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2006 Half Year Results

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... 2006. EIIB A Brief History. Jan 2005 Company established ... including the Dow Jones Islamic Index, Bahrain Islamic Bank and Citi Islamic Investment Bank. ... – PowerPoint PPT presentation

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Title: 2006 Half Year Results


1
2006 Half Year Results
  • September 2006

2
EIIB A Brief History
  • Jan 2005 Company established
  • Q2 2005 Private placement raised approximately
    108 million (net)
  • Mar 2006 FSA authorisation received
  • Apr 2006 Commenced trading
  • May 2006 AIM IPO raised approximately 72.8
    million (net)
  • Sept 2006 Moved to AIM 100 Index

First Islamic investment bank licensed by the FSA
3
Highlights
  • Revenues have increased to 3,019,424
    (20051,062,973)
  • Operating profits of 184,359 (2005 547,730)
  • Total capital now 184m better capitalised than
    most Islamic Banks
  • Key business heads and teams in place. Roll-out
    remains on track versus IPO timetable
  • Treasury Capital Markets Asset Management
    Trade Finance business lines set up and
    developing traction asset acquisition,
    structuring capability
  • Operating Infrastructure and banking platform is
    in place.
  • Developing traction with Shareholders, client,
    market counterparties
  • Deal pipeline developing

Nearing successful completion of Start-up phase
4
Strategy and Business
  • Become a major participant in Islamic financial
    markets
  • Roll-out a broadly-based business model with a
    wide product range
  • Treasury and Capital Markets (incl Structured
    Trade Finance)
  • Asset Management, including Private Banking
  • Corporate Finance and advisory
  • Target investment banking clients across Europe,
    Middle East and Asia
  • Develop and grow liquidity within the Islamic
    Capital Markets
  • Innovate and distribute new structures and asset
    classes
  • Leverage UK presence to develop partnerships with
    other Islamic and European Institutions for
  • Transaction origination
  • White-labelling Shariaa products

We believe our model is differentiated from other
Islamic banks.
5
Delivering the Business Plan
6
Treasury and Capital Markets
  • Danie Marx appointed head of Treasury and
    Capital Markets in January 2006
  • Team of 6 hired offering treasury, risk
    management, debt capital market (vanilla and
    structured) and structured trade finance
    solutions
  • Capabilities now include - Foreign exchange,
    profit rate hedging, money markets, term
    financing, securities origination, underwriting,
    structuring, distribution and sales, and asset
    securitisation developing derivatives
    capabilities
  • Since April 2006 committed to 2 primary market
    Sukuks and 3 secondary market Sukuks including
    1st Islamic Mortgage Securitisation
  • 1st Islamic Investment bank to quote 2 way prices
    in selected Sukuks in London
  • Structured Trade Finance 14 transactions
    evaluated, 3 completed
  • Developed strong Sharia'a structuring skill set

Business well positioned to meet goals and grow
7
Asset Management
  • Jeremy Beswick appointed Head of Asset Management
    May 2006
  • Developing 3 EIIB products
  • Real Estate Fund by end of 2006
  • Structured Product Fund end 2006
  • Absolute Return Fund 1st Quarter 2007
  • Evaluating a number of 3rd party wealth
    management products
  • One of late 2006, another 2007
  • Evaluated and finalised EIIB Private Banking
    model for High net worth individuals Family
    offices
  • Launch end 2006
  • Evaluating two possible Asset Management
    acquisitions

8
Key Strengths
  • EIIB is the only UK quoted financial institution
    offering exclusively Shariaa compliant
    investment banking products and services
  • Well capitalised to drive the business model
  • Based in London, with direct access to extensive
    deal flow and deep pool of human resources talent
  • Experienced Board and management team
  • A diverse and well-respected shareholder base
    that will be a critical driver of success
  • Structuring capability and quality of staff
  • Best Practice in all areas of Corporate Governance

