Al Salam Sudan

1. Company Overview & Earnings Context

Al Salam Bank – Sudan is a public limited Islamic bank established in Khartoum on 28 December 2004. It commenced commercial operations in May 2005 and provides banking services in accordance with Islamic rules and principles. The Bank operates from its Khartoum head office and branches including Rotana, Alsuwq Alsha’bi Omdurman, Port Sudan, Atbara and Al Qadarif. 

The Bank's interim condensed financial statements cover the nine months ended 30 September 2026 and are presented in Sudanese Geneih (SDG).  

The period presents a mixed earnings picture. Total Bank revenue increased sharply to SDG 31.46 billion from SDG 18.44 billion, driven primarily by substantially higher foreign-exchange gains and stronger income from the Bank's own investments. However, operating expenses, financing/investment provisions, Zakah and tax also increased materially. Consequently, PBT grew only around 7%, while net profit declined approximately 10% YoY to SDG 10.40 billion. 

At the same time, the balance sheet expanded dramatically, primarily because of the revaluation and increased carrying value of foreign investments. Total assets more than doubled to approximately SDG 379.93 billion, while shareholders' equity increased to SDG 140.32 billion. 

2. Financial Performance Snapshot

• Total Income from Financing & Investments: SDG 1.83 Billion vs. SDG 1.89 Billion (-3.4%)

• Bank's Share of Investment Income: SDG 1.16 Billion vs. SDG 1.30 Billion (-11.1%)

• Income from Bank's Own Investments: SDG 9.63 Billion vs. SDG 6.39 Billion (+50.6%)

• Income from Banking Services: SDG 1.53 Billion vs. SDG 652.7 Million (+133.7%)

• Foreign-Exchange Gain: SDG 14.39 Billion vs. SDG 4.80 Billion (+199.6%)

• Gain on Valuation of Foreign Currencies: SDG 4.69 Billion vs. SDG 5.29 Billion (-11.4%)

• Total Bank Revenue: SDG 31.46 Billion vs. SDG 18.44 Billion (+70.6%)

• Staff Costs: SDG 3.35 Billion vs. SDG 1.68 Billion (+99.2%)

• Operating Expenses: SDG 4.97 Billion vs. SDG 1.47 Billion (+238.8%)

• Provision for Doubtful Debts: SDG 6.59 Billion vs. Nil

• Total Expenses: SDG 15.27 Billion vs. SDG 3.31 Billion (+361.3%)

• Profit Before Zakah & Tax: SDG 16.18 Billion vs. SDG 15.13 Billion (+6.9%)

• Zakah Provision: SDG 2.21 Billion vs. SDG 940.9 Million

• Tax Provision: SDG 3.57 Billion vs. SDG 2.67 Billion

• Net Profit: SDG 10.40 Billion vs. SDG 11.52 Billion (-9.7%)

• EPS: SDG 85.75 vs. SDG 95.01 (-9.7%)

The underlying performance therefore differs substantially from the headline revenue growth. Revenue increased more than 70%, but a large proportion came from foreign-exchange gains, while total expenses increased more than fourfold, including a significant SDG 6.59 billion doubtful-debt/investment provision. Net profit consequently declined despite the substantial increase in reported revenue. 

Q3 showed stronger bottom-line momentum. Revenue reached approximately SDG 7.44 billion versus SDG 4.46 billion, while quarterly net profit increased to SDG 2.65 billion from SDG 1.16 billion, and EPS improved to SDG 21.87 from SDG 9.60. 

3. Operating Performance & Major Programs

The Bank's financing and investment activities remain based on Islamic structures. Gross Mudarabah investments increased to SDG 4.85 billion from SDG 4.27 billion at December 2025, driven particularly by Mudarabah financing to individual and corporate customers, which increased to SDG 1.28 billion from SDG 690 million. 

However, credit-risk provisioning materially affected the carrying value. The Bank recognized SDG 689.5 million of financing-risk provisions against Mudarabah, reducing net Mudarabah investments to SDG 4.16 billion, slightly below SDG 4.27 billion at year-end 2025. 

