December 9, 2006
Shamil Bank’s Ratings Upgraded By CI
(S&P also assigned Investment Grade to Shamil)

Shamil Bank of Bahrain B.S.C., a leading Bahrain-based Islamic investment and commercial bank has announced that its long-term Foreign Currency and Financial Strength ratings have been upgraded by Capital Intelligence (CI) to “BBB” from “BBB-“. The short-term Foreign Currency rating of “A3” and support rating of “2” were maintained with a Stable Outlook assigned to all ratings. Capital Intelligence is the leading emerging markets rating agency, specialising in the analysis of counterparty credit risk of financial institutions.

The Bank’s new ratings presently stand as follows: Foreign Currency L/T: “BBB” and S/T: A3; Financial Strength “BBB”; Support: “2”; and Outlook: “Stable”.

The last ratings of Shamil Bank by Capital Intelligence were announced two years ago in September 2004.

Mr. Mohamed Hussain, Chief Executive of Shamil Bank said: “It is noteworthy that the Bank’s ratings have been upgraded twice within a span of two years. This is reflective of the Bank’s continuous endeavour to improve its performance. The upgraded ratings are not just a recognition of our financial performance and stability, but also an appreciation of our prudent risk management philosophy. Commitment to the best business practices and steadfast corporate governance are keys to our successes.” Mr. Hussain also thanked Capital Intelligence’s evaluation team and Shamil Bank management for their diligent work on the evaluation process.

According to the Capital Intelligence’s ratings report, Shamil Bank is an important Islamic financial institution in the Kingdom of Bahrain, enjoying diversified business operations and strong shareholder support. The Bank continues to make good progress in its three-year business plan, reinforcing its position in the markets and core businesses, namely retail and investment banking. The Bank’s asset quality continues to improve as evidenced by the decline in non-performing assets and strong coverage ratio. The quality of most of the investments appeared sound and the balance sheet increased considerably during the year. Shamil Bank maintained a very strong capital adequacy ratio, with shareholders’ funds financing a significant share of the balance sheet. The liquidity position remained satisfactory, reflecting a diversified funding profile and a comfortable stock of liquid assets. Profitability continued to grow on the back of higher income and good cost control.

The improved asset quality and profitability has played an important role in the raising of Shamil Bank’s Financial Strength and Foreign Currency long-term ratings to “BBB” from “BBB-“by Capital Intelligence. The rating agency applied a consistent and coherent rating methodology and a holistic approach to assess the Bank’s risks and analyzed substantial number of quantitative and qualitative factors in doing so.

The upgraded ratings assigned by Capital Intelligence were based on sufficient information available to form a credible opinion. Capital Intelligence’s approach to assigning credit ratings involved a thorough evaluation of Shamil Bank’s quantitative and qualitative factors that may affect repayment capacity, underpinned by transparent procedures and detailed methodologies.

Earlier this month, Standard & Poors, the world’s leading financial rating agency, assigned Investment Grade of “BBB-“ to Shamil Bank Shamil Bank recently announced a record net income of US$ 50.2 million for the nine months ended 30 September 2006, reflecting an increase of 96 per cent over US$ 25.60 million earned in the same period last year. As a result, Earnings Per Share doubled to US Cents 22 from US Cents 11 for the same period last year. Annualized Return on Equity also increased from 11.3 per cent to 19.7 per cent.

Shamil Bank is a leading Islamic commercial and investment bank incorporated in the Kingdom of Bahrain. The Bank has grown steadily since 1982 to become a leading Islamic fainacial institution with a shareholding equity of US$ 342.4 million as at 30 September 2006. Shamil Bank is a subsidiary of Ithmaar Bank B.S.C., a full service Islamic investment bank with a paid-up capital of US$360 million. Ithmaar Bank has a 60% shareholding in Shamil Bank. The Bank operates a network of local branches and maintains a presence in overseas markets through its subsidiary, associated and affiliated companies. Both Shamil Bank and it majority shareholder Ithmaar Bank are listed on the Bahrain Stock Exchange.