DMIT Annual Report 2017

Dar Al-Maal Al-Islami Trust 5 The Board of Supervisors has therefore resolved not to recommend a dividend in respect of the year ended 31 December 2017 at the Annual General Meeting. Due to better management of the situation in Islamic Investment Company of the Gulf (Bahamas) Limited, Kingdom of Saudi Arabia’s operations, the fiduciary risk reserve at 31 December 2017 amounted to $60 million. The overall situation is being kept under continuous meticulous review. Ithmaar Holding BSC, regulated by the Central Bank of Bahrain and its shares are listed on the Bourse of Bahrain, Kuwait Stock Exchange and Dubai Financial Market - a key subsidiary in which the Group owns 46.7% continued implementation of its strategic decision in converting Ithmaar into two major units, Ithmaar Bank B.S.C.( c) focusing on core retail business. The other part is IB Capital B.S.C. (c), an investment subsidiary which holds investments and other non-core assets. The Board of Supervisors is convinced that this structure will assist in realising long term strategy for growth by providing greater insight into the strength of core retail banking operations and further facilitate the focussed management of the Group’s investment and non-core assets. It will also help highlight the performance of core business and assist in the planned divestment of investment and non-core assets. The new organization will further focus its efforts, allowing the Group to take advantage of new growth opportunities and help generate greater value to shareholders. In 2017, Ithmaar Holding B.S.C. recorded a net loss attributed to shareholders of $ 84.7 million, primarily due to impairment on investments and other assets. However, the Ithmaar Bank BSC (c) achieved a net profit attributable to shareholders of $ 4.2 million. Ithmaar will continue yielding the strategic decision through continuous efforts to improve its products and services, keep its costs under control, enhance its customer service offerings and expand its network. Ithmaar will continue in developing the core retail banking business, and will continue in the new group structure. The Group owns 31.3% of the economic interest of Faysal Bank Limited (“FBL”) through DMI’s investment in Ithmaar Bank. FBL achieved a net profit after tax of PKR 4.5 billion ($42.7 million) in 2017, compared with PKR 4.3 billion ($41.1 million) in 2016. This achievement was the result of FBL’s timely and effective measures taken for maintaining revenue streams despite the low interest rate era and pressure on banking spreads and profitability. Total assets registered an increase of 10% from PKR 444 billion ($4.2 billion) at 31 December 2016 to PKR 488 billion ($4.4 billion) at 31 December 2017. During the year, FBL made concentrated efforts to acquire low cost CASA deposit (current and saving accounts), resulting in an increase in CASA by 14.4% from PKR 228 billion ($ 2.2 billion) to PKR 261 billion ($2.4 billion). Similarly, total deposits registered an increase by 10% over 2016, from PKR 340 billion (US$ 3.2 Billion) to PKR 373 billion ($ 3.4 billion). Consequently, the cost of deposit of FBL dropped by 20bp. In the light of series of measures taken by FBL during 2017, FBL maintained stable outlook long and short term credit ratings of AA and A1+, respectively, as reported by two reputable rating agencies. The Bank opened 50 new branches to realize a network of 405 branches of which 198 (49%) are dedicated to Islamic banking. FBL will continue its horizontal growth in branch network to provide easy access to customers. These branches will not only generate low cost core deposits but will also improve the current and saving accounts mix, with the goal of reducing the average cost of funding as described above. FBL continues to focus on expanding development of new Islamic products, aiming to attracting more deposit in this sector. With the new business structure at FBL, future strategy will continue to focus on Islamic finance which enjoyed a successful year, taking lead role in a number of syndications and big-ticket transactions. The Bank is confident that synergies will be captured and expectations of its shareholders will be met. Reflecting FBL’s commitment to provide a better, easier and