Al Salam Bank

1. Company Overview & Earnings Context

Al Salam Bank B.S.C. is a Dubai Financial Market (DFM) and Bahrain Bourse-listed Islamic bank headquartered in Bahrain. The Bank is regulated by the Central Bank of Bahrain and provides a full range of Sharia-compliant banking services, including Islamic financing, profit-sharing investment accounts and wealth management. Its international operations include banking businesses in Bahrain, Algeria and Seychelles, alongside UAE-based asset management activities through ASB Capital.

Al Salam Bank delivered a strong H1 2026 performance, with total income rising to BD 199.15 million and net profit increasing 31.0% YoY to BD 51.97 million. Growth was supported by higher sukuk income, fee and commission income, stronger contributions from associates, and improved takaful profitability.

2. Financial Performance Snapshot

• Net Finance Income: BD 162.96 Million (+3.6% YoY)

• Total Income: BD 199.15 Million (+7.5% YoY)

• Profit Before Impairment & Quasi-Equity Attribution: BD 144.31 Million (+7.4% YoY)

• Profit Before Tax: BD 55.20 Million (+29.0% YoY)

• Net Profit: BD 51.97 Million (+31.0% YoY)

• Profit Attributable to Owners: BD 46.28 Million (+23.9% YoY)

• Earnings Per Share (EPS): 13.0 Fils, compared with 10.4 fils in H1 2025

Compared with H1 2025:

• Net finance income increased from BD 157.27 million to BD 162.96 million.

• Total income increased from BD 185.18 million to BD 199.15 million.

• Profit before tax increased from BD 42.78 million to BD 55.20 million.

• Net profit increased from BD 39.67 million to BD 51.97 million.

• Profit attributable to owners increased from BD 37.37 million to BD 46.28 million.

• EPS increased 25.0% from 10.4 fils to 13.0 fils.

3. Operational Highlights & Key Metrics

• Total Assets: BD 8.60 Billion (+6.8% vs. Dec. 2025)

• Financing Contracts: BD 4.07 Billion

• Sukuk Investments: BD 2.21 Billion (+14.1% vs. Dec. 2025)

• Total Quasi-Equity: BD 4.76 Billion (+8.4% vs. Dec. 2025)

• Total Owners' Equity: BD 760.82 Million

• Cash & Cash Equivalents: BD 1.37 Billion

• Net Operating Cash Flow: BD 387.09 Million (+70.7% YoY)

• Off-Balance-Sheet Assets Under Management: BD 872.26 Million (+26.3% YoY)

• Capital Adequacy Ratio: 23.6%

4. Key Performance Drivers

Al Salam Bank's earnings growth was supported by higher income across several revenue streams. Income from sukuk investments increased 24.0% YoY to BD 59.36 million, while income from placements with financial institutions increased to BD 16.48 million. Net fees and commissions rose 14.0% to BD 14.85 million, while the share of profit from associates increased 28.8% to BD 14.47 million.

Takaful operations also improved materially. Net income from takaful operations increased to BD 4.25 million from BD 1.09 million in H1 2025, despite takaful revenue declining to BD 53.03 million.

Another positive factor was lower credit impairment. Allowances for impairment on financial instruments declined to BD 14.23 million from BD 18.81 million, helping profit before tax rise faster than total income.

Banking remained the largest business segment, generating BD 146.08 million of income, while Treasury contributed BD 46.74 million. Banking generated BD 24.62 million of net profit and Treasury contributed BD 26.48 million, while the investment segment recorded a BD 3.98 million loss.

5. Outlook & Forward Considerations

The interim financial statements do not provide specific quantitative guidance for the remainder of 2026. However, Al Salam Bank continues to operate a diversified regional banking platform, with 20 branches in Bahrain, 26 branches in Algeria and one branch in Seychelles, complemented by its UAE-based asset management business.

Asset management is showing notable momentum. Off-balance-sheet assets under management increased to BD 872.26 million from BD 690.85 million in H1 2025. The fixed-income portfolio expanded to BD 571.00 million, while the equity and funds portfolio increased sharply to BD 164.37 million from BD 100.17 million.

The Bank also maintains a strong regulatory capital position, reporting a 23.6% capital adequacy ratio, above the regulatory minimum. During H1, shareholders received a BD 23.34 million cash dividend for 2025, while the Bank also issued bonus shares representing 7% of issued and paid-up share capital.

6. Investor Takeaway

Al Salam Bank delivered a strong H1 2026, with total income increasing 7.5% and net profit rising 31.0% YoY to BD 51.97 million. Profit growth significantly outpaced income growth, helped by stronger fees, associate contributions, takaful earnings, and lower impairment charges. EPS consequently increased 25.0% to 13.0 fils.

The balance sheet also continued to expand, with total assets reaching BD 8.60 billion, sukuk investments rising to BD 2.21 billion and quasi-equity increasing to BD 4.76 billion. Cash generation was particularly strong, with operating cash flow increasing 70.7% YoY to BD 387.09 million and period-end cash and equivalents reaching BD 1.37 billion.

Key areas to monitor include the rising cost of Murabaha term financing, which increased to BD 28.94 million from BD 21.21 million, as well as the performance of the investment segment. However, the combination of higher profitability, strong capital adequacy, expanding assets under management, and diversified regional operations provides several positive indicators heading into H2 2026.