Ithmaar Bank posts record profit of $188.3m

Operating income also increased by 173% to $339.5m. These results compare with a $181.1m net profit for 2006, which included a one-off gain of $105.5m on the sale of a subsidiary, Islamic Investment Company of the Gulf (Bahamas) Limited. Excluding this item, the Bank's net profit more than doubled in 2007, when compared with the previous year. Return on average equity remained strong, at 15.6%, and the capital adequacy ratio of 25.79% was well above the CBB requirement of 12%.

"We are pleased to report that Ithmaar Bank's balance sheet remains strong. Net profits continued to rise, even when compared to last year's results which benefited from an extraordinary gain," said Ithmaar Bank Chairman, Khalid Abdulla-Janahi.

"The Ithmaar banking group, which Ithmaar Bank spearheads, further expanded business volume and the scope of services it offers. It also widened its business coverage of the Middle East, North Africa and South Asia (MENASA) region, and of the Asia-Pacific region and Europe. Despite this swift expansion, the cost-to-income ratio, which was always well within industry standards, actually improved from 42.1 to 41.1%,"

he continued.

Janahi added that, owing to Ithmaar Bank's stringent risk management control of asset quality, the Bank's results were not impacted by the sub-prime woes that affected global financial markets in the second half of 2007.

Ithmaar Bank made major strides in all of its direct business lines, including underwriting (equity and other financings), private equity (structuring, participation and portfolio management), Islamic financing and advisory services, among others.

In 2007, Ithmaar Bank completed its acquisition of Shamil Bank, which resulted in Shamil's Swiss subsidiary, Faisal Private Bank (FPB), also becoming wholly owned by Ithmaar, while Ithmaar's effective stake in Pakistan-based Faysal Bank Limited (FBL) increased, from 51% to 65.72%. Ithmaar Bank's total assets surged 23% from $3.3bn to $4.1bn. Shareholders' equity also jumped by 37%, from $792.1m to $1.1b, while total equity rose by 14% to $1.3bn.

Income from investments in financings contributed $181.4m, while $52.5m was generated in fees and commissions. Meanwhile, the group earned $44.7m from investments in securities and $92.7m from investment property. Customer current and investment accounts rapidly expanded, by 35%, from $1.4bn to $1.9bn, reflecting increased confidence in Shamil Bank's and FBL's services.

Funds under management increased 63%, from $1.1bn to $1.7bn. Important contributors were: the $200m raised for Ithmaar Bank's Aldar Private Equity Fund; and the $185m raised, through Dilmunia Development Fund I LP, to finance land purchase and initial infrastructure works for the $1.6bn Dilmunia 'health island', which is being developed in the north-east of Bahrain by Ithmaar Bank's subsidiary, Ithmaar Development Company.

Ithmaar Bank, CEO & Member of the Board, Michael P. Lee said: "In 2008 we will be focusing on closing various funds and other proprietary initiatives which are already in process. We also expect to have several other major new funds coming into the pipeline. These will cater to different levels of risk and allocation preferences, giving investors a range of investments from which to choose. 2008 will also be a very active year for Ithmaar Development Company, as it begins to implement its $3.3bn real estate project portfolio."