EIIB slides into losses

LONDON (SHARECAST) - European Islamic Investment Bank (EIIB) said results for the year were not in line with expectations as the wholesale bank slipped into losses after it withdrew a poorly received fund.

The fall in values of the UK commercial property portfolio held by the EIIB Pan-European Islamic Real Estate Fund and the costs of establishing the fund resulted in expenses soaring to £15.4m from £5.9m last time.

“The poor capital raising of this Fund resulted in the Bank deciding to withdraw the Fund and bring onto the EIIB balance sheet a property portfolio that had been acquired by the Fund," it said.

As a result, the group incurred pre-tax losses of £2.4m from a profit of £1.8m in the same period last year. However, underlying pre-tax profitability increased 155% to £4.8m on revnues that surged 61% to £12.6m.

Total assets of the company rose 17% to £275m and deposits grew 87% to £90m.

The group said 2007 has been challenging for global financial markets but added that it has made progress even though there was a slowdown in the Islamic capital market issuance in the second half of the year.

“London continues to expand as a centre for Islamic finance and we are very confident that the new players entering the City will bring ever increased scale and dynamism to the industry which, in our view, will increase EIIB's market opportunities as well,” said the group.

“We are well positioned to deliver on our business objectives in the coming years and will continue to focus on building a sustainable transaction pipeline in our key business areas,” it added.