| 1972 | 1973 | 1974 | 1975 | 1976 | 1977 | 1978 | 1979 | 1980 | 1981 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 |1991 |
BCC Group Annual Report & Accounts
Report of the Directors
The Directors have pleasure in placing before you the Consolidated Statement of Condition and Statement of Earnings of BCCI Holdings (Luxembourg) S.A. and its subsidiaries and affiliates for the financial year ended December 31, 1980 together with the Auditors' Reports.
During 1980 we continued the consolidation process and taking recognition of global inflation, the increase in assets by 36 per cent. supported by an increase of 29 per cent, in the Capital fund, reflects management's desire for regulated growth.
The net operating profit, prior to tax provision rose by 84 per cent. It is this increasing return on our earlier investments that endorses our past policy for establishing a global network within a reasonably short passage of time. From the early days of the Group when our results were predominated by our Middle East operation, the diversified network we have since established in Europe, Africa, the Far and Near East and a small beginning in the Latin and North Americas, have greatly helped produce assets and income distribution more or less evenly through these various regions.
Capital Funds
During the year, besides capitalising a sum of $5 million out of the retained earnings of 1979, a sum of $15 million has been provided for further capitalisation out of the profits of 1980. Additionally, 300,000 Right Shares were issued at the same share premium of $75 on each $50 share as in 1979, producing further cash investment of $37,500,000, by the shareholders.
A new 'C' series of Capital Notes of $10,000,000 was issued during the year and a subordinated loan of $5,000,000 was obtained directly from the shareholders. As a result of the above capitalisation programme and including the reserves and retained earnings of 1980, the total Capital Fund now stands at $291.9 million, an increase of 29 per cent. over 1979.
Assets
In accordance with the management's preference to maintain higher liquidity, loans and advances were kept at a restrained level. Their ratio now stands at 48 per cent, against total assets and 60 per cent. against total deposits, as against 51 per cent. and 60 per cent, respectively at the end of 1979. Placements with prime banks mostly for short-term periods were 51 per cent. of customers' deposits and 39 per cent, of total assets, as against 50 per cent. and 37 per cent, respectively at the end of 1979.
Investment in securities and bonds now amounts to $295.4 million as against $202.4 million in 1979 and forms 5.5 per cent. of total assets, which is about the same ratio as in 1979. The Group's emphasis on liquidity is highlighted by the extent of short-term placements of funds with other banks and the short-term investments in securities and bonds which is $126.6 million.
Liabilities
Total deposits and other funds raised from the market now stand at $4.839 billion as against $3.566 billion, an increase of 35 per cent. during 1980 out of which customer deposits have shown an increase of 41 per cent.
Reserves
During 1980 the General and Other Reserves of the Bank increased by 34 per cent. The Total Reserves now stand at over $100 million. As in earlier years a careful assessment was carried out by the management as to the reserve requirement for possible loan losses, and the total amount now maintained under this reserve is $34.8 million as against $24.4 million in 1979, after writing off certain loans and advances during the year. This gives a ratio of 1.34 per cent, on loans outstanding at the year end.
Operating Results
The Group's operating profit before tax rose from $25.9 million in 1979 to $47.8 million in 1980 an increase of 84 per cent., in spite of substantially increased loan loss provision. The distributable profit of the Group, (after providing for an increased tax liability to cover the larger number of high tax areas in which the Group is operating) stood at $21.9 million as against $14.8 million, an increase of 48 per cent. The return of pre-tax operating profit on average shareholders' equity was 23 percent as against 16 per cent. in 1979. This profit works out to 1.07 percent of average assets during 1980 as against 0.83 percent. in 1979.
The Group Organisation
At the end of 1980 the BCC Group operated offices in 45 countries. In 8 of these countries the Group maintained Representative Offices, while in the remaining 37 countries full commercial banking offices are now in operation. The international network of branches and offices currently number 215. In all these locations our policy has been to remain within the broad outlines of commercial banking where most activity is trade related and short-term in nature. As indicated in our 1979 report the Bank has continued a process of consolidation during 1980 in which the various regions have been further strengthened and the level of supervision and inter-regional co-ordination has been greatly enhanced. These are clearly reflected by the improved all-round results during 1980.
The Group has been given permission to establish full commercial banks with local participation in Zimbabwe and Egypt and direct banking licence in Zambia in its own name. All the above banks are expected to commence operations during the first half of 1981.
During the year the Holding Company acquired additional shares in Hong Kong Metropolitan Bank Ltd. and now owns 96.2 percent. of that bank. It also sold 55 per cent. of its share in BCCI Finance International Ltd. to the aforementioned bank.
The Directors take this opportunity to thank the Central Banks and Supervisory Agencies in the countries where the Group Banks are operating for the guidance extended by them.
Our staff, while continuing to acquire additional field experience around the world, remain highly motivated, and the increased prospects which are seen to be available in 1981 will no doubt be a guiding force for them to achieve the further all-round improvement anticipated in 1981.
The Directors wish to place on record their appreciation for the loyalty, devotion and service rendered by members of the staff throughout the whole Group and whose individual and collective efforts and aspirations are reflected in this annual report and provide confidence in the continued progress and strength of the Group.
The Directors propose that the Shareholders adopt the Consolidated Statement of Condition and Statement of Earnings as submitted.
AGHA HASAN ABEDI
March 10, 1981