Message from the Chairman

A message from the Chairman

Dear shareholders,
Peace be upon you,

The year 2020 began as any other preceding year by developing plans, projects and goals, taking into account the political, economic and social environment that we are used to. However, before the end of the first quarter, evidence and events began to show us that this year is not like any other. From the beginning of the year, the Israeli Occupation targeted all Palestinian banks with threats of legal pursuits if they received benefits of current prisoners, previous prisoners and families of martyrs; this coincided with the suspension of transfer of Palestinian clearing funds by Israel and the spread of the coronavirus pandemic, which heavily disrupted both our work and personal lives. Life moved from partial closure to complete closure, to intermittent presence to remote work, to shifts with a low percentage of employees, to numerous medical conditions, to constantly disinfecting offices. This also coincided with an almost complete interruption for practical, economic and social life in every way, which caused a severe decline in personal and national income and the closure of many business entities which caused an increase in unemployment, a growth in poverty and the decrease of social interaction to a minimal.

Following the decrease in the pace of business activities and the successive closures, the number of bounced cheques and irregular debt repayments increased greatly, financing installments were postponed for several months which was followed by a decrease in some fees. All of these events required an emergency plan to be developed by the Bank to face these compelling circumstances in line with the entire banking sector. Palestine Islamic Bank (PIB) including all levels of management and staff, was able to rise to the level of responsibility in dealing with this situation; we were able to handle funding affected by the coronavirus pandemic in a manner which contributed to its revival and continuity, and a large number of financing transactions were rescheduled in accordance with the provisions of Islamic Sharia which address emergency situations on an exception basis. Furthermore, spending was curbed in a professional manner without affecting the quality of performance or productivity and also while maintaining of the benefits and safety measures of the Bank’s employees.

Despite these difficult times and immense challenges, PIB was able to move forward in its planned projects; it completed a large part of the Bank’s new core banking system (Temenos) and continued to update its projects which aim to reduce risk and combat money-laundering. The Bank also began issuing its new MasterCard cards, enabled instant printing for cards via the Bank’s branches, released its project for contactless payment services for MasterCard cards, strengthened electronic payment services via electronic channels by signing agreements with numerous organizations, and completed the Automatic Indexation process with Reuters for the real time update of currency prices. The Bank also released a project for adapting ATMs to the requirements of special need individuals (the visually impaired). In its pursuit to provide better services to its customers, PIB established a Digital Contact Center to provide 24 hour services for managing clients’ accounts, cards and general services.

Financially, PIB ’s results showed an increase in equity to around 123.3 million US Dollars, compared with 112.7 million US Dollars at the end of 2019, reporting a 9.42% percentage increase. The Bank’s assets increased to around 1.51 billion US Dollars after having been 1.31 billion US Dollars at the end of 2019, with an increase of 14.91%, while total liabilities reached 1.38 billion US Dollars versus 1.20 billion US Dollars at the end of 2019, increasing by 15.42%. Client’s deposits increased to become 1.16 billion US Dollars from 1.05 billion US Dollars at the end of 2019, which is a growth of 10.45% compared with the increase of direct financing to 885.47 million US Dollars from 770.48 million US Dollars at the end of 2019, a growth of 14.92%.

The good results that were achieved in this year, which was full of challenges and political and economic unrest, could not have been possible without the competency of the entire executive management, its commitment to its professionalism during these compelling circumstances and increasing risks, and its accuracy in implementing the policies of the Board of Directors, which closely monitored the pandemic’s developments and adjusted its policies to overcome the issues and hurdles. The Sharia Supervisory Board also played a large and accompanying role in following up with difficult files and finding practical solutions within the principles of Islamic Sharia.

Finally, we look forward to 2021 with confidence that we will move forward in achieving our goals and successes leaning on a solid foundation based on implementing principles of Islamic Sharia, good governance and an advanced, dynamic digital banking system harnessed to serve our clients and shareholders.

In conclusion, we thank the Palestinian Monetary Authority for its role in stabilizing the financial and banking sector and improving it. We extend our thanks to the Palestinian Capital Markets Authority and the Companies Controller for their constructive and positive role in serving this important economic sector.

And God is the Arbiter of Success.
Peacy, mercy and blessings of God may be upon you.

Maher Masri

Chairman

About PIB

Overview

Palestine Islamic Bank is Public shareholding company(PIB)  was founded in 1995, beginning its banking activities in early 1997, with an authorized capital of 100 million shares and a nominal value of $1 per share. In 2017, paid-up capital was increased to $69 million, in addition to another increase in 2018 to $74 million, rising to $77 million in 2019 and to $80 million in 2020.

PIB conducts its banking, financial, commercial and investment business according to Islamic Sharia, with a network of 45 branches and offices and more than 80 ATMs throughout Palestine, thus confirming its identity as the largest Islamic banking network in Palestine. The Bank realizes its vision as the leading Palestine Islamic bank providing the utmost in excellence and quality in Islamic banking services to meet customer needs and requirements.