9
Half-Year Results Financial Highlights
  • Interim results prepared under IFRS
  • Small profit in 4 month since authorisation to 30
    June against an anticipated loss in business plan
  • Expenses remain below plan operating expenses
    remain well managed and recruitment plan is
    staggered to stay in line with business growth.
  • Expenses also reflect costs of implementing
    banking platform that is being tailored to EIIB
    requirements. Development expenses of 446k have
    been capitalised in the 1H06

have generated a small profit in first three
months since authorisation
10
Half-Year Results Financial Highlights
  • Capital being used as Tier 1 Capital to support
    operations and to invest in proprietary
    transactions
  • Continued focus on building inter-bank
    relationship and lines. Bank has taken first
    customer deposits after close of 1H06
  • Seeking credit rating in 2H06 and believe that
    when in place this will further facilitate
    development of funding lines
  • Balance sheet profile is beginning to see a shift
    from purely inter-bank to higher yielding assets.

11
Risk Profile
Internal Risk Rating
Industry/Sector
Asset Classes
Geographic Breakdown
Average Risk Rating A- equivalent
12
Current Trading and Prospects
  • Market environment and opportunity remain highly
    positive
  • Focus is on building sustainable fee income from
    an Investment Banking and Asset Management
    business
  • Establishing office in Bahrain with a top-tier
    team to originate and distribute transactions in
    Gulf is a priority
  • Develop product offerings that are innovative and
    offer our investors the opportunity to build a
    diversified portfolio
  • Continue to source and recruit quality staff
    required to grow the business
  • Launch 3 products and complete 2 deals by year
    end
  • Obtain rating and complete listings
  • EIIB continues to have 1st Mover advantage
    allowing it to develop brand presence and
    leverage its competitive niche

On track to meet market expectations
13
Appendices

14
Appendix 1 Organisational Structure
Teams are in place, charters of committees ensure
oversight and independence
15
Appendix 2 Board of Directors
  • Adnan Ahmed Yousif, Non-Executive Director and
    Chairman, is also CEO and Board Member of
    AlBaraka Banking Group.
  • Khalid Abdulla Al-Bassam, Non-Executive Director,
    Deputy Chairman and Chairman of the Nomination
    Committee, is Chairman of Al Bassam Investment
    Co., and Chairman, Bahrain Islamic Bank and prior
    to this, Deputy Governor of Bahrain Monetary
    Agency.
  • John Weguelin, Executive Director and Managing
    Director, has over 30 years banking experience,
    was Managing Director of Bank of America
    Securities Limited in London and COO and Chief
    Administration Officer of Bank of America NA for
    Europe, Middle East and Africa
  • Atif Raza, Executive Director and Chief Operating
    Officer and Finance Director, was previously with
    Unicorn Investment Bank in Bahrain, where he was
    the Chief Financial Officer. Prior to that he
    was CFO for Citicards UK, a Citigroup entity and
    SAMBA.
  • George Morton, Senior Non-Executive Director, was
    previously Senior Vice President and Head of
    International Division at Arab Banking
    Corporation (BSC), Bahrain

