DMIT_Annual_Report_2018_EN

Dar Al-Maal Al-Islami Trust 4 CHAIRMAN’S MESSAGE Dear Participants, May the peace, blessings and mercy of Allah be upon you. On behalf of the Board of Supervisors, I am pleased to present the thirty-seventh annual report of Dar Al-Maal Al-Islami Trust for the financial year ended 31 December 2018. I am pleased to report the Group’s progress and key achievements in 2018. Operating performance continued its positive trend during the year, and the first phase of our transformation strategy and digital banking, has met its goals. Despite slowing global economic growth, uncertainty and market volatility along with persisting geo-political tensions, the Group continued to perform well during 2018, with notable achievements. The deceleration in global growth and increased financial markets volatility witnessed in 2018, were influenced by several critical factors. These included escalating global trade tension, mainly emanating from US efforts to reduce trade imbalance with China, Japan and other countries. The economic slow-down in China, due mainly to the new measures implemented by the government, tightening of US monetary policy through gradual increase in interest rates and “tapering” measures i.e. reversal of quantitative easing policy, and ongoing geo-political development. The US Federal Reserve has indicated that for the rest of 2019, they intend to follow an accommodative monetary policy, which may imply that there will be no rate hike for the rest of the year. In Emerging Markets (“EM”), numerous uncertainties weighed on investors sentiments in 2018 and led to an overall drop in equity values for the year. EM equities fell over in the fourth quarter too but outperformed the indices of the developed markets. Concerns about global economic growth, US interest rate hikes and US-China trade tension stoked market volatility during the period, as they did in much of 2018. The strengthening of the US Dollar and worries about the high level of sovereign and corporate debt in emerging market countries led to weakening of EM currencies and impacted corporate earnings too. The year proved challenging for global markets as a whole, with EM equities losing more ground than developed markets stocks. The MSCI World Index fell 8.71% whereas the MSCI EM Index dropped by 14.57%, both in US Dollar. Despite this challenging backdrop, the GCC region is expected to achieve GDP growth of 2.1% in 2019, as per forecast by the IMF. This positive outlook is supported by the sustained increase in oil prices; a slower pace of fiscal consolidation; and the growing success of economic transformation programmes by governments across the region, led by the Kingdom of Saudi Arabia, the largest economy of the GCC. After facing two years of significant pressure, the regional banking sector exhibited signs of recovery in 2018,