Ithmaar Bank, a globally-focused investment bank based in Bahrain, announced today a record net profit of US$183.8 million for 2006, a leap of five-fold from the US$37.6 million earned the previous year.
The new record profit was supported by an equally impressive operating profit, which surged 418.5% to US$70 million, compared with US$13.5 million in 2005. The cost to income ratio fell from 69% to 41%. Total assets surged to US$3.2 billion at 2006-end, from US$442 million at 2005-end, shareholders’ equity trebled to US$984 million, from US$247 million the previous year, and funds under management reached $ 1.1 billion.
In view of these excellent results, the Bank’s Board of Directors, which met yesterday (Feb 26), put forward a recommended cash dividend of 13.5%, subject to the Central Bank of Bahrain’s approval. The proposal will be presented for shareholder approval at the Annual General Meeting, to be held on March 19. A total of US$47.7 million, or 13.5 cents per share, is recommended for distribution, an increase of 138% from the US$20 million distributed in 2005. The Board also advises that US$130 million be transferred to Retained Earnings account and US$16.8 million to the Bank’s General Reserve.
Ithmaar Bank Chairman Khalid Abdulla-Janahi said that this milestone year was driven by a strong performance in all areas of business, including that of associates and subsidiaries, especially Shamil Bank of Bahrain, Solidarity, First Leasing Bank, Faysal Bank Limited (Pakistan) and Faisal Private Bank S.A. (Switzerland).
“The economic boom in the GCC region has provided an excellent environment for Ithmaar Bank to restructure and re-brand itself as a globally-focused investment bank,” said Janahi.
“Positive market sentiment translated into strong client activity, and we were well positioned to benefit from the favorable investment conditions. These results are a testament to the success of the Bank’s new business strategy, which has seen it aggressively consolidate existing assets and pursue new opportunities,” he said.
Earnings per share more than doubled from 24 cents last year to 55 cents in 2006, as did the return on average equity from 15.8% to 33.4%. Total equity attributable to shareholders jumped three-fold from US$247.4 million to US$758.5 million, while total equity went up from US$252.8 million to US$984.8 million. The Bank also showed a healthy 30.3% increase in net book value per share to US$2.15 at December-end 2006 against US$1.65 at December-end 2005.
The 2006 full-year consolidated profit caps a string of record earnings during a milestone year, which also saw the Bank’s reconstitution from a closed to a public shareholding company. A private placement launched early in 2006, which raised US$60 million, was followed by a successful initial public offering (IPO), bringing in an additional US$337.5 million. As a result the Bank’s paid-up capital was raised to its current US$360 million.
In August 2006 Ithmaar Bank invested US$401.3 million to acquire a 60% shareholding in Shamil Bank, a leading Islamic commercial and investment bank based in Bahrain, which is also listed on the BSE. In a two-way deal with Dar Al-Maal Al-Islami (DMI) Trust, one of the world’s largest Islamic financial institutions, Ithmaar Bank then sold its 100% shareholding in the Islamic Investment Company of the Gulf (IICG) Bahamas to DMI Trust. The US$150 million sale transaction, netted a profit of US$105.5 million, in the third quarter. The sale of IICG (Bahamas) was followed by the sale of 7.5% of Ithmaar Bank’s stake in Faisal Islamic Bank of Egypt for US$18.8 million, also in the third quarter of 2006.
Ithmaar Bank also invested US$22.4 million to acquire 21,323,810 shares (21.3%), of First Leasing Bank. In June the Bank also injected US$20 million in its affiliate Solidarity, maintaining the Bank’s interest in the company at 40%.
The efforts to consolidate the Bank’s assets have been complemented by new strategic investments. This saw Ithmaar Bank acquire, in December 2006, a 20% shareholding in China-based CITIC International Asset Management Company (CIAM), in an investment worth $60 million. CIAM, which specializes in distressed asset management, is a flagship company of CITIC International Financial Holdings Limited, which is based in Hong Kong and listed in the Hong Kong Stock Exchange.
Moreover, Ithmaar launched a $2 billion Infrastructure and Growth Capital Fund together with Abraaj Capital and Deutsche Bank. This will be one of the largest funds ever raised in the region, aimed to target a number of strategic investment opportunities, including power and utilities, water, health care, education, transportation, oil and gas, petrochemical and mining.
The Bank is also undertaking major development projects in Bahrain, for which work is commencing this year. They include but not limited to the following 2 projects:
The US$1 billion Health Island project aims to provide state-of-the-art health care facilities in a resort-type environment. The project will include specialist hospitals and hotels, which will be built using unique engineering architecture, with breathtaking landscaping.
The US$175 million Serai project in Seef District, will comprise twin towers, of which one will be a luxury family hotel, with a Middle Eastern theme, and the other an office tower.
“In addition, we have a strong pipeline of high quality investments with significant potential, which we will be announcing during this year,” said Janahi.
“We are confident about our strategies and our prospects for future growth,” he said.
“From a social contribution viewpoint, I am pleased to announce that Ithmaar Bank has taken the necessary steps to establish "Ithmaar Learning & Development Fund", in coordination with top-tier universities in the United Kingdom. This fund will play a major role in providing high level training and post graduate education to young and bright students of Bahrain. The fund, which will be subject to shareholders' approval, will have an initial capital of US$ 4.2 million and will be the first of its kind in Bahrain,” he added.
About Ithmaar Bank
Ithmaar Bank B.S.C. is a 22-year-old bank licensed by the Central Bank of Bahrain and listed on the Bahrain Stock Exchange.
Ithmaar Bank, which has a paid-up capital of US$360 million, is a full service investment bank, with operations covering the Middle East and North Africa (MENA) region, as well as South Asia, Asia-Pacific and Europe. Besides holding significant investments in the banking, financial services and real estate sectors in different markets, the main activities of the Bank include underwriting business (equity and other financings), private equity (structuring, participation and portfolio management), project financing, and advisory business (capital market, mergers & acquisitions as well as project advisory).
Ithmaar Bank’s flagship companies include Shamil Bank of Bahrain, First Leasing Bank, Solidarity (an Islamic insurance company, headquartered in Bahrain); Faisal Private Bank (Switzerland) and Faysal Bank Limited (Pakistan) and Ithmaar Development Company.
The Bank’s shares are listed on the Bahrain Stock Exchange.
For more information on Ithmaar Bank, please visit the Bank’s website on www.ithmaarbank.com
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