16
Appendix 2 Board of Director cont/
  • Shabir Ahmed Randeree, Non-Executive Director and
    Chairman of the Remuneration Committee, is also
    Managing Director of DCD London Mutual PLC and
    a Non-Executive Director of Islamic Bank of
    Britain Plc.
  • Hatem Abou Said, Non-Executive Director, is also
    a member of the Board of Directors of the
    Italo-Arab Chamber of Commerce. His
    international, investment and commercial banking
    experience spans more than 40 years and was
    awarded the honorary title of Cavaliere al Merito
    della Repubblica Italiana (Knight of the Order of
    Merit of the Italian Republic) by the President
    of Italy, in recognition of his service to the
    national economy.
  • Yusef Abu Khadra, Non-Executive Directors, was
    previously a member of the Management Committee
    of Investcorp Bank E.C. in Bahrain and latterly
    an Executive Director of Investcorp Securities in
    London
  • John Clouting, Non- Executive Director and
    Chairman of the Board Executive Committee, and is
    also a non-executive Director of Turkish Bank
    (UK) Limited. He was General Manager of Jordan
    International Bank Plc and General Manager of
    Turkish Bank (UK)
  • Salman A Abbasi, Non-Executive Director, was
    General Manager of Investcorp Bahrain until 2004.
    Prior to that, he was Vice President CEO
    responsible for all Chase Manhattan Bank NAs
    business in Africa and the Middle East
  • Aabed Alzeera, Non-Executive Director, is a
    prominent Bahraini banker and Chief Executive
    Officer of International Investment Bank (IIB).
    Previously Aabed held senior positions with
    American Express Banking Corporation and Arab
    Banking Corporation (ABC)

17
Appendix 3 Shariaa Supervisory Board
  • Justice (rtd.) Muhammad Taqi Usmani, Chairman was
    a member of the Shariaa Cassation Board at the
    Supreme Court of Pakistan from 1982-2002. He has
    also been Chairman of the Shariaa Board of
    Accounting and Auditing Organisation for Islamic
    Financial Institutions (AAOIFI) and a former
    Chairman of the Shariaa Board of Islamic Bank of
    Britain Plc and sits on a number of Shariaa
    boards of other institutions.
  • Dr Abdul Sattar Abu Ghuddah has taught at various
    institutes, including the Imam Al Daawa
    Institute in Riyadh and the Shariaa College and
    Law faculty in Kuwait University. He is
    Secretary General of the Unified Shariaa
    Supervisory Board of Dallah Albaraka Group in
    Jeddah and a member of the Shariaa board of
    AAOIFI.
  • Dr Abdul Latif Mahmood Al Mahmood has been Head
    of Arabic Language and Islamic Studies Department
    at the University of Bahrain from September 2001
    to September 2005 and Assistant Professor for
    Islamic Studies since 1985. He is a member of
    the Board of Trustees of the International Union
    for Muslim Scholars. He is head of a number of
    Shariaa boards including the Bahrain Islamic
    Bank (BSC) and Lebanon Islamic Bank.
  • Sheikh Nizam Muhammad Seleh Yacouby is a member
    of a number of Shariaa Supervisory Boards,
    including the Dow Jones Islamic Index, Bahrain
    Islamic Bank and Citi Islamic Investment Bank.
    He is also a member of the Shariaa board of
    AAOIFI, a member of the Shariaa Board of Islamic
    Bank of Britain Plc and has been a visiting
    lecturer at Harvard

18
Appendix 4 Management Team
  • John Weguelin, Managing Director. John has over
    30 years banking experience. Until 2003, he was
    Managing Director of Bank of America Securities
    Limited in London, and Chief Operating Officer
    and Chief Administration Officer of Bank of
    America NA for Europe, Middle East and Africa
  • Atif Raza, Finance Director and Chief Operating
    Officer. Atif is a UK qualified chartered
    accountant with over 20 years experience in
    public accounting and senior leadership positions
    in chief financial officer roles in international
    financial institutions in the UK and Middle East.
    Atif was previously with Unicorn Investment bank
    in Bahrain, where he was the Chief Financial
    Officer. Prior to that he was CFO for Citicards
    UK, a Citigroup entity and CFO for Saudi American
    Bank (SAMBA) in Saudi Arabia. He was a director
    of UIB Capital Sdn. Bhd., Malaysia until November
    2005.
  • Mohaimin Chowdhury, Head of Legal, Shariaa and
    Compliance and Company Secretary. Mohaimin is a
    solicitor qualified in England and Wales and
    joined EIIB in June 2005 from Dubai Islamic Bank
    where he was Legal Advisor. Prior to that, he was
    Legal Advisor in the Legal and Shariaa
    Compliance Department of Abu Dhabi Islamic Bank
    from October 2000 to July 2004. Mohaimin started
    his legal career in private practice in London
    where he worked for 4 years after qualification.
  • Danie Marx, Head of Treasury and Capital Markets.
    Prior to joining EIIB he was Treasurer and Head
    of Capital Markets at Absa Bank Limiteds London
    branch. Until 2000 he was tasked with structured
    solutioning at Absas Head Office in
    Johannesburg, South Africa. Before that, Danie
    was at Standard Bank of South Africa

