While demand for credit was relatively slow in the first two quarters of the year, the third quarter ushered in a welcome change in tempo. The increase in demand for credit gained momentum in the fourth quarter, thereby enabling the bank to grow its gross advances book by a commendable 21,5% (R341.9 million) for the year to R1,9 billion. However, the relatively late surge in advances growth did little to compensate for the overall effects of the downward pressure in yields and, as a result, income earned from advances decreased by 3,0% to R180.4 million for the year.

However, it is pleasing to report that, due to the evenly-paced 20,7% (R441.0 million) growth in the deposit book, the bank experienced a significant increase in excess liquidity which ultimately led to an equivalent increase in the bank's investment in equity finance for the better part of the year before declining by R8,4 million to R471,7 million at the end of the year. As a result, the bank's income from equity finance increased by 33,4% to R37/I million in spite of the generally lower yields which prevailed during the year.

As a result of the foregoing, the bank's net income before impairment for credit losses increased by a marginal 2,0% to R94,4 million. The improvement in impairment for credit losses and in fee and commission income contributed to a R6,4 million increase in the bank's net income from operations to R107.6 million.

The R7,9 million (9,5%) increase in operating expenditure was brought about by a combination of an increase of R4,7 million (9,7%) in staff costs, and R2,7 million (57,2%) in depreciation and amortisation of property, equipment and intangible assets. The increase in staff costs was partially due to a demand for extra resources during the implementation of a new banking system, as well as normal inflationary adjustments. The increased depreciation and amortisation charges are the result of the implementation of the electronic banking offering launched in November 2009, coupled with the aforementioned new banking system which went live on 1 August 2010.

During the course of the year, the bank's wholly-owned subsidiary company, Albaraka Properties (Proprietary) Limited, purchased vacant land adjacent to the new head office premises in Kingsmead Office Park for an amount of R10.3 million.

Click here to view Preliminary Report 31 December 2010