Islamic Bank of Britain Plc
12 March 2007
Islamic Bank of Britain PLC
Annual results for year ended 31 December 2006
- 120% increase in customer numbers compared to the December 2005 position 30,814 at the end of 2006, compared to 14,023 at the end of 2005)
- Number of customer accounts more than doubled to 51,032 from 25,403
- Customer deposits grew by 76% to £83.9 million from £47.7 million
- Two new branches opened in 2006, total branch numbers currently 8 across the UK
- Distribution capability strengthened with launch of internet banking service in September 2006
- Further strengthened business banking proposition with introduction of commercial property finance
- Move to MasterCard's Maestro platform to give customers access to global banking network
- Relationship management team strengthened to target private clients, SMEs and charities
- Introduction of Home Finance product in June 2006, in conjunction with other partners in Islamic Banking
- Income receivable from Murabaha and Wakala transactions advanced to £3.9 million (year end to 31 December 2005 £2.8 million)
- Income receivable from consumer finance £640,257 (year end to 31 December 2005: £201,539)
- Net income from Islamic financing transactions of £2.8 million (year end to 31 December 2005: £2.2 million)
- Operating costs up to £11.4 million from £8.7 million reflecting investment in operational infrastructure, increase in distribution capability (Branch and Internet Banking) broadly in line with plans; increase in the number of staff and other business volume related costs.
- Loss on ordinary activities before tax of £8.8 million (year end to 31 December 2005: £6.4 million)
- Loss per ordinary share of 2.1p (year end to 31 December 2005:1.5p)
Mohsen Moustafa, Chairman, commented: "I am pleased to announce our results for
the year ended 31 December 2006 which show our continued growth in terms of
products and business development. We have seen a strong upward trend in
customer numbers, account volumes, deposits, and financing activities during the
year. We are very optimistic about the prospect for Islamic banking in the UK
"During the year, we have focused leveraging previous achievements. We continued
to develop our product portfolio and now have a comprehensive range of products
offering a real alternative to conventional banking. Additionally, we continued
to develop our delivery channel capabilities with the opening of two new
branches and the launch of internet banking.
"It is especially pleasing to have our progress recognised by key leaders in the
banking industry. In June 2006 the Chairman of the FSA, in the presence of the
Chancellor of the Exchequer, cited Islamic Bank of Britain as a positive
initiative which the UK was proud to support. We were also pleased to be awarded
'Best Islamic Bank of Europe' for the second successive year. In 2007, we will
continue to progress our business development plan. Our main focus moving
forward will be to build on our customer base and focus on strengthening our
service delivery channels."
Issued on behalf of Islamic Bank of Britain by McCann Erickson PR. McCann House,
Highlands Road, Shirley, Solihull, B90 4WE. Tel 0121 713 3500
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Islamic Bank of Britain PLC Year ended 31 December 2006
I am pleased to present the Annual Report for Islamic Bank of Britain PLC (the '
Bank') for the financial year ended 31 December 2006.
In 2006 the emphasis has been on developing the Bank's business to build on our
achievements in 2005. These efforts resulted in:
- The number of customers increased by 120% to 30,814 (2005: 14,023)
- Number of accounts more than doubled to 51,032 (2005: 25,403)
- Deposits grew by 76% to £83.9m (2005: £47.7m)
- Total customer financing (personal and commercial) advanced by 131% to £10.4m (2005: £4.5m)
A number of key initiatives contributed to this performance:
- We opened two branches, Manchester in January 2006 and East Ham in November 2006. The Bank now has a total of eight branches.
- We strengthened our distribution capabilities in line with our strategic objectives by launching Internet Banking in September 2006.
- We launched our Commercial Property Finance product in the third quarter of 2006, having worked pro-actively with Her Majesty's Revenue and Customs to incorporate the Diminishing Musharaka contract in the Finance Bill 2006.
- We enhanced our relationship management team to develop business from Private Clients, SME's, and Charities.
- We launched Home financing in conjunction with other partners in Islamic Banking.
- We upgraded our debit cards to MasterCard's Maestro platform which now allows our customers access to a global network of ATMs and points of sale.
In June 2006, the Chairman of the FSA, in the presence of the Chancellor of the Exchequer, cited Islamic Bank of Britain PLC as a positive initiative and expressed the view that the UK was proud to have supported the introduction and development of the first Sharia'a-compliant bank in the Western world.
The loss for the year ended 31 December 2006 was £8.8m (2005: £6.4m). This represents an increase in operating income of 36% to £3m, offset by operating costs which increased by 32% to £11.4m and impairment charges of £0.45m. The growth in income was lower than plan mainly due to the delay in the launch of Commercial Property Finance which was dependent on the Finance Bill 2006. This became effective in July 2006. The growth in costs represents planned costs associated with the extension of our distribution capability, both branches and internet, and the introduction of new products aimed at the business sector.
Staff costs were up by £1m, due to an increase in average staff numbers from 102 to 144. Depreciation and amortisation charges were up by £0.2m. Increases in occupancy, IT costs and volume related costs, were partly offset by lower professional and legal costs. Credit criteria were further tightened in December 2005 taking into account our arrears experience and the increased level of arrears on unsecured finance in the UK.
We continue to be optimistic about the prospects for Islamic Banking in the UK.
The Bank now has a comprehensive range of products and offers a real alternative to conventional banking. In 2007 we aim to build on our customer base and focus on further strengthening our service delivery channels. We are working with external providers to develop new Murabaha finance products in the consumer market. Although our main focus remains in the UK we are also engaging in dialogue with interested parties aiming to launch Islamic Banking services into other European countries.
In February 2007 we were the principal sponsor of the inaugural UK Muslim Power 100 awards which recognised the significant positive impact the Muslim population contributes in the social and economic spheres. The event highlighted the £31bn annual contribution to GDP made by the UK Muslim community and recognised achievers in business, education, professional services, health, and the arts. The event, which was well received, was attended by a wide range of individuals and businesses and attracted glowing national press coverage.
In December 2006, Michael Hanlon retired from his position as Managing Director. I would like to thank him for his contribution and work in establishing Islamic Bank of Britain and setting up a sound infrastructure to take the Bank into the future. I would like to welcome Gerry Deegan to our Board as Managing Director. Gerry comes with 35 years of experience in retail banking and a strong track record of delivery in his previous roles. I would also like to
extend my thanks to Ashraf Piranie, who resigned as Finance Director in March 2007 to pursue another career opportunity. Ashraf worked diligently to enhance both the profile and development of the Bank's product range and distribution capability. Additionally, I would like to welcome Robert Owen as Senior Independent Non-Executive Director to the Board replacing Chris Davis who resigned in February 2007. Robert brings 35 years of UK financial services experience to our Board. I would like to thank Chris for his positive contribution to the Bank.
I would like to thank Islamic Bank of Britain's shareholders for their continued support and commitment to the Bank. I would also like to thank Abdul Rahman Abdul Malik, who resigned as Chairman in March 2007, for his guidance and leadership that were essential in establishing Islamic Bank of Britain as the first full service Sharia'a-compliant bank in Europe. Finally, I would like to thank the Bank's management and staff for their hard work and dedication.
I am pleased the Bank was awarded, for a second successive year, the 'Best Islamic Bank in Europe' award. We are now looking forward to the next phase of our development with optimism and vigour. May Allah grant us success in our
Click here to view or download the Annual Report 2006