The bank, which offers Sharia-compliant banking services for individuals and businesses, reduced its loss by 15 per cent to £5.9 million during the year ended December 31, 2008, down from £6.9 million in 2007. The bank put the reduction down primarily to growth in fee and commission income.
But despite its loss last year, Islamic Bank of Britain (IBB), which opened its first branch in 2004, saw customer numbers increased by 10 per cent to over 47,000 and deposits increased by 15 per cent to £158 million.
Islamic Bank of Britain commercial director Sultan Choudhury said he was pleased with the advances the bank had made last year.
“I think it’s an improvement across the key metrics. We reduced our losses but we are still in the initial phases of when you launch a bank and clearly we have a lot of fixed costs and need time to break even.
“Towards the end of last year and the beginning of this year the Bank of England benchmark rate came down significantly and that has impacted on all banks and that will impact us strongly in 2009.
“But apart from that, the balance sheet metrics such as financing and deposit growth have been quite encouraging.”
The bank launched several new products during the period, including a Sharia-compliant home purchase plan which is equivalent to a mortgage and a 60-day notice savings account which was launched in December 2008.
The bank said it was pleased to see the 60-day notice account attracting significant balances at a time where banks’ savings deposits in the UK in general were retracting.
Mr Choudhury said: “We have gone into two new products in a big way and they have been attractive to audiences other than Muslims. Our home purchase plan came at a time when there was a big withdrawal of a lot of home finance products, so it was a good news story that the Islamic Bank of Britain came into the market providing credit when others were moving out. We have had strong take-up of that because our product is quite competitive.
“The other product that attracts non-Muslim is the 60-day notice account.
“Clearly now it’s very hard to get a good rate for savings and this account was at three per cent for a while – it’s now 2.5 per cent which is still a good rate.”
“We have even had expats from Spain ringing us up about this – it has had phenomenal growth.”
In a statement on the London Stock Exchange, the bank said it expected 2009 to be a challenging year.
But it added: “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.
“We will continue to assess new and innovative products and services to enhance our customer offering.”
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