Faysal Islamic Bank of Bahrain (FIBB), an Islamic offshore and commercial bank, has reported a net profit of $13.9 million for 1996, an increase of 10.3 per cent on the year before. The bank is planning to pay $6.7 million in dividends.
FIBB, which is controlled by the Dar al-Maal al-Islami Group, is about to launch a investment bank in Indonesia in partnership with Bank Negara Indonesia, and has just received permission to open a branch in Bangladesh. Both are hoped to be up and running within the next three months. FIBB, which raised its share capital to $100 million from $70 million during 1996, already has subsidiaries in Pakistan.
The 1996 results show that the bank earned less in fees from fund management in 1996, but this was more than offset by higher earnings on Islamic financing and investments and other sources of fee income. The total balance sheet shrank by 3 per cent to $356 million. Off-balance sheet business grew strongly, with letters of credit and guarantees up 50 per cent at $493 million and managed funds up by 15 per cent at $1,261 million.
For the first time, the bank has issued Islamic financial information alongside the conventional results drawn up in accordance with international accounting standards (IAS). The Islamic figures are based on rules drawn up by a Bahrain-based body, the Accounting & Auditing Organisation for Islamic Financial Institutions. The main difference between the two is that ‘unrestricted investment accounts’ – client funds over whose management the bank has total control – are counted by the Islamic rules as on-balance sheet. This gives FIBB total assets of $1,058 million for 1996. The bank says this gives a clearer picture of its liquidity and capital adequacy than the IAS figures.