Ithmaar Bank B.S.C. (Closed), a Bahrain-based Islamic retail bank, reported profits for the year ended 31 December 2022.

The announcement, by Ithmaar Bank Chairman His Royal Highness Prince Amr Al Faisal, follows the review and approval of the Board of Directors of the Bank’s consolidated financial results.

Ithmaar Bank reported a net profit attributable to equity holders for the year ended 31 December 2022 of BD3.10 million, a 706 percent increase compared to the net loss of BD0.51 million reported for 2021. Total net profit for the year ended 31 December 2022 is BD8.34 million compared to the net profit of BD5.16 million reported for 2021. This is mainly due to higher core income during the year.

The Bank reported profits for the year, despite that the financial results showed a net loss attributable to equity holders for the three-month period ended 31 December 2022 of BD8.29 million compared to the net profit of BD2.11 million reported for the same period in 2021. Total net loss for the three-month period ended 31 December 2022 was BD6.86 million compared to the BD3.82 million net profit reported for the same period in 2021. This is mainly due to prudent impairment provisions as well as higher taxation charges from the group’ subsidiary in Pakistan.

“On behalf of the Ithmaar Bank Board of Directors, I am pleased to report that the Bank continues to report profits for the year as it has started the next phase of growth as an exclusively corporate-focused Islamic bank,” said HRH Prince Amr. “This new phase marks an important milestone in the Group’s transformation, and adds to our decades-long history as key pioneers of the region’s Islamic banking and finance industry,” he said.

This follows completion of the transaction on 7 July 2022, which involved Ithmaar Holding, Ithmaar Bank’s parent company, selling some of its key assets in Bahrain, including Ithmaar Bank’s consumer banking business as well as Ithmaar Holdings’ ownership stake in BBK and Solidarity Group Holding, to Al Salam Bank. Following the transaction, which was approved by Ithmaar Holding shareholders at an Extra Ordinary General Meeting on 17 March 2022, Ithmaar Bank continues to operate as a CBB-licensed Islamic bank that is wholly-owned by Ithmaar Holding and specialised in Corporate Banking and related services.  

The results show that the group’s share of income from unrestricted investment accounts as a Mudarib increased to BD176.99 million for the year ended 31 December 2022, a 106 percent increase compared to BD85.84 million for the same period in 2021. This contributed to increasing the group’s share of income from unrestricted investment accounts as a Mudarib to BD83.07 million for the year ended 31 December 2022, a 75 percent increase compared to BD47.55 million for 2021.

Total owners’ equity decreased to BD36.12 million as at 31 December 2022, a 17.40 percent decrease from BD43.73 million as at 31 December 2021. This is largely due to the Bank being significantly impacted by foreign exchange rate movements from its subsidiary in Pakistan, Faysal Bank Limited, with the Pakistan Rupee-US Dollar parity depreciating significantly during the year resulting from strengthening of US Dollar against other global currencies, coupled with the political situation in Pakistan. Despite these challenges, Faysal Bank successfully completed its Islamic transformation during the year and was granted an Islamic banking license by the State Bank of Pakistan effective 1 January 2023.