Exchange Rate at 30 June 1998 1 US Dollar = 148.50 Y.R. Financial Trends

Islamic Bank of Yemen for Finance & Investment is a Finance Shareholding Company, established in 1996 and incorporated in Yemen, fully operating in compliance with Islamic principles, with licensed capital of Y.R. 1 billion and paid-up capital of Y.R. 500 million. Shareholders with greater than 5% of total shares outstanding include Al-Haj Abdulkarim Al-Aswadi & Sons (41%); Islamic Development Bank, Jeddah (10%); Ali Sa’ad Murshid & Sons (7.65%); Dallah Al-Barakah Co. Jeddah (5%). The Company has two offices (in Sanaa and Hodeidah).

Total assets at 30 June 1998 were Y.R. 3.461 billion (US$23.3 million) up by 14.7% from the previous period (31 Dec 1997: Y.R. 3.017 billion).

Customer Deposits totalled YR2.771 billion, up by 15.7% from the previous period (31 Dec 1997: Y.R. 2.394 billion). Net Profit was sharply higher at Y.R. 63.6 million (31 Dec 1997: a loss of 15.1 million Y.R.).

Total income for the period was up 79% to Y.R. 135.4 million (31 Dec 1997: Y.R. 75.5 million).

General and Administrative expense was materially lower by 22% at Y.R. 71.0 million (31 Dec 1997: Y.R. 90.6 million). Expense: Revenue ratio was 52.4%.

Business Highlights

The Scope of the Company is “to satisfy the needs of the society (individuals, companies and corporations), the Bank offers a complete package of bank services completely in compliance with Islamic Shari’a.”.This package includes:

1. All Islamic banking and investment services
2. Pursuit and revival of social and cooperative ways based on the bilateral benefits
3. Attraction of funds and deposits for participation in the right investments
4. Ensuring the finance necessary for the requirements of the different economic and social sectors

During the period, the Company undertook the following Banking activities:

• Current accounts opened in both Yemeni Riyals and foreign currencies, with funds available for immediate withdrawal by cash or cheque

• Savings accounts, with a minimum deposit balance of YR 5000, where profit is shared at year end 50:50 between the Bank and the account holderTime deposits for periods of 6 or 12 months, subject to minimum balances of Y.R. 100,000, with profit calculated at the end of the financial year.Investment accounts; letters of credit; letters of guarantee; local and global money transfers and foreign exchange<

Trade and Investment services offered included:

• Local and global Murabaha trade finance (cost-added financing)Musharaka (joint-venture partnership between the bank and one or more parties with a pre-agreed capital ratio. Contracts included:

1. Fixed Musharaka (valid for the life of the project)
2. Decrement Musharaka (with part of the client’s profit used to reduce the Bank’s share of the capital of the project to eventually pass ownership of the project to the client

Direct Investment; investing in trade, agricultural, industrial and real estate projects; instituting or participating in the institution of companies