Ithmaar reports growth

Manama: Ithmaar Bank, a Bahrain-based Islamic retail bank, reported yesterday an increase in total income and operating income from its core retail banking operations during 2015 which was impacted by recognition of certain investment related impairment provisions. 

Net income before provisions for impairment and overseas taxation increased 169.2 per cent including an 18pc increase in Operating Income. Overall, the bank recorded a net loss of US$46.4 million in 2015.  This compares to a net loss of US$8.8m in 2014.  This was mainly due to significant impairment provisions of US$95m in 2015, compared to provisions of US$26.1m in 2014.

Net loss attributable to equity holders of the bank for the year 2015 was US$60.8m, compared to a net loss of US$15m reported over the same period in the previous year. Results include a net loss for the quarter ended 31 December 2015 of US$57.8m, compared to a net loss of US$13.7m for the same period last year. The net loss attributable to equity holders of the bank for the quarter amounted to US$62.9m, compared to the net loss of US$16.2m reported for the same period last year.

Commenting on the results, Ithmaar Bank Chairman, Prince Amr Al Faisal said: “Net income, before provisions for impairment and overseas taxation, increased 169.2pc to US$77.9m in 2015, from US$28.9m in 2014.  This included a 17.8pc increase in Operating Income to US$268.4m in 2015, up from US$227.8m in 2014. This was mainly due to sustainable revenue growth across most income streams.”

“However, decline in oil prices and the resultant new economic challenges have impacted investment valuations, and consequently impacted Ithmaar Bank’s financial results,” said Prince Amr.

“To address this, the bank has taken prudent investment impairment provisions, and the net loss for the year is due largely to the significantly higher provisions for impairment, which rose by US$68.9m in 2015,” he said.

Total expenses dropped 4.2pc to US$190.4m. Total assets rose 3.5pc to US$8.1 billion as at 31 December 2015.

Ithmaar Bank Chief Executive Officer, Ahmed Abdul Rahim, said, “The stable, sustainable growth achieved in the bank’s core retail business is evident with total income increasing 5.4pc to US$478.4m in 2015, when compared to US$453.9m in 2014.”

New Holding company

The bank said it is finalising plans, subject to shareholder and regulatory approvals, to create a new holding company which will be listed on Bahrain Bourse and Kuwait Stock Exchange.

The new company will retain 100pc ownership of all assets presently owned by Ithmaar Bank. These assets will be divided into two wholly owned subsidiaries, the Islamic retail bank subsidiary will hold the core retail banking business and the investment assets will be held by an investment subsidiary.  The holding company and these two subsidiaries will be licensed and regulated by the Central Bank of Bahrain (CBB).    

As per the proposed new structure, the core retail banking operations of Ithmaar Bank, both in Bahrain and in Pakistan as Faysal Bank Limited, will be retained as assets under new banking entity, an Islamic retail bank, while strategic investments and other investment assets including real estate, will be transferred to the new investment firm. This proposed restructure will help to separate  the core assets from any negative impact of the investment assets.