5
Dar Al-Maal Al-Islami Trust
Annual Report 2012
end of 2011. As a result, the value
of each participation unit rose to
$124.03 a 6.6% increase over last
year’s value of $116.36. In view
of this, the Board of Supervisors
has resolved not to recommend
a dividend in respect of the year
ended 31 December 2012 at the
Annual General Meeting.
shareholders will be aware that it
has been our policy for a number
of years to allocate a percentage
of the Group’s profit to a fiduciary
risk reserve to cover inherent
fiduciary risks which might arise
in the Group’s managed funds. In
light of the difficult years behind
us, the Board has again resolved
to recommend the appropriation of
an additional $20.0 million from
reserves to the fiduciary reserve
to reflect the increased risks. The
amount of the fiduciary risk reserve
of $207.5 million will be kept under
review and will not be available for
distribution.
Two full years have passed since
Ithmaar Bank B.S.C., DMI’s core
subsidiary held at 53% ownership,
converted to a licensed Islamic retail
bank. We can now proudly look
back upon this decision as we
witness Islamic financing gaining
global acceptance as a serious
alternative to conventional western
banking.
In spite of the continued hardships
faced in global markets, Ithmaar
Bank was able to turnaround its net
operating profit before taxes and
provisions to BD12.8million ($34.0
million) as compared to a loss in
2011 of BD 14.3 million ($37.9
million). However, the continuing
weight of the carrying costs of non-
core underperforming investments
coupled with substantial provision
charges sapped profitability,
resulting in a total net loss of BD
10.1 million ($26.8 million) after
tax and provisions. The balance
sheet showed an encouraging 26%
growth in financing assets (loans)
and a 31% growth in customer
funds, with the addition of 18,000
new client relationships to its
customer base in 2012 alone, a
20% growth in the core bank.
To address the challenges facing the
Bank, future strategy includes the
sale of identified investment assets,
internal cash generation through the
growth of profitable business lines
and raising additional capital at an
opportune time in the future. Thanks
to the confidence of its investors,
Ithmaar’s traded share price nearly
doubled during the year. Ithmaar
Bank now stands at the forefront
prepared to take full advantage of its
strengths in Islamic retail banking
and aims to promote all business
opportunities to generate additional
shareholder value.
Faysal Bank Limited, in which the
Group owns an economic interest
of 35% through its ownership
in Ithmaar Bank, performed
commendably in the midst of an
adverse economic environment,
which saw the Pakistani Rupee
further devalue 8% against the US
dollar, acute energy shortages,
political uncertainty and deteriorating
social stability. FBL recorded net
profit in 2012 of PKR 1,423 million
($15.2 million) after tax, an 11%
increase over the prior year. The
bank boasts a high credit quality
rating of AA for long term investments
and an A1+, high certainty of
payment, for short term liquidity.
FBL’s total asset base growth
attained a breakthrough increase
of 7% amounting to PKR 313
billion ($3.2 billion) as compared
to 2011. Seven additional Islamic
branch offices were opened during
the year bringing the geographical
span to 265 (including 52 Islamic
branches) in a total of 75 cities
across Pakistan. Furthermore 41
ATMs were added to the network
bringing the total number to 258
in the country. During 2012, the
bank significantly strengthened the
risk management processes and
early warning systems to better
respond to the negative macro-
economic impact on the bank’s
portfolios. Following the post-
merger integration with Royal Bank
of Scotland Pakistan (RBS) the
bank made noteworthy progress
on reducing costs, mobilising core
deposits and proactively managing
non-performing assets. FBL is
confident that future results will
reflect the efforts and successful
execution of the bank’s strategy,
which will continue to reap rewards
for customers and shareholders
alike.
Upholding its creditable growth
record, Islamic Investment Company
of the Gulf (Bahamas) Limited,
DMI’s wholly-owned subsidiary,
delivered positive results in 2012
despite the continuing difficult and
challenging market conditions. On
a consolidated basis, however,
it registered a first time loss of
$4.6 million due to negative results
in some of its subsidiaries and
pre-operating expenses in its new
subsidiary. Gross income increased
6% while operating expense levels
remained the same as the prior
year. The funds under management
registered growth, albeit modest,
compared to 2011 mainly due to
issuing new funds and IICG’s ability
to provide competitive rates of return.
IICG remains committed to continue
to increase its clients’ investments
through various measures including
the stabilisation of its asset portfolios
by enhancing quality, generating
increased income, rationalising
management costs and arranging
refinancing.
IICG’s 73% owned subsidiary,
Gulf Investors Asset Management
Company (GIAMCO), a Saudi closed
joint stock company registered
in the Kingdom of Saudi Arabia,
formally commenced business
operations in July 2012. GIAMCO
is licensed for business activities,
which include establishing and
managing investment funds and
portfolios, underwriting and
arranging corporate finance and
providing advisory services for
fund raising and custodial services
for fiduciary assets. GIAMCO is
comprised of three main operating
divisions; Asset Management, Real
Estate Trading and Development
and Investment Banking, which
