Against an actual increase in GDP for 2009 of 4.0% - which in itself had been a substantial shortfall in the originally targeted growth rate of 10.0%, subsequently revised to 6.0% - the
Sudanese economy grew by an estimated 5.5% in 2010, a not inconsiderable achievement in a year of reduced foreign currency earnings as oil prices stabilised at lower levels than had obtained the previous year. The current account deficit also improved, from -11.2% of GDP to -9.1%, while the rate of inflation fell back slightly from 11.0% to around 10.0%. As a result of 2010's lower foreign currency earnings, the exchange rate of the Sudanese pound on the international exchanges declined, prompting the authorities to implement a number of defensive measures, notable among which were the raising of customs duties on a range of goods and an increase to 100% to the cash margins required on letters of credit opened for purposes other than importation of agricultural, industrial and medicinal goods. The Central Bank of Sudan also imposed a limit of four branches per bank on the number of bank branches in the capital authorised to deal in foreign currencies.

Meanwhile the Central Bank has also been overseeing the development and upgrading of the payment and settlement system – introducing real time settlement for the first time – in addition to a number of corporate governance measures and the introduction of a new bank audit system.

The Central Bank is taking steps to enhance the inter-bank market and has also activated open market operations to manage liquidity. It has announced that it is raising the minimum paid-up capital of banks to SP100 million from the current SP80 million. A Development and Reconstruction Bank of Darfur is also being established.

2011 was a turning point in the history of Sudan, as the people of south Sudan voted in January in a referendum to break away from the north and form a separate state. The vote for secession, the details of which are expected to be worked out in negotiations over the next 6 months, will undoubtedly adversely impact the economy of north Sudan due to the loss of the major part of the foreign exchange revenues from oil production, as the greater proportion of the current oil development fields lay in the south. This in turn will impact on Sudan's balance of payments and the international exchange rate of the Sudanese pound. However, drilling operations are currently under way in north Sudan which, it is hoped, will lead to the identification of new oil reserves in economic quantities, while mining operations are also expanding in the north, especially in the development of gold and chromium reserves. These measures, together with intensification of existing efforts to develop further the agricultural and livestock export markets, should lead to an improvement over the period 2013-15.

Al Baraka Sudan's total assets grew in 2010 by 6% in Sudanese pound terms. However in US dollar terms the value of total assets fell by 5% to $303 million on account of the 10.6% decline of the Sudanese pound against the US dollar over 2009. In US dollar terms, its total financings and investments suffered a 15% reduction, to $192 million. The assets were funded chiefly by customer deposits, 12% lower at $220 million again on account of the fall in the value of the Sudanese pound. In view of this, the joint income from sales receivables and jointly financed contracts and investments was 10% less than in 2009 so that, after accounting to the investors for their share and including its own share as Mudarib, the bank's income from this source was also 10% lower at $16 million. When added to its income from own sales and investments, revenues from banking services and other income, the total operating income was 7% lower at $26 million and, after operating expenses of $20 million, net operating profit was $6 million or 31% below that applicable to 2009. However, after a net write back of prior years’ provisions and a lower taxation charge, the bank returned a net profit of just over $7 million, 12% up on the equivalent result for 2009, despite the negative impact of local currency depreciation against the US dollar, accounting for 5% of net income.

Al Baraka Sudan launched a number of new products during the year. It added to its Takaful (insurance) products introduced in 2009 and now offers a range of products covering, amongst others, income protection, mortgage protection, debt or finance protection, medical and education costs and Hajj and Umrah costs. Internet banking, SMS banking and Parallel Salam were also introduced and have all made a good start. For the future, it is to introduce an education financing product and is currently awaiting Central Bank approval before offering Ijarah Muntahia Bittamleek. It is presently preparing for the issuance of Hajj and Umrah cards, which it hopes to be able to launch in the medium term. Its plans for network expansion remain in place, as it intends to open at least 5 new branches and cash offices over the next 5 years.

Al Baraka Sudan completed the rebranding of its operations during April 2010, in accordance with the Groupwide Unified Corporate Identity strategy.

Mr. Abdullah Khairy Hamid
General Manager
Al Baraka Tower, P.O. Box 3583
Khartoum, Sudan
Tel: +249183 780 688
Fax: +249183 788 585
www.albaraka.com.sd