Al Baraka Bank Posts Record Financial Results for 2023 Financial Year, With Net Profit Before Tax Growing By A Massive 121%

10 May 2024

Al Baraka Bank, South Africa’s only fully-fledged, commercial Islamic financial institution, has surged to the delivery of record financial results in the past financial year, ended 31 December 2023.

The Bank’s net profit before tax grew by a massive 121%, from R78 million in 2022, to an impressive R172 million by the end of the 2023 financial year 

Commenting on its record postings, Al Baraka Bank Chairman, Mr Yunus Suleman, said: “Such phenomenal financial resurgence and growth in profitability, in spite of a prolonged sluggish economy and persistent downward trend in economic growth, which has beset South Africa for a number of years, is most encouraging and indicative of client support for our Shariah-compliant system of banking, coupled with the robust strategies we implemented inclusive of load-shedding and logistics concerns.”

He said that the Bank’s return on equity had increased to 11,6%, while registering an 8% growth in total advances (including inter-bank placements and other receivables) to R8,2 billion, 8% growth in deposits to R7,6 billion and total assets growth of 8% to R9,2 billion in the review period.

The Chief Executive, Mr Shabir Chohan commented “It is clear that the support we have received and the internal outcomes we have achieved have yielded a highly significant improvement in our financial performance, re-setting our growth trajectory benchmark for the future. Critically, too, this inspiring and notable financial performance has had a most positive impact on our stubbornly high cost income ratio, which reduced to a far healthier 64,5% by the close of the 2023 financial year in December.”

He stressed that South Africa’s National Treasury’s issuance of a R20 billion Domestic Sovereign Sukuk (Investment Certificates) in November 2023 had ‘brought immense benefits’ to Al Baraka Bank. The Sukuk gained immediate traction, becoming over-subscribed by 74%.

Mr Suleman added: “With the advent of National Government’s Shariah-compliant Sukuk, we have been afforded the opportunity to invest in this financial instrument, further boosting our levels of profitability. We commend National Treasury for its Sukuk initiative, a move which has fundamentally changed this country’s financial industry landscape.”

The Bank’s 2023 financial year also heralded a number of other key achievements, including continued digitalisation strategies, the development of additional products to its offering, the adoption of a new approach to certain of its branches, creating cashless outlets, and undertaking a nation-wide presence awareness campaign to expose greater numbers of people to the benefits of Shariah-compliant banking as an alternative to traditional banking services.

“The review period saw the Bank significantly increase investment in digitalisation initiatives, bolstering our ability to remain relevant in the highly competitive South African banking industry. Our intent is to continue investing in this innovative approach to serving and consuming banking products and services.”

Mr Chohan commented further, “In addition new products developed in 2023 for imminent introduction include Takaful (insurance), a Shariah-compliant credit card and a foreign exchange card. This will give effect to further boosting non-funding income. Further, and in reviewing our branch network, we are committed to styling branches so as to maintain optimal efficiency, whilst continuing to meet and exceed client service expectations.”

During 2023, the Bank was the recipient of an international award, named as the Best Islamic Bank in South Africa in the IFN Best Banks Poll 2023.

“Looking to the future and building on our record financial performance in the 2023 financial year, we anticipate – and are projecting – the continued achievement of a significant and sustainable growth trajectory in the 2024 financial year and subsequent periods, further improving the Bank’s profitability and maximising returns to shareholders,” Mr Suleman said.

Al Baraka Bank’s Financial Statistics At A Glance 

ROE (%)                       ROA (%)                      Net Profit Before Tax (Rm)

2023      2022                     2023      2022                     2023      2022

11,6       5,9                        1,2         0,6                        172        78

Assets (Rb)                  Deposits (Rb) 

2023      2022                     2023      2022     

9,2         8,5                        7,6         7,1

Advances, Inter-bank Placements

and Other Receivables (Rb)

2023      2022

8,2         7,6