Al Baraka Group, a Bahrain-based Islamic lender, reported a 6 per cent decline in net income attributable to shareholders to $39 million for the first quarter of 2024, compared to $41m in the same period last year.

Earnings per share mirrored the decline, falling to 3.23 cents from 3.42 cents in Q1 2023. The bank cited higher costs of funding alongside a rise in foreign currency translation effects as key factors behind the drop in profitability.

Despite the Q1 dip, Al Baraka’s net income for the period ended March 31, 2024, excluding minority interests, actually grew 6pc year-on-year to $77m, driven by increased profits from financing and investments across most units and lower provisions.

Total comprehensive income, however, took a larger hit, with a 137pc year-on-year increase in losses to $60m. This was primarily attributed to negative foreign currency translation reserves in Turkey and Egypt.

Equity attributable to shareholders and Sukuk holders also decreased by 6pc to $1.18 billion by the end of Q1 2024, compared to $1.25 billion at the end of 2023. This decline stemmed from an increase in foreign currency translation reserves. Total equity followed a similar trend, dropping 5pc to $1.87bn from $1.97bn over the same period.

Total assets also witnessed a 2pc decline to $24.81bn at the end of Q1 2024, compared to $25.26bn at year-end 2023. This decrease reflects the depreciation of regional currencies against the US dollar in several of the Group’s operating markets, including Turkey and Egypt.

“The Group has achieved resilient and stable financial performance despite global inflationary pressures,” said chairman Shaikh Abdullah Saleh Kamel. “We plan to leverage our investment approach and cost management framework to navigate current geopolitical challenges and explore growth opportunities through innovative solutions.”

Houssem Ben Haj Amor, board member and group chief executive, acknowledged the challenges: “Devaluation of local currencies, higher funding costs, and rising credit default risks impacted performance. Nevertheless, we distributed dividends for 2023, the first since 2019. We are closely monitoring our units in Lebanon and Sudan and remain confident in our ability to mitigate the impact of economic fluctuations.”

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