Musharaka exposure was even more significantly affected. Gross Musharaka investments remained SDG 460.5 million, but the financing-risk provision increased to the full SDG 460.5 million exposure, compared with SDG 100.5 million at December 2025. The resulting net carrying amount was therefore reduced to zero from SDG 360 million. 

The most significant balance-sheet development was the increase in foreign and GCC investments. Investments available for sale increased to approximately SDG 127.96 billion from SDG 50.95 billion, including:

• Al Salam Bank – Bahrain: SDG 64.29 billion vs. SDG 23.79 billion

• Al Salam Bank – Algeria: SDG 53.09 billion vs. SDG 22.48 billion

• King Abdullah City: SDG 10.49 billion vs. SDG 4.44 billion

Total investment exposure before provisions reached SDG 133.74 billion, of which SDG 74.79 billion related to GCC investments, SDG 53.09 billion to Al Salam Bank – Algeria and SDG 5.86 billion to local investments. 

4. Key Performance Drivers

Foreign-exchange gains were the dominant revenue driver. Gain on exchange of foreign currency increased from approximately SDG 4.80 billion to SDG 14.39 billion, nearly tripling YoY. Together with SDG 4.69 billion of foreign-currency valuation gains, currency-related items represented a very substantial portion of reported revenue. 

Income from the Bank's own investments also performed strongly, rising approximately 51% to SDG 9.63 billion, while banking-services income more than doubled to SDG 1.53 billion.

In contrast, the core financing/investment-income line was softer. Total income from financing and investments declined approximately 3%, and the Bank's share after returns to unrestricted investment account holders declined approximately 11%.

Provisioning was a major earnings headwind. Provision for doubtful debts and investments reached approximately SDG 6.59 billion, compared with no corresponding charge shown for 9M 2025. The notes separately show substantial increases in provisions against Mudarabah, Musharaka and the wider investment portfolio. 

The total provision against investment risk increased to SDG 1.15 billion from SDG 100.5 million at December 2025. 

Operating costs also increased sharply. Staff costs approximately doubled, while operating expenses increased more than threefold. As a result, total expenses reached SDG 15.27 billion versus SDG 3.31 billion.

Consequently, although revenue increased 70.6%, PBT increased only 6.9% and net profit declined 9.7%, illustrating that much of the additional revenue was absorbed by operating costs, provisions, Zakah and tax.

5. Balance Sheet, Backlog & Cash Flow

• Total Assets: SDG 379.93 Billion vs. SDG 162.72 Billion (+133.5% YTD)

• Cash & Cash Equivalents: SDG 81.10 Billion vs. SDG 34.76 Billion (+133.3%)

• Deferred Sales Receivables, Net: SDG 87.24 Billion vs. SDG 36.58 Billion (+138.5%)

• Mudarabah Investments, Net: SDG 4.16 Billion vs. SDG 4.27 Billion

• Musharaka Investments, Net: Nil vs. SDG 360 Million

• Available-for-Sale Investments: SDG 127.96 Billion vs. SDG 50.95 Billion (+151.1%)

• Investment Property: SDG 468.3 Million, unchanged

• Projects in Progress: SDG 5.07 Billion vs. SDG 2.99 Billion

• Fixed Assets, Net: SDG 4.08 Billion vs. SDG 1.37 Billion

• Total Liabilities: SDG 156.77 Billion vs. SDG 60.97 Billion (+157.1%)

• Unrestricted Investment Accounts: SDG 82.83 Billion vs. SDG 36.21 Billion (+128.8%)

• Total Equity: SDG 140.32 Billion vs. SDG 65.54 Billion (+114.1%)

• Retained Earnings: SDG 7.86 Billion vs. SDG 2.16 Billion

• Paid-Up Capital: SDG 326.23 Million, unchanged

• Operating Cash Flow: SDG 5.10 Billion vs. SDG 7.58 Billion (-32.8%)

• Investing Cash Flow: SDG (66.14) Billion vs. SDG (12.67) Billion

• Financing Cash Flow: SDG +102.70 Billion vs. SDG +7.77 Billion

• Period-End Cash: SDG 81.10 Billion

• Contra Accounts: SDG 217.29 Billion vs. SDG 85.56 Billion

The dramatic increase in equity was driven primarily by foreign-investment revaluation reserves, which rose to SDG 119.63 billion from SDG 46.85 billion. Total reserves consequently increased to SDG 132.13 billion from SDG 63.06 billion. 

