DMIT Annual Report 2017

Dar Al-Maal Al-Islami Trust 6 seamless customers experience, FBL has initiated a comprehensive digital strategy, implementing a new online banking platform. Islamic Investment Company of the Gulf (Bahamas) Limited (“IICG”), DMI’s wholly owned subsidiary, reported a net profit of $ 8.7 million in 2017 compared with a loss of $0.4 million in 2016. Shareholder’s equity decreased to $48.0 million compared to $48.3 million in 2016, following the payment of a dividend of $ 9 million to the parent, in respect of 2016. IICG’s total assets declined by 18%, from $107.2 million in 2016, to $87.9 million, in 2017, reflecting the distribution of dividend of 2016, and reduction in investment in Funds under Management and receivable from Group entities. IICG’s Funds Under Management amounted to $2.1 billion in December 2017, a marginal decrease of 4.5% from $ 2.2 billion in 2016, primarily due to redemptions. Following the directives of the regulatory authorities in the Kingdom of Saudi Arabia, IICG is in a process of liquidating its Modarabas in this country. All assets are now under liquidation and distributions to investors are made proportionately. Since 2016 four distributions have so far been made to the investors, equivalent to 8% of investors’ equity. As the liquidation of the assets progresses, further repayments will be made as and when more assets are liquidated. The overall Group risk in respect of Funds Under Management does not appear to have been worsen since last year, while discussions with the regulators are progressing smoothly . IICG’s 73% owned subsidiary, Gulf Investors Asset Management Company (“GIAMCO”), a Saudi closed joint stock company registered in the Kingdom of Saudi Arabia, recorded a net loss of $2.5 million in 2017 compared to a net loss of $ 1.0 million in the previous year. Total Funds Under Management as at December 31, 2017 amounted to $ 86 million, compared with $91.6 million in 2016. On strategic basis, the Group decided to transfer the management of GIAMCO’s 3 funds to other funds managers, during 2018. Faisal Islamic Bank of Egypt (“FIBE”), 475% owned by the Group’s managed funds, achieved a remarkable results in 2017. At an all-time high since incorporation in 1981. Additionally, the liberalization of the Egyptian Pound (“L.E”) had a positive impact on the Bank’s business results. The exchange rate for L.E. against the US Dollar, as advised by the Central Bank in Egypt, improved during 2017 from L.E. 18.27 to L.E. 17.73. Further improvement was also witnessed against world’s currencies. As a result, the FIBE maintained its leadership in Islamic banking activities within the Egyptian market and strengthened its competitive position considerably on regional and international levels. Branch network expanded during 2017 and reached 36 branches, while another new branch is planned for 2018. As per new regulatory rules, the Capital Adequacy Ratio (“CAR”) increased during 2017 from 11.25% to 11.875%. In addition the adoption of IFRS 9 by the Central Bank of Egypt, in respect of provisioning, may form a challenge to the banking system in Egypt. FIBE has continued its policy of strengthening its capital base and mitigating the risks related to its activities. As December 31, 2017, the CAR for FIBE reached 13.184%, compared with a regulatory level of 11. 875% FIBE’s net profit after tax in 2017 amounted to L.E. 1,723 million ($ 97 million) compared with L.E. 2,887 million ($ 288 million) in 2016. However, after elimination of the impact of foreign exchange gain earned in 2016 of L.E. 1,557 million ($156 million), the results of 2017 represents an increase of 30% over 2016. Total assets in 2017 amounted to L.E. 82.61 billion ($ 4.7 billion) represents an increase by 10% over December 2016 of L.E. 74.98 billion ($4.2 billion). Total equity reached L.E. 9,247 million ($ 522 million) compared to L.E. 8,395 million ($ 466 million) for the previous year. The most important source of funds for the Bank, savings pools and investment certificates (funds under management) increased by 11%, from L.E. 64.1 billion ($3.6 billion) in 2016, to L.E. 71.1 billion ($ 4.01 billion) in 2017. FIBE will continue to play a pioneering role in the development of Islamic banking and consolidation of its position.