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Bahrain-based Ithmaar Bank saw profits almost double in the first-quarter of 2008. Chairman Khalid Abdulla-Janahi tells Andrew White what's next for the fledgling financial institution.

KhaLid Abdulla-Janahi eats his breakfast in a hurry at the Four Seasons Hotel in Sharm El Sheikh amid the bustle of activity that is the World Economic Forum.

It's clear that time is of the essence to the Ithmaar Bank chairman. And yet this is to be expected. After all, for an institution that is only just three years old, Ithmaar has come a long way - and Janahi with it.

Earlier this month the Bahrain-based investment bank announced a 91% surge in its first-quarter net profit, to a record US$59.3m, up from US$31m earned in the same period of last year.

The results come as the bank and its subsidiaries and associates in the Middle East, Asia Pacific, Europe and North Africa continue their expansion into new markets. For Janahi, the Q1 performance is just a stepping stone to bigger and brighter things.

"The results are just the beginning of reaping some of the benefits of some of the investments that we have put through, both in terms of restructuring and in terms of new investments that we have made," he insists. "I would not look at our bottom line until three years down the road."

Such restructuring and investments are manifold. In February, Ithmaar Bank announced its acquisition of 19.1% of BBK, a leading Bahrain-based commercial bank, for approximately US$329m.

Also during the first quarter, Ithraa Capital, an associate of Ithmaar Bank, received licences from the Saudi Arabian Capital Market Authority to set up an Investment Bank in the Kingdom of Saudi Arabia.

At the end of the first quarter, the bank's consolidated total assets stood at US$4.5bn, up 10% on a year earlier. Funds under management also recorded a steep hike of 18%, rising by US$300m to US$2bn.

"All the benefits have yet to be seen, but they will be seen in the future," Janahi claims, nevertheless. "You're not going to see the benefits of changes like this on day one - you have to put in the time and money, and then look three years further.

"On a group basis we're ahead of last year's Q1 - I think US$60m against US$30m - but those results aren't anything to do with the restructuring or anything we have changed, it's just down to the business we are doing," he adds.

Janahi argues that it is impossible to extrapolate such results over the course of the year ahead and he says it is unwise to count on the success of deals that are yet to be realised, particularly those undertaken by its investment banking unit.

"By its very nature, in investment banking you can never extrapolate," he says. "It's not a seasonal thing - it is a business of deals and it depends when a deal is done. There are always so many deals in the pipeline, and it depends what deal comes in at what time."

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