Ithmaar Bank implements strategic initiatives to turn Group around in 2014 | Ithmaar Bank implements strategic initiatives to turn Group around in 2014 -
Ithmaar Bank, a Bahrain-based Islamic retail bank, announced that it has already started implementing cost-cutting and other strategic initiatives, both in the Bahrain and in Pakistan, aimed at turning the Group around in 2014.

Ithmaar Bank implements strategic initiatives to turn Group around in 2014

: Monday, March 31 - 2014 @ 15:22

Ithmaar Bank, a Bahrain-based Islamic retail bank, announced that it has already started implementing cost-cutting and other strategic initiatives, both in the Bahrain and in Pakistan, aimed at turning the Group around in 2014.

The announcement was made by the Ithmaar Bank Chairman, His Royal Highness Prince Amr Al Faisal, to the Bank’s shareholders at the Annual General Meeting (AGM) that was hosted at the Movenpick Hotel in Bahrain. Also present at the AGM were Directors Khalid Abdulla-Janahi and Tunku Dato’ Ya’acob Bin Tunku Abdullah (Chairman of the Audit and Governance Committee), and representatives of the Bank’s Sharia Supervisory Board, the Central Bank of Bahrain, the Ministry of Industry and Commerce, the statutory auditors PricewaterhouseCoopers, and the Bahrain Bourse.

The AGM welcomed Ithmaar Bank’s increased focus on further strengthening its Islamic retail and commercial banking operations and on continuing towards realising the shared vision of becoming the region’s premier Islamic retail bank.

Earlier this month (ed note: 18/03/14) Ithmaar Bank announced that its Board of Directors had initiated several measures aimed at increasing revenues, improving margins and reducing costs across Ithmaar Group. In particular, the cost reduction initiatives across Ithmaar Group are expected to result in savings in the range of BD9 – BD13m annually.

“The far-reaching cost reduction initiatives include many aspects of our operations, including Information Technology, Administration and Staff Costs, both at Ithmaar Bank in Bahrain and its subsidiaries, mainly Faysal Bank Limited (FBL) in Pakistan,” said HRH Prince Amr. “This will allow us to realise the full potential of the powerful synergies created over almost four years of business acquisition and reorganisation within the Group,” he added.

“In Bahrain, we have already implemented some reorganisation and staff cost rationalization under the Voluntary Separation Programme, and this will significantly reduce the Bank’s staff costs going forward,” said HRH Prince Amr. “We have also begun implementing several technology-related initiatives that will reduce costs and bring the Bank closer to its customers, as well as further improvements to the Bank’s administration processes that will further improve cost-efficiency,” he added.

“In Pakistan, we have commissioned internationally-renowned independent consultants to advise on the complete re-engineering of FBL’s operations, with a specific emphasis on growth and cost cutting initiatives,” said HRH Prince Amr. “This follows an Ithmaar Bank Board decision to convert FBL’s remaining conventional operations to Islamic banking over the next few years following necessary regulatory approvals,” he said.

Ithmaar Bank Chief Executive Officer, Ahmed Abdul Rahim, said, “Both Ithmaar Bank in Bahrain and FBL in Pakistan had good potential for additional growth in revenues and cost reductions.”

“The immediate implementation of the Board’s strategic decisions earlier this year to turn the Group around in 2014 has started, and we have already taken significant steps forward,” said Abdul Rahim. “These initiatives, coupled with the consistent growth of our core business, despite challenging local, regional and international market conditions, will contribute to improving the Bank’s performance,” said Abdul Rahim. “It will also further improve customer satisfaction and increase shareholder value,” he said.

“In 2013, for example, Ithmaar Bank’s sustained, consistent efforts started paying off with tangible results,” said Abdul Rahim. “New products and enhanced services are the key drivers of our business growth, and our increased branch and ATM network has helped extend our reach. This, in turn, has contributed to our improving performance, which includes improved liquidity and increased deposits,” he said.

“The Bank’s balance sheet, for example, continues to be stable, with good growth in core business: unrestricted investment account deposits grew by 13.4% despite a reduction in average profit rates, a reaffirmation of investor confidence,” said Abdul Rahim. “The customer base in Bahrain has also more than doubled over the last three years, and liquid assets increased to represent about 14.8% of the balance sheet,” he said.

“Ithmaar Bank reported a profit of BD1.8m before taxation and provisions for the year ended 31 December 2013 and a net loss of BD29.9m after taxation and provisions for the year,” said Abdul Rahim. “The major factors impacting the performance of the Group for the year were the significant reduction in regulatory benchmark profit rates in Pakistan, coupled with increased minimum profit rate on certain liability products resulting in significant margin compression in FBL; and recognizing prudent impairment provisions on its investment portfolio,” he said.

“The positive story for 2013 is that total income for 2013 mainly comprises increased recurring income, though this was impacted by margin compression in FBL, whereas the 2012 income included certain one-off items,” said Abdul Rahim. “The results of the various strategic and cost rationalisation initiatives that has already started will have a major positive impact on the Bank’s performance in 2014 and thereafter,” he said.

For more information please contact:
Taimour Raouf
Senior Manager, Group Public Relations
Ithmaar banking group
Tel: +97317584038
Fax: +97317584090

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Monday, March 31- 2014 @ 15:22 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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