Bahrain Islamic Bank B S C : Annual Financial & Sustainability Report 2023

Bahrain Islamic Bank B.S.C.	ANNUAL FINANCIAL AND SUSTAINABILITY REPORT | 2023

Bahrain Islamic Bank B.S.C.

P.O. Box 5240, Manama

Kingdom of Bahrain

T.: [phone]

F.: [phone]

Licensed as an Islamic Retail Bank by the Central Bank of Bahrain

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Bahrain Islamic Bank B.S.C.

ANNUAL FINANCIAL AND SUSTAINABILITY REPORT | 2023

His Highness	His Majesty	His Royal Highness
Shaikh Isa bin Salman	King Hamad bin Isa	Prince Salman bin Hamad
Al Khalifa	Al Khalifa	Al Khalifa
Late Amir	The King of the	The Crown Prince,
	Kingdom of Bahrain	Deputy Supreme Commander
		and Prime Minister

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Bahrain Islamic Bank B.S.C.	ANNUAL FINANCIAL AND SUSTAINABILITY REPORT | 2023

Empowering dreams through innovative and simplified financial solutions.

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Bahrain Islamic Bank B.S.C.

ANNUAL FINANCIAL AND SUSTAINABILITY REPORT | 2023

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Bahrain Islamic Bank B.S.C.

ANNUAL FINANCIAL AND SUSTAINABILITY REPORT | 2023

B i s B . About the Report

About the Report

The Bahrain Islamic Bank (BisB) Annual Financial and Sustainability Report (The Report or This Report) for the year 2023 highlights the Bank's financial performance and sustainability development.

In line with BisB's commitment to transparent Environmental, Social and Governance (ESG) reporting, the Bank conducted a comprehensive review of its ESG progress in 2023 to help the key stakeholders and investors to make informed decisions. To get a complete overview of BisB's performance metrics, we recommend viewing our ESG report along with our consolidated financial statements, risk and capital management disclosure, corporate governance review report, and remuneration disclosure.

2023 REPORTING SCOPE AND ORGANISATIONAL PARAMETERS

2023 was an important year for BisB. We continued to invest in new technologies to enhance our digital products and operational capabilities. Furthermore, our bank-wide approach is focused on delivering improved customer experience while ensuring ESG progress.

Reporting Boundary

The financial and sustainability information provided in this Report corresponds to the fiscal year 2023 (1st January 2023 till 31st December 2023), unless otherwise stated.

The Bank has eight branches, all operating in the Kingdom of Bahrain. Therefore, the Report's boundary is BisB's banking operation in Bahrain.

The consolidated financial statements include the results of the Bank and its wholly owned subsidiaries (together the Group). The Bank holds 100% of the share capital of Abaad Real Estate W.L.L.

National Bank of Bahrain (NBB) owns 78.81 of shares. Hence, NBB is considered as Parent of the Bank for financial reporting purposes.

Reporting Frameworks

The Report has been prepared in accordance with internationally recognised reporting standards and frameworks in order to ensure complete accountability and transparency.

This includes:

• Adhering to the International Integrated Reporting Framework (IIRF), now part of the IFRS Foundation. The framework requires complete disclosure of financial and non-financial performance to provide a holistic overview of a company's long and short-term goals and value creation.
• The consolidated financial statements have been prepared in accordance with Financial Accounting Standards (FAS) issued by the Accounting
  and Auditing Organisation of Islamic Financial Institutions (AAOIFI) and applicable rules and regulations issued by the Central Bank of Bahrain (CBB).
• Ensuring the sustainability content of the Report is in accordance with the Global Reporting Initiative (GRI).
• Following the 29 ESG metrics outlined by the Bahrain's National Stock Exchange (Bahrain Bourse), wherever possible. These metrics are

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Bahrain Islamic Bank B.S.C.

ANNUAL FINANCIAL AND SUSTAINABILITY REPORT | 2023

"Through this Report, we aim to provide our stakeholders with insights into the financial value created by BisB, and highlight ESG targets achieved through various industry-lead initiatives and business practices.

aligned with the Sustainable Stock Exchanges (SSE) initiative.

• Adhering to the UN Sustainable Development Goals (SDG) that were developed to achieve environmental sustainability by world economies by 2030.
• Aligning BisB's ESG initiatives with the Bahrain Economic Vision 2030.

Relevant sections of the Report clearly outline the framework and international reporting standards they adhere to. Further details are included in the GRI Appendix at the end of the Report.

consolidated financial statements of BisB were audited by KPMG Fakhro, an internationally recognised audit firm. Additionally, BisB's board of directors has approved these consolidated financial statements.

