5
Dar Al-Maal Al-Islami Trust
Annual Report 2013
compared to $486.1 million at the
end of 2012. As a result, the value
of each participation unit decreased
to $109.48 as compared to last
year’s value of $122.88. In view
of this, the Board of Supervisors
has resolved not to recommend
a dividend in respect of the year
ended 31 December 2013 at the
Annual General Meeting.
Owners and holders of equity
participation certificates 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 challenging
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 $227.5 million will be
kept under review and will not be
available for distribution.
DMI’s ownership in its core
subsidiary, Ithmaar Bank B.S.C.,
reduced from 53% to 49%
following the increase in the Bank’s
share capital by BD 21.4 million
to BD 285.6 million; a result of
the share swap with First Leasing
Bank, one of its Bahrain based
associated companies. After three
challenging years, including the
aforementioned transaction and the
smooth integration of two mergers
in Bahrain and Pakistan, the Bank
remains strong. Opportunities were
successfully seized as they arose.
Ithmaar Bank was not exempt from
the turbulent business environment
and continuously challenging
global markets. The Bank reported a
net loss, after taxes and provisions,
of BD 29.9 million ($79.3 million)
for the year ended 31 December
2013, compared to a net loss of
BD 10.1 million ($26.8 million)
in 2012, mainly due to diminished
margins in one of its subsidiaries.
Operating expenses were controlled
and the Bank expects further
cost efficiencies with planned
restructuring measures. The balance
sheet indicated stability, improved
liquidity, an encouraging rise in
financing assets (loans) of 14.8%
and a 13.4% growth in customer
funds, with the customer base
more than doubling in the last three
years. New products and services
enhanced the expansion in the
Bahrain retail banking network of
17 branches and 47 ATM locations.
This year’s results were nevertheless
reassuring in light of a 35%
increase in the share price and
the continued growth in its Bahrain
core business market share, a
clear sign of confidence, gratefully
acknowledged by the Bank. Ithmaar
Bank is nonetheless fully aware
that it has not yet realised the full
potential of synergies. The future
strategy will focus on transforming
its organisation into the region’s
premier Islamic retail bank. The
positive impact of these key
decisions will be witnessed in 2014.
Faysal Bank Limited, in which the
Group owns an economic interest
of 35% through its ownership in
Ithmaar Bank, generated a net
profit of PKR 1,850 million ($18.2
million) after tax, a 30% increase
over the prior year. This marked
a year of accomplishment and
turnaround in adverse economic
conditions, which included the
further devaluation of the Pakistani
Rupee by 8% against the US
dollar, a change in government
with diverging monetary and
fiscal spending policies and
continued inflationary pressure on
consumer prices. During 2013,
the Bank concentrated its efforts
on increasing revenue from core
business activities by improving
the deposit mix increasing low
cost customer accounts, efficiently
containing administrative costs,
proactively managing credit costs
and recovering non-performing
loans. Following the merger with
Royal Bank of Scotland, the Bank
upgraded and merged two core
banking systems, which will bring
operational efficiency and cost
savings for many years to come. This
year FBL added four new branches
resulting in a geographical presence
of 269 in 79 cities and expanded the
53 Islamic Banking office network
through the successful launch of
dedicated Islamic Banking Windows
in several conventional branches.
Going forward, FBL’s strategy will
continue to build upon those high
quality activities which have yielded
well for the bank. FBL fully expects
that future initiatives will result in
a strengthened balance sheet and
improved profitability, benefiting
shareholders and customers alike.
In spite of another challenging
year, Islamic Investment Company
of the Gulf (Bahamas) Limited,
DMI’s wholly-owned subsidiary,
delivered positive results on a
stand-alone basis with a modest
net profit of $3.8 million. However,
due to unfavourable results in some
of its subsidiaries, coupled with
continuing start-up expenses in
its new subsidiary, IICG recorded
a consolidated net loss of $4.1
million. IICG’s total assets increased
2%over 2012 amounting to $158.5
million, while shareholder’s equity
rose to $51 million, an increase
of 8% compared to the prior year.
During this period, IICG focused on
achieving longer maturity profiles for
its client investments resulting in the
funds under management reaching
$2.4 billion, a 2% increase in
2013 deposits. IICG reaffirms its
commitment to asset stabilisation,
yield enhancement, value creation
and cost rationalisation for its clients
now and for years to come.
IICG’s 73% owned subsidiary,
Gulf Investors Asset Management
Company (GIAMCO), a Saudi closed
joint stock company registered
in the Kingdom of Saudi Arabia,
commenced business operations in
July 2012. During 2013 GIAMCO
continued to set the detailed ground
work required for its fund structuring,
Sharia and statutory approvals, third
party agreements and its operational
requirements of manpower, IT and
operational systems. GIAMCO’s
Asset Management department
