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Ithmaar Bank reports US$29.5 million loss.

Summary: Ithmaar Bank reported yesterday a US$29.5 million loss attributable to equity holders of the Bank for the three month period ended 30 September 2009.

Ithmaar Bank reported yesterday a US$29.5 million loss attributable to equity holders of the Bank for the three month period ended 30 September 2009. This compares with a US$20.5 million loss for the same period last year.

The announcement, by Ithmaar Bank CEO and Member of the Board Mohamed Hussain, follows the review and approval, by the Board of the Directors on 11 November 2009, of the Bank's consolidated financial results for the nine month period ended 30 September 2009. During the nine month period, Ithmaar Bank reported a loss of US$59.5 million attributed to shareholders equity.

This compares with a profit of US$60 million for the same period last year. "The revenues from the core retail banking operations of the group continue to increase, expenses are being strictly controlled and this is very encouraging," said Hussain. "The overall performance has been impacted by prudent additional unrealized impairment provisions coupled with lower income from investment banking activities in these challenging market conditions" he said. "We have continued our policy of taking prudent impairment provisions and, in the third quarter, we booked a further provision of US$19.4 million, mainly against exposures in Pakistan and in the GCC region," said Hussain. "This brings our total unrealized impairment provisions for the nine month period ended 30 September 2009 to US$53.1 million, up from the US$18 million that was booked in the same period last year," he said.

The Bank, said Hussain, continued to maintain liquidity of more than 15 percent of its total assets and reported an encouraging growth in core customer accounts. "Our retail banking operations continue to remain a stable source of recurring income and our focus going forward," said Hussain. Ithmaar Bank shareholders had, at an Extra-ordinary General Meeting (EGM) on 4 November,approved plans by the Ithmaar Board of Directors to implement a comprehensive reorganisation that will turn Ithmaar Bank into a premier Islamic retail bank after pooling its resources with its wholly-owned subsidiary, Shamil Bank. The reorganisation will further improve liquidity, lower the Bank's risk profile and enhance shareholder value by amplifying existing synergies and eliminating duplicated resources. The unification of the boards of directors will further strengthen the Bank's overall corporate governance and ensure compliance with best practices At the EGM, Ithmaar Bank shareholders also approved plans to increase the Bank's authorised capital to US$2 billion, as well plans for three capital raising initiatives that will, together on For immediate release completion, add up to US$500 million to the Bank's capital, thereby increasing shareholder equity to about US$1.4 billion.

Ithmaar had, on 17 October, announced that the Bank intends to offer a rights issue as well as launch a five-year Mandatory Convertible Sukuk, the Islamic equivalent of mandatory convertible bond issue, with the assistance of J.P. Morgan Chase. Ithmaar had then also announced that an agreement in principle had been reached with Global Emerging Markets of London (GEM), whereby GEM would commit to provide an equity line of credit amounting up to US$125 million which the Bank will have the right to draw down, resulting in issuance of new ordinary shares.

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Publication:Mena Report
Article Type:Financial report
Date:Nov 12, 2009
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