Bahrain-based Islamic retail bank Ithmaar registered a net loss of $500,000 in the first quarter compared to a net profit of $4.8 million in the same period last year mainly due to prudent impairment provisions.

Announcing the results on Sunday, the Islamic bank said this was despite a net operating profit of $4.4 million before impairment provisions and taxation, compared to a net operating loss of $2.8 million in the same period last year.

Ithmaar Bank chairman Prince Amr Mohamed Al Faisal said the total income has increased from $109.2 million to $120.8 million in the first quarter, thus registering an increase of about 11 per cent.

This increase in total income is despite decline in income from Murabaha and other financings and is mainly due to reduced profit rate charged by a subsidiary which is in line with the reduced benchmark rate, he stated.

It is encouraging to note that the expense control initiatives are yielding results and operating expenses have declined from $52.8 million to $48.6 million, a savings of about 8 per cent, he added.

Prince Amr pointed out that Ithmaar's net operating income of $4.4 million before impairment provisions and taxation represents a turnaround of 257 per cent in the first three months of the year.

“The Bank, however, continues to take prudent impairment provisions and, as a result, reported a net loss of $0.5 million, after provisions for the first quarter of 2012, compared to a net profit of $4.8 million in the same period last year and that the results for the first quarter of 2012 outperformed the budget.

A substantial part of the provision charge of $4.6 million during the first quarter is attributable to general provisions,” he said.

“The financial results indicate that most of the income streams from Ithmaar’s core retail and commercial banking activities continue to grow steadily,” he added.

Prince Amr said in the first quarter, Ithmaar continued to build up impairment provisions and has allocated $3 million as a general impairment charge,” he said.

Ithmaar Bank CEO and member of the board, Mohammed Bucheerei said that the bank’s core business continued to grow in the first quarter.
 
“Customer current accounts and unrestricted investment accounts and due to investors have  increased to $4.35 billion, during the period. Equity of unrestricted investment accounts increased by $115 million to $1.6 billion, up 8 per cent,” remarked Bucheerei.

“In the same period, the results show that corresponding increases were also achieved in Murabaha and other financing products which have risen by around $250million to about $3 billion, an increase of about 9 per cent,” he added.-TradeArabia News Service