Reporting Integrity

The Board of Directors ensures the integrity of this Report and confirms that the disclosed information is fairly presented, in all material aspects, and is

in accordance with the International Integrated Reporting Framework, the Financial Accounting Standards issued by AAOIFI as well as the GRI Standards.

External Assurance

As part of our commitment to transparency and accuracy, we have engaged Centre for Sustainability & Excellence, an international provider of sustainability, ESG and CSR advisory

and training solutions to conduct a limited assurance on a select number of ESG KPIs. The independent assurance statements and reports for the sustainability-related figures have been included as part of the report.

Disclaimer: Forward-Looking Statements

Forward-looking statements involve uncertainty given the many external factors that could have an impact on the environment in which the Bank is operating. BisB bears no obligation to publicly update or revise any/all forward-looking statements included in the report unless required by applicable laws and regulations.

Financial Data Accuracy

Fair presentation in all material aspects underpins BisB's financial reporting. To that end, the

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Bahrain Islamic Bank B.S.C.

ANNUAL FINANCIAL AND SUSTAINABILITY REPORT | 2023

Table of

Contents

01

Who We Are 10

Bank Profile 10

Financial Highlights 16

ESG Highlights 18

Board of Directors Report 20

Board of Directors 24

Shari'a Supervisory Board Report 30

Shari'a Supervisory Board 32

Chief Executive Officer Report 34

Executive Management 38

04

Financial Capital 64

Financial Strength 66

Economic Impact 69

07

Natural Capital 92

02

Our Strategic Direction 44

Integration with NBB 46

Anticipating Risks 47

Our Approach to ESG 48

Listening to our Stakeholders 56

05

Human Capital 72

Workforce Well-being74

Diversity, Inclusion and Equal Opportunity 78

Employee Training and Development 81

03

Value Creation 60

Value Creation Model 62

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Intellectual Capital 84

Digital Transformation and Innovation 86

Responsible Customer Relationships 89

Sustainability Through Automation 89

Data Privacy and Security 89

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Bahrain Islamic Bank B.S.C.

ANNUAL FINANCIAL AND SUSTAINABILITY REPORT | 2023

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Social and Relationship Capital 96

Community Investment 98

Responsible Sourcing 100

Financial Inclusion & Literacy 100

11

Remuneration Disclosures 128

14

Key ESG Performance Indicators 240

09

Safeguarding Value 102

Robust Governance Structure 104

Sustainability Governance 105

Compliance 106

Internal Audit 107

Risk Management 107

12

Consolidated Financial Statements 134

15

GRI & Bahrain Bourse Index 241

10

Corporate Governance Review 108

13

Risk and Capital Management 204

16

Independent Assurance Statement 248

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Bahrain Islamic Bank B.S.C.	ANNUAL FINANCIAL AND SUSTAINABILITY REPORT | 2023

01 Who We Are

Bank Profile

WHO

WE

ARE

Bahrain's Leader in Digital Islamic

Financial Services.

BisB has been serving the community of the Kingdom of Bahrain since its establishment in 1979. BisB operates under an Islamic Retail Banking license authorised by the Central Bank of Bahrain (CBB) and is listed in the Bahrain Bourse. As Bahrain's first Islamic bank, and the GCC's fourth Islamic banking entity, BisB continues to play a leading role in developing the local and global Islamic banking industry as well as the Kingdom's economy.

Our success is built on robust and enduring client relationships, attributable to our customer centric approach complimented by innovative solutioning strategies.

This is supported by our dedication to maintaining robust corporate governance, significant risk management expertise, commitment to safeguarding customer assets, and investment in talent development. A customer-first approach is central to how we do business, and we strive to improve the banking experience at every touch point through improved business practices and technological innovation. By providing superior, safe and trusting financial services across the board that enables economic growth and progress, BisB has cemented its position as a trusted and innovative Shari'a-compliant Bank establishing the next era of global banking.

A Pioneer in Islamic Banking

Islamic principles guide BisB's banking approach and diverse portfolio of integrated financial solutions. To improve our services and stay at the forefront of the banking industry, we continually evolve through the continuous incorporation of innovative strategies and global best practices in line with Shari'a principles. Embracing this agile yet thoughtful approach to banking allows us to stay ahead of changes in local financial markets while maintaining our competitive edge. Our approach enables us to understand and better serve our clients, whilst anticipating their financial needs, and

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