Bahrain-based Ithmaar Bank said it has returned to the black with a net profit of BD540,000 ($1.4 million) for the first quarter compared to a loss of BD170,000 in the same period last year.

The Islamic lender pointed out that its net income before provisions for impairment and overseas taxation had increased by 31 per cent to BD2.2 million in the first quarter compared to BD1.6 million last year

Announcing the results on Tuesday, Ithmaar Bank chairman Prince Amr Al Faisal said, "In addition to reporting a profit for the first quarter, I am also pleased to report that operating income continues to be stable, at BD19.4 million, despite a compression of margins from overseas subsidiaries due to cuts in benchmark profit rates."
 
“Cost control continues to be our focus,” he stated.

The balance sheet marginally increased but the core business continues to grow with Murabaha and other financings, increasing by 5.5 per cent to BD1.186 billion compared to BD1.124 billion last year.

The equity of unrestricted investment account holders increased, by 10.4 per cent, to BD662.6 million in the first quarter of 2013, compared to BD600.1 million as at 31 March 2012,” he said.

“In the first quarter, total expenses were reduced by about 6 per cent – an achievement that is made all the more impressive considering our continuously expanding retail banking network. Ithmaar has also continued to take prudent impairment provisions,” noted Prince Amr.

According to him, there has been a solid improvement in the bank's liquidity for the first quarter. “In fact, liquid assets, comprising cash, balances and commodity placements with banks, financial and other institutions, now represent about 15 per cent of the balance sheet,” he added.

“Following its transformation into an Islamic retail bank, Ithmaar has continued to exit from its investment banking portfolio which declined 12.6 per cent to BD393.5 million in the first quarter of 2013 compared to BD450.5 million as at 31 March 2012,” said Prince Amr.

“During the Quarter, Ithmaar also completed the transfer of business and the share swap agreement with First Leasing Bank (FLB) resulting in increasing Ithmaar’s share capital by BD21.4million,” the chairman stated.

In his comments, CEO Mohammed Bucheerei said the bank’s return to profitability was a testimony to the success of its efforts to focus on core retail and commercial banking operations.

“Since our transformation, Ithmaar has continued to work towards realising the board-approved vision of becoming the region’s premier Islamic retail bank,” observed Bucheerei. “The results of these efforts are now clearly beginning to pay off,” he added.-TradeArabia News Service