LONDON (SHARECAST) - Islamic Bank of Britain (IBB), the shariah compliant bank, narrowed losses by 15% for the year and said it fared well due to its minimum exposure on higher risk assets but warned results in 2009 will be impacted by low interest rates.
The group narrowed its losses for they year to £5.9m from £6.9m before as operating income rose slightly, due to growth in fee and commission charges. Income from receivables rose to £8.3m from £7.8m previously.
Impairment charges in the unsecured consumer finance portfolio fell by 50% to £0.3m and there are currently no arrears within the secured finance portfolios.
Despite growth in fee and commission income, much of the IBB's income is derived from deposits. “Net margins on these deposits have been on the decline recently as the Bank of England reduced its bench mark rates to historical lows,” it said, adding that this would have a “significant” negative effect on its income.
As announced in February, it warned again that reaching break-even will extend beyond its recent plans and expectations.
During 2008, the group raised £7.5m via a placing of new shares to an existing shareholder. The group said it has sufficient capital for its current requirements but intends to raise additional capital at an appropriate time to support expected growth.
“The economic environment undoubtedly makes 2009 a challenging year. However, the Directors believe IBB will be well positioned to benefit from the eventual recovery particularly with a reinforced capital base. The Bank will continue to focus on growth in lower risk secured customer finance funded by longer term deposits,” it said.