Ithmaar Bank posts record half-year profit of USD33.2 million

A continued growth in assets, revenue and net income, has resulted in a net profit of US$33.2 million for the first six months of 2006. This represents more than 90% of the 2005 full-year profit of US$37.6 million and more than double the 2005 first-half profit of US$16.3 million.

As a result, the annualized return on equity amounted to 14.8%, while the annualized return on assets was 10.4%.

Commenting on the Bank's strong performance during 2006, Mr. Khalid Abdulla-Janahi, Chairman of Ithmaar bank, said:

"The Bank's outstanding performance during this year is attributable to increased contributions from all areas of the Bank's core business as well as strong performances of its associates."

"The results are particularly remarkable as the Bank has undergone a complete structural overhaul this year."

Earlier in the year, Ithmaar Bank was reconstituted as a public shareholding company, now listed on the Bahrain Stock Exchange. Through a private placement and an initial public offering (IPO), the Bank's paid up capital was increased to its current US$360 million.

The capital increase was aimed at supporting Ithmaar Bank's new mission of becoming a major Islamic financial institution in the world.

The Bank's current business covers 4 geographic segments, namely Bahrain, Other Middle East, Pakistan and Europe, with all regions, particularly Bahrain and the Middle East posting enhanced profitability. The corporate management and retail lines of business turned in the best performances, followed by asset management and insurance (Takaful).The Bank is also expanding its business in China and Malaysia.

An increase in all areas of business more than trebled operating profit to US$19.1 million for the first half of 2006, from US$5.5 million during the same period last year.

Shareholders equity amounted to US$646.7 million, compared with US$252.7 million at December 2005, while total assets almost doubled to US$830.2 million at June-end 2006, from US$442.3 million at the same time last year.

"This year is a milestone year for the Bank and I am delighted with the successes achieved so far," said Mr. Janahi.

In August 2006, Ithmaar Bank acquired from Dar Al-Maal Al-Islami (DMI) Trust, one of the world's largest Islamic financial institutions, a 60% shareholding in Shamil Bank, a leading commercial and investment bank based in Bahrain, also listed on the Bahrain Stock Exchange (BSE).

With the acquisition of Shamil Bank in a US$401.3 million transaction, the activities of Ithmaar Bank now cover the entire spectrum of Islamic banking and finance services, including commercial banking, private and corporate banking, investment banking, Takaful (Islamic insurance), and leasing. Its flagship companies include Takaful company, Solidarity B.S.C.(c), based in Bahrain, Faisal Private Bank and Faysal Bank Limited (Pakistan).

Ithmaar Bank also sold its 100% shareholding in the Islamic Investment Company of the Gulf (IICG) Bahamas. The US$150 million sale transaction, completed this week, has netted a profit of US$104 million, which will be reflected in Ithmaar Bank's profits for the remainder of 2006.

The sale of IICG (Bahamas) has added US$0.29 per share to Ithmaar Bank's net equity, bringing the total equity attributable to Ithmaar Bank shareholders to US$2.07 per share.

"These major developments have set the foundation for the next phase of growth and development of Ithmaar Bank. The Bank is aggressively pursuing a growth-oriented strategy, the results of which will continue to be seen during the remainder of 2006 and in the coming years," said Mr. Janahi.

"The new Ithmaar Bank is highly dynamic, with a global outlook. We are eyeing deals throughout the world and we have a strong pipeline of high quality investments with significant potential lined up, which we will be announcing in the coming weeks and months.

"We are confident that a highly successful 2006 is only the start of an extremely promising and strong future for the bank, its shareholders, its investors and the staff alike."