19
Appendix 4 Management Team Cont/
  • Jeremy Beswick, Head of Asset Management.
    Jeremy joined EIIB from RMB MultiManagers, which
    is the London-based international investment
    management arm of FirstRand Group. Before
    this, Jeremy spent seven years with US mutual
    fund company MFS. He established and launched its
    operations in Europe, and was Managing Director
    (Europe). From 1999 to 2002, he was seconded to
    MFSs owner Sun Life of Canada, to become CEO of
    Indias second-largest mutual fund company, Birla
    Sun Life AMC.
  • Grant Lowe, Head of Risk Management. Prior to
    joining EIIB Grant consulted at the Bank
    Supervision Department of the South African
    Reserve Bank, specialising in counterparty and
    position risk management. Before joining the
    Central Bank, Grant was the Head of Risk at
    Citibank Johannesburg Branch, and prior to that
    he was a Senior Credit Officer with Bank of
    America London Branch and Standard Bank London
    Plc.
  • Tara McCabe, Head of HR. Tara has approximately
    10 years experience in Human Resources, and joins
    EIIB from the General Council of the Bar, England
    Wales where she was the Human Resources
    Manager. Prior to this Tara worked as an HR
    contractor for 5 years in various start-up and
    restructure projects in telecommunications,
    PPIs, Investment Banking and Asset Management.

20
Appendix 5 Market Opportunity
  • Significant growth in Islamic banking
  • 1.4bn Muslims 24 of world population
  • 88.5 Muslims (incl Turkey) 20 EU population
  • Global assets estimated at approximately 700bn
  • Deposits of approx 200bn
  • Global Sukuk market 41bn
  • 82bn outstanding in Commodity Murabaha
  • 3bn pd traded in London
  • Total of HNW wealth in ME - 1.3 trillion, 70
    GCC
  • Increased demand for Shariaa compliant
    investment products
  • Significant opportunity to bring higher-yielding
    Islamically structured assets to the EU market
    place

Islamic Finance market continues to record robust
growth.
21
Appendix 6 Market Environment
  • Macro-economic environment in ME remains very
    positive with oil prices at record levels
    generating surplus liquidity in region 74
    growth in the last 3 years
  • Strong investor appetite for European and OECD
    assets supports EIIBs positioning to
    intermediate EU Capital markets and ME liquidity
  • Six GCC countries estimated to generate over
    220bn surplus in 06 and 07
  • GCC economies will remain in surplus based on
    current spending plans, even if oil prices fall
    to 40
  • Non energy sector is growing faster 8 in 2006
    - than the Oil Gas sector
  • GCC countries are expected to accumulate foreign
    assets almost as rapidly as China will add to its
    FX reserves
  • Bulk of capital flows are expected to be used to
    finance portfolio investment.
  • Estimated in excess of 1,000bn of infrastructure
    investment over next 5-10 years

22
Appendix 7 Islamic Finance developments
  • Islamic banking heading for 20 of total banking
    assets growing at 10-15 pa
  • GCC banks continue to report solid performance
  • Most major Islamic banks investing resources
    directed at becoming regional players. Smaller
    banks looking to expand footprint and size
    through overseas expansion
  • Malaysian Islamic banking deposits reached
    10.7bn while Islamic banking is now 12 of total
    system. 44 of bonds being issued are
    Islamically structured
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