Ithmaar B S C : Annual Report 2023

Resilient Transformation

ANNUAL REPORT 2023

CONTENTS

• 02 At a glance

• 03 Vision, Mission and Values

• 04 Financial Highlights

• 06 Joint Message

• 08 Review of Operations

• 14 Financial Review

• 15 Key Operating Subsidiaries

• 17 Board of Directors

• 19 Sharia Supervisory Board

• 20 Executive Management

• 21 Corporate Governance

• 40 Funds Under Management

• 45 Report of the Sharia Supervisory Board

• 47 Board Of Directors' Report

• 50 Independent Auditor's Report

• 53 Consolidated statement of financial position

• 54 Consolidated income statement

• 55 Consolidated statement of changes in owners' equity

• 56 Consolidated statement of cash flows

• 57 Consolidated statement of changes in restricted investment accounts

• 58 Notes to the Consolidated Financial Statements

• 118 Public Disclosures

• 146 Corporate Information

AT A GLANCE

Ithmaar Bank B.S.C. (Closed) (Ithmaar Bank, Ithmaar or Bank) is a Bahrain-based Islamic bank that is licensed and regulated by the Central Bank of Bahrain (CBB) and provides corporate, treasury and financial institutions, and other banking services.

Ithmaar Bank is a wholly-owned subsidiary of Ithmaar Holding B.S.C. (Ithmaar Holding, the Group or the Company), a Bahrain-based holding company that is licensed and regulated as a Category 1 Investment Firm by the CBB and listed on the Bahrain Bourse and Dubai Financial Market (DFM). Ithmaar Holding is a subsidiary of Dar Al-Maal Al-Islami Trust (DMIT).

Ithmaar Bank provides a diverse range of Sharia-compliant products and services that cater to the financing and investment needs of small and medium enterprises (SMEs), corporates and institutions. Ithmaar Bank also maintains a presence in overseas markets through its subsidiary, Faysal Bank Limited (Pakistan).

02

ITHMAAR BANK B.S.C. (c)

ANNUAL REPORT 2023

VISION, MISSION AND VALUES

Our Vision

We will prosper with our stakeholders and serve communities via commitment to Islamic morals, innovative Islamic solutions, service excellence, and intuitive community welfare aiming to expand value creation and prosperity to generations to come.

Our Mission

To inspire socially conscious corporate clients with the best-in-class personalized experience by embracing our passion of service excellence and innovative value creation to enable them to realize financial stability, business sustainability and prosperity.

Our Values

• I Innovative Islamic solutions

  We strive to provide creative solutions with the aim to enhance value creation of our corporate clients, stakeholders and shareholders.

• T Team and Partnership Spirit

  We nurture through service excellence, remaining close and thinking different to exceed our corporate clients' expectations and support them all the way to success.

• H Holistic

  We intend to provide and facilitate a comprehensive business experience to our corporate client that is creative, simple, practical and quick in the most convenient way.

• M Morals of Islam

  We embrace Islamic morals in all our relationships and business transactions and extend it to support the welfare of the communities.

• A Aspiration for Financial Stability and Prosperity We cultivate towards best-in-class service and personalized experience to our corporate clients to support them in achieving their business sustainability and financial prosperity.

• A Accountability

  We sustain our responsibility of promoting socially conscious corporates and spreading awareness that embraces communities' prosperity.

• R Revenue Realization of Value Creation

  We envision and strive for exceptional performance and sustainable business relationships to realize consistent returns to our shareholders.

