This is the bank’s first full set of results as an Islamic retail and commercial bank with consolidated financial statements prepared in accordance with Financial Accounting Standards (FAS) under the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards.
This follows Ithmaar’s comprehensive reorganisation in April 2010 with its then wholly-owned subsidiary, Shamil Bank.
The results were announced by Ithmaar Bank Chairman His Royal Highness Prince Amr Mohammed Al Faisal following the review and approval by the board of the directors.
The results include a consolidated fourth quarter loss of $161.3 million attributable to the shareholders of the Bank, which compares to a loss of $167.2 million for the same period last year.
The results also show that the bank’s total consolidated income, improved by $103.2 million, or 92 percent, over 2009.
“Market conditions continue to be especially challenging and volatile, particularly for a retail bank that has recently transitioned from an investment bank,” said HRH Prince Amr. “The results, however, show a full turnaround in Ithmaar Bank’s income, with the Bank reporting a net income of $51.4 million before impairment provisions and taxation for 2010 as compared to a net loss of $44 million for 2009,” he said.
“The Bank, nonetheless, continues to build prudent impairment provisions, with net provisions charge of $197.4 million in 2010 marginally lower than those taken in 2009,” said HRH Prince Amr. “A significant portion of these impairment provisions are for the investment portfolios. The results include $57.5 million which represents profits arising from the sale of certain assets to a related party,” he said.
“Ithmaar’s balance sheet remains strong and continues to grow, with total assets increasing by 10.5 percent to $6.7 billion. Shareholders’ equity remains strong, at $654 million,” said Ithmaar Bank Chief Executive Officer and Member of the Board, Mohammed Bucheerei. “It is very encouraging to note that customer current and investment accounts also continued to grow and are a stable source of funding for an already strong deposit base,” he said.
“Following the reorganisation in April 2010, the Bank’s new strategy is focused on developing its retail banking in Bahrain and the GCC with a view to become the leading regional Islamic retail bank,” said Bucheerei. “In 2010, for example, we expanded our customer reach in Bahrain by adding five new Automated Teller Machines (ATMs) and introducing a new, first of its kind mobile online banking service. We also introduced new customer-focused products, including Thimaar, a best of its kind prize-based savings account, and improved a number of our retail products including our personal and auto finance offerings,” he said.
“The Bank also continues to focus on growing its core retail business overseas,” said Bucheerei. “Our Pakistan subsidiary, Faysal Bank Limited (FBL), for example, fully acquired the operations of RBS Pakistan in 2010, increasing the number of FBL branches to 220. Despite our retail expansions, both in Bahrain and overseas, operating expenses have been strictly controlled,” he said.
“In 2010, Ithmaar repaid all its contractual obligations and managed to refinance its major liabilities, which will now mature in 2015,” said Bucheerei.