Khaleeji Commercial Bank (KHCB), a Bahrain-based Islamic retail bank, has completed due diligence on a proposed merger with another Bahraini lender Bank Alkhair, said a report.

KHCB shareholders were told yesterday by chairman Dr Fuad Al Omar during the bank's annual general meeting that the matter was under discussion and no decision had been taken yet, reported the Gulf Daily News, our sister publication.

"While regional and global economic environment saw signs of improvement, last year remained challenging for the local economic and business environment," Dr Al Omar said.

"Despite the market scenario, the bank achieved considerable growth during the year including opening of new branches, launching of new retail banking products and expanding consumer finance business."

When compared with 2012 levels, the bank's total assets grew by 14.6 per cent to BD542.2 million last year with the consumer finance portfolio increasing by 66.7 per cent, he said.

Income from commercial banking comprised 94.6 per cent of total income as a result of a 74.5 per cent increase in consumer finance activities.

A comprehensive review was conducted to ensure that assets, especially those acquired prior to the new business model, reflect realisable and fair value.

Based on the review, the board decided to take a very conservative view and provide for all assets which were impaired or likely to be impaired in the short to medium term, the chairman said.

Consequently, last year the bank provided an aggregate amount of BD17.7 million in impairment provisions and marked to market losses.

This resulted in net loss of BD19.2 million compared to a profit of BD751,000 in 2012, stated Dr Al Omar.

"The bank continues to maintain strong liquidity and capital positions with a capital adequacy ratio of 22.95 per cent (regulatory requirement is 12 per cent) and liquid asset ratio of 27.3 per cent, which indicates a strong financial position with sufficient capacity for growth in future," he added.

Dr Al Omar said the bank continued to improve its profitability with increase in revenue from core operations and control of costs. On future plans, he said KHCB would launch new products based on customer needs.-TradeArabia News Service