Arab Islamic Bank (AIB) has announced that its first quarter profits in 2005 have increase by 170% on the same period in 2004. This follows record growth for the full year of 2004, driven by the healthy Palestinian market for financial services.
Profits in the first quarter reached $702,000 compared to $260,000 in Q1 2004. Chairman of the bank Mr Waleed Fakhouri stated that the fixed assets of the bank had grown by 7.6% since the year-end results, reaching $155.4 million compared to $144.4 million at the end of 2004. Sources of funds, including deposits and investment allocations grew by 4.6% reaching a new high of $128.4 million, against $122.6 million at the end of 2004.
“The financing investment portfolio has grown by 3.3% reaching $72.6 million against $70.4 million compared to2004 year-end,,” said Mr Fakhouri.
“Based on these results the bank’s performance has exceeded the estimated budget expectation for the first quarter.” He explained that profits have grown by 105% more than expected.
“The same applies to assets which have grown by 6.8%, deposits and allocated investment accounts grew by 1.9%, and the financing investment portfolio has reached 1.7% of our estimated expectations for Q1 2005.”
Mr Fakhouri attributed this strong performance to the excellence of management and staff, and outstanding products and services, along with its strong credentials as a modern Islamic bank.
Based on the bank’s deep understanding of the Palestinian market and the great potential of the market, a business restructuring was carried out during 2004, which led to the creation of a Business Development and Planning Department. This helped the bank to reap the rewards of the growing Palestinian market, and was also reflected in a healthy rise in the share price.
The Business Development and Planning Department strategy included new product development, improvements in customer service, and effective marketing and PR activities.
Mr Waleed Fakhouri, Chairman, said:
“We are proud of these results. They demonstrate our success in achieving our business objectives, as well as a successful diversification strategy, enhance customer service levels, and improved quality of investments, and increasing our depositors allocations by 103.6%”
He added:
“These results have led to an increase in our financial adequacy, and have enabled us to achieve improved performance indicators on previous years. Return on average assets rose from 0.4% to 0.77%, while returns on depositors share increased from 3% to 5.4%.” Mr Fakhouri explained the bank was able to achieve these results and to increase market share through entering new markets and sectors where the financing investment portfolio increased to $70.4 million, or 60.8%.
Since its inception in 1995 and commencement of business in 1996, AIB has pursued a strategy of improving services and Sharia-compliant products against the challenging backdrop of the Palestinian situation. The bank has also expanded its strategic partnerships and diversifications to increase shareholder value.
AIB is currently looking at increasing its branch network from the existing eight branches. It has expanded its distribution capabilities through remote ATMs and point-of-sale machines.
The bank has performed well in a competitive market, being currently ranked fifth out of more than 20 banks in Palestine, in terms of assets, deposits and loans. It is ranked number two among Palestinian banks, and number one Islamic bank in Palestine.
“The slogan “Lifestyle” represents our vision of being the number one choice for customers, and of being the number one Islamic bank, a key part of an Islamic culture and society. The bank prides itself on its transparency and Sharia-compliance, while also maintaining a leading position in technology and communication,” added Fakhouri.
Outlining his vision for the next two years, Mr Fakhouri said: “We are full of optimism and belief. We are committed to supporting government and private sector development initiatives, and will strive to meet the needs of all our customers.”
He thanked the bank’s customers, staff and senior management. “These are the three pillars of our business and have been the drivers of these results.”. He also thanked the Palestinian Monetary Authority, Ministry of the Economy, Financial Regulator, the Palestinian Financial Market, as well as the Ministry of the Interior for their efforts to maintain peace and stability under difficult circumstances.
