr. Bassem Awadallah ¢p

Mr. Mohyedin Saleh Kamel

Dr. Khaled Abdulla Ateeq

Board Executive Committee p

20/02/2017 Mr. Saleh Mohammed Al Yousef 1