Cash flow requires careful interpretation. Operating activities remained positive but generated only SDG 5.10 billion, down from SDG 7.58 billion. Investing activities consumed SDG 66.14 billion, mainly because of the significant movement in deferred-sales receivables and investment assets. 

This was more than offset by SDG 102.70 billion of financing cash inflow, principally from increases in current accounts, other liabilities and unrestricted investment accounts. Cash consequently increased to SDG 81.10 billion. 

A conventional corporate backlog is not applicable to a bank. More relevant are off-balance-sheet/contra-account exposures. These increased substantially to SDG 217.29 billion, including letters of credit of SDG 26.78 billion, letters of guarantee of SDG 6.45 billion and restricted investments with Elneelein Bank – Abu Dhabi of SDG 173.04 billion. 

6. Investor Takeaway

Al Salam Bank – Sudan's 9M 2026 financial statements show very substantial nominal balance-sheet and revenue growth, but a much more mixed underlying earnings picture.

Reported revenue increased 70.6% to SDG 31.46 billion, but this was heavily influenced by foreign-exchange and currency-valuation gains. Core financing and investment income did not exhibit comparable growth, while the Bank's share of investment income actually declined.

The most important earnings concern is the sharp increase in credit/investment provisioning and operating expenses. A SDG 6.59 billion provision for doubtful debts and investments, combined with sharply higher staff and operating costs, meant that PBT grew only 6.9% despite the 70%+ revenue increase. After higher Zakah and tax, net profit declined approximately 9.7% to SDG 10.40 billion.

Asset-quality indicators within the notes therefore deserve close attention. Mudarabah now carries a SDG 689.5 million financing-risk provision, while the entire SDG 460.5 million Musharaka exposure is provided for, reducing its net carrying amount to zero. These developments indicate materially more conservative provisioning and/or deterioration in the recoverability assessment of certain financing exposures.

At the same time, the Bank's reported financial position expanded dramatically. Assets reached SDG 379.9 billion, equity increased to SDG 140.3 billion and cash rose to SDG 81.1 billion. However, much of the equity increase relates to foreign-investment revaluation rather than retained operating profit. The foreign-investment revaluation reserve alone reached SDG 119.6 billion, equivalent to the overwhelming majority of total equity.

This distinction is particularly important in assessing the Bank: nominal balance-sheet growth should not be interpreted in the same way as organic volume growth, because currency movements and revaluation effects are major contributors to the reported figures.

Q3 provides a more positive near-term signal. Quarterly revenue increased strongly and net profit more than doubled to approximately SDG 2.65 billion from SDG 1.16 billion, suggesting better recent earnings momentum despite the weaker nine-month net-profit comparison.

The main investor monitoring points are therefore credit provisioning, quality of Mudarabah and Musharaka exposures, sustainability of FX-related earnings, operating-cost growth, cash generation, unrestricted investment-account funding, foreign-investment valuations and the very large off-balance-sheet/contra-account exposures.

The financial statements were prepared under AAOIFI standards and IAS 34, together with applicable Central Bank of Sudan and Sharia Supervisory Board requirements. 

The independent reviewer conducted the review under AAOIFI requirements and ISRE 2410 and issued an unmodified conclusion, stating that nothing came to its attention indicating that the interim financial information was not prepared, in all material respects, in accordance with AAOIFI standards and IAS 34. The review report was signed by Abdel Rahman O. El Imam, PhD/CPA, and dated 7 October 2026. 

Overall, Al Salam Bank – Sudan remains profitable and reported substantial growth in assets, equity and revenue during 9M 2026, but the quality of that growth requires careful interpretation. Foreign-exchange/revaluation effects are exceptionally significant, while provisions and operating expenses have risen sharply. The key investment question is whether underlying banking profitability and asset quality can strengthen sufficiently to support earnings without relying heavily on currency-related and valuation gains.