Ithmaar Bank, a Bahrain-based investment bank with global reach, today announced a record net profit of $188.3 million for the year ended December 31, 2007, as the consolidated earnings, (including minority interest) from its operations and that of its subsidiaries and associates continued their upward trend. Operating income also increased by 173 per cent to $339.5 million. These results compare with a $181.1 million net profit for 2006, which included a one-off gain of $105.5 million on the sale of a subsidiary, Islamic Investment Company of the Gulf (Bahamas) Limited. Excluding this item, the Bank’s net profit more than doubled in 2007, when compared with the previous year. Return on average equity remained strong, at 15.6 per cent, and the capital adequacy ratio of 25.79 per cent was well above the CBB requirement of 12 per cent.

“We are pleased to report that Ithmaar Bank’s balance sheet remains strong. Net profits continued to rise, even when compared to last year’s results which benefited from an extraordinary gain,” said Ithmaar Bank Chairman, Khalid Abdulla-Janahi.

“The Ithmaar banking group, which Ithmaar Bank spearheads, further expanded business volume and the scope of services it offers. It also widened its business coverage of the Middle East, North Africa and South Asia (MENASA) region, and of the Asia-Pacific region and Europe. Despite this swift expansion, the cost-to-income ratio, which was always well within industry standards, actually improved from 42.1 to 41.1 per cent,” he continued.

Janahi added that, owing to Ithmaar Bank’s stringent risk management control of asset quality, the Bank’s results were not impacted by the sub-prime woes that affected global financial markets in the second half of 2007.

Ithmaar Bank made major strides in all of its direct business lines, including underwriting (equity and other financings), private equity (structuring, participation and portfolio management), Islamic financing and advisory services, among others.

In 2007, Ithmaar Bank completed its acquisition of Shamil Bank, which resulted in Shamil’s Swiss subsidiary, Faisal Private Bank (FPB), also becoming wholly owned by Ithmaar, while Ithmaar’s effective stake in Pakistan-based Faysal Bank Limited (FBL) increased, from 51 per cent to 65.72 per cent. Ithmaar Bank’s total assets surged 23 per cent from $3.3 billion to $4.1 billion. Shareholders’ equity also jumped by 37 per cent, from $792.1 million to $1.1 billion, while total equity rose by 14 per cent to $1.3 billion.

Income from investments in financings contributed $181.4 million, while $52.5 million was generated in fees and commissions. Meanwhile, the group earned $44.7 million from investments in securities and $92.7 million from investment property. Customer current and investment accounts rapidly expanded, by 35 per cent, from $1.4 billion to $1.9 billion, reflecting increased confidence in Shamil Bank’s and FBL’s services.

Funds under management increased 63 per cent, from $1.1 billion to $1.7 billion. Important contributors were: the $200 million raised for Ithmaar Bank’s Aldar Private Equity Fund; and the $185 million raised, through Dilmunia Development Fund I LP, to finance land purchase and initial infrastructure works for the $1.6 billion Dilmunia ‘health island’, which is being developed in the north-east of Bahrain by Ithmaar Bank’s subsidiary, Ithmaar Development Company.

Ithmaar Bank, CEO & Member of the Board, Michael P. Lee said: “In 2008 we will be focusing on closing various funds and other proprietary initiatives which are already in process. We also expect to have several other major new funds coming into the pipeline. These will cater to different levels of risk and allocation preferences, giving investors a range of investments from which to choose. 2008 will also be a very active year for Ithmaar Development Company, as it begins to implement its $3.3 billion real estate project portfolio.”