2023	2022	2021	2020	2019	2018
Net profit [BD 000]	12,223	8,344	5,161	(10,969)	2,480	14,140
Net profit/(loss) attributable to shareholders [BD 000]	3,957	3,104	(512)	(15,294)	(1,352)	1,409
Net profit before allowance for impairment and overseas
taxation [BD 000]	47,400	28,879	13,420	14,485	15,667	13,700
Total equity attributable to shareholders [BD 000]	40,076	36,119	43,730	49,831	79,171	85,385
Book value per share [Fils]	40	36	44	50	79	85
Earnings per share [Fils]	3.96	3.10	-0.51	-15.29	-1.35	1.41
Total assets [BD 000]	2,330,798	2,309,558	3,327,499	3,094,777	2,978,946	3,127,795
Funds under management [restricted investment
accounts] [BD 000]	15,935	15,812	16,663	16,676	17,203	17,203
Return on average shareholders' equity (ROAE)	10.39%	7.77%	-1.09%	-23.71%	-1.64%	1.17%
Return on average assets (ROAA)	0.53%	0.30%	0.16%	-0.36%	0.08%	0.44%
Capital adequacy ratio	13.95%	13.21%	12.90%	12.65%	13.52%	13.43%
Cost to operating income ratio	58.00%	69.40%	84.72%	83.36%	81.26%	83.65%

JOINT MESSAGE

In the name of Allah, most Gracious, most Merciful

Dear Shareholders,

We are pleased to report that Ithmaar Bank continues to report profits for the year and to grow further since it has been transformed into a corporate Islamic bank that focuses exclusively on serving corporate clients.

Despite the challenging market conditions, the Bank continued its efforts to grow its core Islamic banking business, which focused on Corporate Banking and related services. The Bank also focused on enhancing its products and services that cater to the banking requirements of the Small and Medium Enterprises (SMEs) and Corporates as well as all other types of businesses and institutions.

The Bank further strengthened its position by capitalising on key opportunities, while consistently aiming to deliver better services for corporate customers, enhance digital innovation, and continue to meet compliance and regulatory standards with the high levels of business efficiency and quality.

Corporate Social Responsibilities (CSR) is an integral part of Ithmaar Bank's culture. We are determined to create a more sustainable environment in the community we serve by adopting policies and initiatives that value Environmental, Social and Governance (ESG) matters. In 2023, Ithmaar Bank had set goals to meet the needs of its key stakeholders and implemented initiatives that will have positive impact on the environment, community, and governance. The Bank will continue searching for opportunities to better serve its corporate customers, support its employees and the community.

In 2023, Ithmaar Bank's year-end financial results show a net profit attributable to equity holders for the year ended 31 December 2023 of BD3.96 million, a 27.74 percent increase compared to the net profit of BD3.10 million reported for 2022. Total net profit for the year ended 31 December 2023 is BD12.22 million compared to the net profit of BD8.34 million reported for 2022. This is mainly due to higher core income during the year.

The results show that the group's share of income from unrestricted investment accounts as a Mudarib increased to BD107.70 million for the year ended 31 December 2023, a 29.65 percent increase compared to BD83.07million for 2022.

The Bank's achievements in 2023 would not have been possible after the grace of Allah without the unwavering support of our stakeholders, which we take big pride in allaying with them.

We take this opportunity to express our appreciation to our members of the Board of Directors and the Sharia Supervisory Board, our management, our employees, our subsidiaries and all our shareholders for all efforts contributed along the years. We consecutively convey our gratitude to the Central Bank of Bahrain, the Ministry of Industry and Commerce, the Bahrain Bourse, and the Dubai Financial Market for their continuous prompt valuable support.

We pray to Allah the Almighty for an improved performance and prosperity of the Bank for the years to come, collaborating all efforts for the best interest of all stakeholders… Ameen.

Amr Mohammed Al Faisal Chairman

Abdulla Abdulaziz Taleb Chief Executive Officer

HRH Prince Amr Mohammed Al Faisal Chairman

Abdulla Abdulaziz Taleb Chief Executive Officer

The Bank further strengthened its position by capitalising on key opportunities, while consistently aiming to deliver better services for corporate customers, enhance digital innovation, and continue to meet compliance and regulatory standards with the high levels of business efficiency and quality.

REVIEW OF OPERATIONS