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PT Bank Muamalat Indonesia was established on 1 November 1991, commencing operations on 1 May 1992. The Indonesian Council of Ulama (MUI), supported by a group of entrepreneurs and Muslim intellectuals who are amoung the 227 shareholders, initiated the establishment of the Bank. The Bank's scope of activities is to conduct commercial banking business based on Islamic Shari'a principles. The Bank became a Foreign Exchange Bank In 1994, and after 8 years of operation is the leading Shari'a bank in Indonesia. The Bank has 9 branch offices, 2 sub-branch offices and 26 cash offices. Plans are to open a further 10 offices in 2000. The Year in Brief Against a backdrop of continuing serious political and economic instability, Bank Muamalat has show considerable resilience, with indications that depositors regarded the Islamic system to be a reliable home for their money during a difficult period. Capital adequacy ratio was14.09%, double the 1998 level of 6.76%, and places the Bank in the A category established by Bank Indonesia. Total Assets increased by 44.7% or Rp214.2 billion to Rp.693.3 billion (1998: Rp.479.1 billion). Stockholders' equity increased by 41.8% or Rp.29.9 billion to Rp.101.4 billion (1998: Rp.71.5 billion). Total Deposits increased by 34.7% or Rp.136 billion to Rp.528.1 billion (1998: Rp.391.9 billion). Net income for the year was Rp.2.7 billion (Rp.20 per share) against a loss of Rp.75.5 billion in 1998 (Rp.624 loss per share). Margin income and profit sharing net to the Bank was 357% or Rp.6.6 billion higher at Rp.9.1 billion (1998: Rp.2.6 billion). Other operating income was sharply lower by 85% or Rp.65.0 billion at Rp.11.3 billion (1998: Rp.76.3 billion), the comparison reflecting a more normal FX gain of Rp.9.1 billion (1998: Rp.75.2 billion). Operating expenses (excluding provisions) were 4.3% or Rp.1.62 billion higher at Rp.39.3 billion (1998: Rp.37.7 billion). Provisions were sharply lower by 89.2% at Rp.15.7 billion (1998: Rp.146.2 billion). Business Highlights A Group Investment Banking and Treasury unit was formed to promote the 'Universal Value' of the Bank, focussing on the management of liquidity and the coordination of ALCO policies. This unit provided Rp.9 billion of profits from interbank (largely FX) transactions. 11 ATMs were in place at year-end, using wireless communication technology in remote areas. Plan is to join the 'ATM Bersama' together with the provision of debit card facilities at point-of-sale. A rights issue during the year resulted in an increase in paid-up capital of Rp.26.5 million and other paid-in capital of Rp.27.2 billion, derived from the Islamic Development Bank. An additional rights issue in 2000 is expected to raise a further Rp.50 billion. This additional capital is being used:
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