Shamil Bank of Bahrain, a leading Islamic retail and investment bank, has reduced its stake in Karachi-based Meezan Bank from 26 to 7 per cent.

Shamil Bank’s sale of 19 per cent of the ownership of the institution, Pakistan’s first licensed Islamic bank, netted a healthy 17 per cent internal rate of return (IRR) and an average 46 per cent return on investment (ROI) each year since the inception of this investment 10 years ago.

The bank’s equity rose substantially over that period, during which it was able to withstand a major economic downturn and later reap huge rewards from Pakistan’s exceptional growth over the last four years.

“Meezan Bank’s first mover advantage has turned it into a very profitable and financially stable institution. The sale of our stake in the bank is one of Shamil Bank’s most important transactions during 2007 and will undoubtedly contribute very positively to our financial results,” said Shamil Bank chief executive and Meezan Bank board member Mohamed Hussain.

“While Meezan Bank is expected to continue to be a strong performer, Shamil Bank decided that the time was right to dispose of part of our holdings in this very fine institution.  We will continue to be shareholders with our 7 per cent stake remaining a part of our portfolio for the foreseeable future,” he said.

The sale comes during an exceptional year for Shamil Bank which posted a record net income of $28.39 million for the first quarter of 2007. This reflects a 151 per cent surge over the $11.32 million earned in the same period last year.

Shamil Bank is a subsidiary of Ithmaar Bank and a very important part of Ithmaar banking group, which is one of the largest and most diversified in the Middle East. Meezan Bank, which has a strong network of more than 60 branches across Pakistan, also experienced a strong growth year in 2006, with pre-tax profits surging 23.2 per cent.

“This important sale builds on our strong performance so far this year. We have a string of quality business transactions in the pipeline, making our future outlook very bright,” said Hussain. - TradeArabia News Service