Ithmaar Holding shareholders praised the transformation witnessed in 2016 with the successful completion of a major reorganization as well as a complete turnaround in financial performance.
This followed an announcement that the reorganized Ithmaar Holding became fully operational with the start of 2017, concluding the full implementation of plans for a new group structure that was designed to provide greater insight into the strength of the core retail banking operations and further facilitate the focused management of investment and non-core assets.
As a result of its focus on core retail banking business, Ithmaar Holding (profile) earlier reported a net profit of USD 13.80 million for 2016, compared to a USD 46.40 million net loss reported for 2015.
Net profit attributable to equity holders for the year ended 31 December 2016 was USD 3.28 million, compared to a net loss USD 60.80 million reported for 2015.
The announcements were made by Ithmaar Board Member, Sheikh Zamil Abdulla Al-Zamil, who chaired Ithmaar’s Annual General Meeting and the Extraordinary General Meeting which followed.
The plans for a new group structure, which were discussed and approved at the last shareholders’ meeting on 28 March 2016, involved conversion of the commercial registration of Ithmaar Bank B.S.C. into Ithmaar Holding B.S.C. Ithmaar Holding is licensed and regulated by the Central Bank of Bahrain and listed on the Bahrain Bourse and Boursa Kuwait.
Following the conversion, Ithmaar Holding retains 100 percent ownership of all assets formerly owned by Ithmaar Bank through two wholly-owned subsidiaries, Ithmaar Bank B.S.C. (c), an Islamic retail bank subsidiary which holds the core retail banking business, and IB Capital B.S.C. (c) (IB Capital), an investment subsidiary, which holds investments and other non-core assets. The two subsidiaries are licensed and regulated by the CBB.
At the meeting, Sheikh Zamil extended, on behalf of the board and the executive management team, sincere thanks and appreciation to the Central Bank of Bahrain, the Ministry of Industry, Commerce and Tourism, the Bahrain Bourse and Boursa Kuwait for their outstanding support which has led to the completion of the two-year long reorganization project successfully and on time. During the EGM, shareholders also approved amendments to the Memorandum and Articles of Association of Ithmaar Holding.
“On behalf of the Board of Directors, I am pleased to announce that 2016 has been a year of remarkable transformation at Ithmaar,” said Sheikh Zamil. “Throughout the year, the focus remained on implementing the new group structure while continuously developing our core retail banking business. Ithmaar’s performance in 2016 is testimony to the success of these efforts, and we are confident that this growth will continue following the completion of the reorganization and the formal commencement of the new group structure with the start of 2017,” he said.
Ithmaar Chief Executive Officer, Ahmed Abdul Rahim, said the financial results are a direct consequence of the clear focus on core retail banking business.
“In 2016, Ithmaar conducted certain process-reengineering initiatives to improve efficiency at the branches as well as enhance customer experiences at all possible touch points,” said Abdul Rahim. “As a result of Ithmaar’s consistent efforts in Bahrain to enhance its products, expand its network and introduce new services, retail banking customer current accounts, savings accounts, Thimaar and URIA deposits, increased by 10.9 percent in 2016, from USD 1.72 billion at the end of 2015 to USD 1.91 billion. Ithmaar’s financing business also increased by 7.2 percent, from USD 1.18 billion at the end of 2015 to USD 1.27 billion. The growth was driven mainly by home financing, which increased by 51 percent in 2016,” he said.
“Ithmaar’s success in 2016 is perhaps most clearly reflected in the growth in net income, before overseas taxation, which amounted to USD 36.74 million for 2016, a complete turnaround from a net loss of USD 17.07 million, before overseas taxation, reported for 2015. Total assets also increased to USD 8.34 billion as at 31 December 2016, an increase of 2.5 percent from USD 8.14 billion as at 31 December 2015,” said Abdul Rahim. “This is, in a large part, a result of continuously improving Ithmaar’s products and services while also keeping costs and expenses under control. Total expenses for 2016, for example, amounted to USD 192.10 million, a marginal increase from the total expenses of USD 190.41 million reported for 2015, despite the continuous expansion of Ithmaar’s retail banking operations both in Bahrain and in Pakistan,” he said.
“Our focus on business growth and enhanced customer satisfaction, however, did not distract us from our commitment to our social responsibilities and, in 2016, we continued to making real and meaningful contributions to the community in which we operate” said Abdul Rahim. “This, along with our clear commitment to transparency, has not gone unnoticed and, in 2016, the World Islamic Banking Conference singled Ithmaar out from among the world’s Islamic banks and presented it with a prestigious international award in recognition of its Corporate Social Responsibility and Financial Disclosure,” he said.
“The achievements of 2016 are made all the more impressive by Ithmaar’s continuously improving financial performance,” said Abdul Rahim. “The balance sheet continues to be stable, and our customer deposits continue to grow as is evident from the equity of unrestricted investment account holders growing to USD 2.77 billion as at 31 December 2016, a 15.5 percent increase compared to USD 2.40 billion as at 31 December 2015,” he said.
“This increase reflects customer confidence in Ithmaar, and is further evidence that efforts to grow continuously closer to customers are paying off,” said Abdul Rahim. “Current accounts and due to investors, for example, grew to USD 3.48 billion as at 31 December 2016, a 9.3 percent increase compared to USD 3.19 billion as at 31 December 2015. Financings Murabaha, Musharaka and Ijarah also increased to USD 3.93 billion as at 31 December 2016, a 5.7 percent increase from USD 3.72 billion as at 31 December 2015,” he said.
In 2016, Ithmaar further expanded its retail banking network, both in Bahrain where it added a new full-service branch in Galali and two Automated Teller Machines (ATMs) in Hamad Town, as well as in Pakistan, where Faysal Bank Limited added 75 new, full-service Islamic branches.
In line with its commitment to continuously improving its products and services, Ithmaar partnered with Batelco and Arab Financial Services to launch Bahrain’s first ever mobile payment solution, EasyPay, in 2016. The solution uses secure Near Field Communication (NFC) tags to eliminate the need for cash or cards by allowing customers to shop simply by tapping their mobile phones at Point of Sale (POS) machines. The formal launch earlier this year marked a key milestone for the Bahrain retail market, potentially revolutionizing shopping experiences of the customers with secure, real-time payments now possible directly from their mobile phones.