Ithmaar Bank, a Bahrain-based Islamic retail bank, announced yesterday (ed note: 18/03/14) that its Board of Directors has initiated several measures aimed at turning Ithmaar Group around in 2014.
This includes a combination of increased revenue, improved margins and cost reductions across Ithmaar Group. In particular, the cost reduction initiatives across Ithmaar Group are expected to result in savings in the range of $25-$35 million annually.
“To realise the full potential of the powerful synergies created over the past few years, we must now leverage existing resources and share information technology systems and infrastructure between Ithmaar Bank in Bahrain and its subsidiaries, mainly Faysal Bank Limited (FBL) in Pakistan to maximise cost efficiencies,” said Ithmaar Bank Chief Executive Officer, Ahmed Abdul Rahim. “In particular, we have conducted a study with the aim of identifying areas to reduce costs, including staff and other overheads, and ultimately improve our efficiency across Ithmaar Group,” he said.
“This follows almost four years of business acquisition and reorganisation within the Group that included the seamless integration of business and systems at Ithmaar Bank and Shamil Bank in April 2010 as well as at Ithmaar Bank and First Leasing Bank in 2013; and FBL’s acquisition of the Pakistan operations of Royal Bank of Scotland in 2010. The focus is now to realize the full potential of these cost synergies through rationalization of human resources and IT infrastructure,” said Abdul Rahim.
“This cost rationalisation will result in better utilisation of both our information technology systems and our human resources, who we have long-recognised as our most important asset,” said Abdul Rahim. “It will also allow us to further improve our financial performance as a commercial institution and return to sustainable profitability,” he said.
“Key strategic decisions taken by the Ithmaar Bank Board of Directors include the full conversion of FBL Pakistan’s remaining conventional operations to Islamic banking,” said Abdul Rahim.” “This key decision is in line with the Bank’s commitment to further consolidate its Islamic banking business, to develop its core business and to becoming the region’s premier Islamic retail bank,” he said.
“Ithmaar Bank, with its 67 percent stake in FBL, is increasing its control by adding two more directors to become five out of eight directors, including the FBL president and chief executive officer,” said Abdul Rahim. “FBL has good potential for additional growth in revenues and cost reduction,” he said.
“These sustained, consistent efforts are paying off and we have already started seeing 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, will substantially improve Ithmaar Group performance and the shareholder value,” he said.