Shamil Bank posts a record net income of USD 61.6 million in 2006

The Chairman of the Board of Directors, Mr. Mohamed Abdulla Abdulaziz Al-Angari expresses his full satisfaction with the financial results and extended his thanks and appreciation to the executive management and the staff of the Bank for their hard work, dedication and diligence, which has resulted in achieving continuous growth over the last several years.

Commenting on the results, the Chief Executive of Shamil Bank, Mr. Mohamed Hussain said:

"The increase in net income is attributed to substantial growth in earnings from the Bank's core business as well as the strategic investment activities, in line with the Bank's 3-year Strategic Plan 2006 - 2008. The Bank's improved profitability is reflected on the key financial ratios. Earning per Share increased to 27 US cents from 17 US cents in 2005, and Return on Average Equity increased to 17.8% from 12.4% in 2005, thereby achieving greater returns for our shareholders."

Net Income from Investment Accounts, both restricted and unrestricted, increased by 27%, from US $ 24.2 million in 2005 to US $ 30.8 million in 2006. Income from unrestricted investment accounts increased by US $ 11.2 million (76%).

Other Income also increased by 22%, from US $ 17.4 million in 2005 to US $ 21.2 million, on account of higher fees and commission from commercial and investment activities.

Total operating expenses, comprising Staff Cost and General and Administration Expenses remained almost unchanged from 2005 level. Staff cost increased by 11.3% in 2006, while administration and general expenses decreased by 16%.

On the Balance Sheet, total assets at the end of 2006 increased by 11% from US$ 1,526 million at the end of 2005 to US$ 1,693 million at the end of 2006. The growth is mainly attributed to increase in Mudaraba investment accounts that in turn attributed to increased Murabaha facilities to local retail and corporate clients and increase in short term liquid funds with banks and financial institutions.

Other Investments declined by US $ 56 million due to sale of one of the Bank's major available-for-sale investments for a total consideration of US$ 48.7 million.

Other Assets also decreased from US $171.7 million in 2005 to US $ 89.7 million, mainly due to settlement of accounts receivable of US$ 48 million in respect of US Development Opportunity Fund, a restricted Mudaraba fund.

On the liability side, unrestricted investments accounts increased by US$ 198.4 million during 2006, reflecting continued customers' confidence in the Bank and its ability to meet their satisfaction.

Customers' current accounts balance as of 31 December 2005 included an amount of US$ 60 million relating to Ithmaar Bank, Shamil's parent company, in respect of Ithmaar's private placement. Excluding this transaction, the current accounts at the end of 2006 would have shown an increase of US $ 30.2 million (37%) compared to end of 2005.

Further commenting on the Bank's strong performance during 2006, Mr. Mohamed Hussain, Chief Executive of Shamil Bank, said: "The year 2006 proved to be the most successful and eventful period in Shamil Bank's long history which witnessed record financial results and key strategic developments accompanied by significant business and organisational achievements. During the year, the Bank was assigned 'BBB-' long-term and 'A-3' short term counterparty credit rating with a 'stable outlook' by Standard & Poor's while Capital Intelligence upgraded the Bank's long term foreign currency and financial strength rating to 'BBB' from 'BBB-' with a 'stable outlook' maintained.

The Bank's operations were further streamlined with the appointment of two General Managers to head up new Commercial Banking Group and Support Services Group. As a result, Shamil Bank is now a stronger, more professional, efficient and responsive institution with a brighter future outlook. We will continue to discharge our economic and social responsibilities as a leading Islamic financial institution.

"We are well positioned to take advantage of the economic upsurge in the local and regional markets. Our strategy will continue to focus on our core banking business and growing our market share in the retail and corporate sectors" said the Chief Executive.

In view of the abovementioned excellent performance, the Board of Directors is proposing to the Annual General Meeting on 14th March 2007 distribution of cash dividend of US cents 17 per share, i.e. 17 percent after obtaining the approval of the competent authorities.

In conclusion, Mr. Hussain said: "We would like to express our gratitude to our shareholders, customers and employees for their continuous support and cooperation without which we could not have done so well."