PIB offers Islamic banking services and works to develop and attract the best employees. It reinforces its message of excellence in its target markets by offering effective and modern banking solutions in accordance with Islamic Sharia, with the aim of meeting the financial needs of all segments of the community and upholding the principle of participation in earnings.

Moreover, the Bank has been developing its performance and is increasingly introducing technology into its business. By adopting advanced programs and modern communication channels it is providing its customers with a unique banking experience. The bank also works to avoid any risks that may affect its business and has won several awards in this field, the last of which was the "Safest Islamic Bank in Palestine for the year 2020" award, according to the World Union of Arab Bankers.

PIB believes in its role in achieving sustainable development and works to implement projects with a positive and sustainable impact, especially to support the health and education sectors, as well as support the less fortunate and improve their living conditions.

PIB is also making efforts to protect the environment by operating its 15 branches and offices with a solar energy system that produces an average of 600 megawatts of electricity annually, and contributes to reducing harmful gas emissions annually.

Also The bank was the first Palestinian Islamic banking institution to join the United Nations Global Compact for Sustainable Development. The United Nations Global Compact is one of the initiatives launched by the United Nations to encourage companies across the world to adopt sustainable and socially responsible policies.

Vision

To be a pioneer in providing Islamic banking, financing and investment services and activities using the latest technology to meet the needs and requirements of clients and stakeholders.

Mission

Achieving excellence in target markets by providing comprehensive and modern banking solutions in accordance with the provisions of Islamic Sharia. Constantly striving to meet the financial needs of all segments of the local community to achieve profit-sharing.

Values

• Integrity and Transparency
• Loyalty and Commitment
• Honesty and Sincerity
• Objectivity and Credibility
• Fairness and Equality
• Modernity and Diversity

Our Strategy

The Bank continuously develops its strategic plan and strives to adapt it to suit internal and external variables, in order to achieve its desired goals. The Bank’s participatory approach is based on planning that begins with setting objectives involving different administrative levels in the process. The Bank's main objectives are to:

1- Provide innovative Islamic financial solutions by developing and providing high-quality, innovative products and services and to enhance the culture of Islamic banking both inside and outside of the Bank, in addition to establishing partnerships with local, regional and international financial institutions.

2- Achieve excellence in customer relationship management through continually measuring and developing customer satisfaction and loyalty and providing high quality services.

3- Develop staff and provide a good working environment by encouraging cooperation and supporting integration, nurturing talent and developing planning, evaluation and decision-making skills.

4- Increase the efficiency and quality of the Bank's business by digitally developing all operations of the Bank and working to provide an infrastructure which ensures optimal use of data and enhances customer access efficiently and effectively, in addition to taking advantage of possible synergies with partners.

5- Increase utilization of available income sources through developing investments, improving returns, and diversifying sources of income to enable the Bank to increase its sources of income and enhance its profitability.

6- Reduce the risks to the business by adhering to local and international procedures and requirements, integrating the principles of risk management into administrative and operational processes, promoting a culture of compliance and combating money laundering, and tracking and evaluating the performance of the Bank's portfolio to minimize risks.

7- Promote sustainable community participation by supporting sustainable social responsibility initiatives and acting as a community partner serving the country and its citizens.

In addition to its view to implement this strategy, the Bank has developed an effective system to reduce risks to the appropriate level to implement its banking operations, ensure the continuation of its business easily and smoothly and avoid unnecessary complications at work, including dealing with risks regarding liquidity, fluctuation in exchange price, operational risks or otherwise.

During the coming years, the Bank aims to complete the process of increasing its paid up share capital up to 100 million US Dollars in response to the Palestinian Monetary Authority’s requirements; this being after it has increased it to 80 million US Dollars in 2020, whereby completing the increase in capital will give the Bank greater stability and increase its investment opportunities. The Bank operates to achieve these endeavors according to a vision which aims to maintain shareholders’ investments and increase their profit while making sure to continue to distribute profit according to previous years’ average.

To ensure reducing deviations in implementing the plans or any effects which may arise thereafter, the Bank demonstrates, through its various regulatory and executive monitoring channels, great caution to apply the plans which executive management has put forward and to continue to implement them according to the timeline to ensure achieving the desired objectives.

The Bank considers it particularly significant to qualify its human resources and develop its personnel’s experience and skills in the area of Islamic finance industry; striving to achieve this by providing opportunities to obtain the required training and participating in local, regional and international conferences.

Awards

Palestine Islamic Bank has been voted:

Our Banking Network

The Bank is considered the widest Islamic banking network in Palestine, whereas it has worked on expanding this network since its incorporation that being in conformity with the strategy of financial inclusion which the Palestinian Monetary Authority launched, believing in citizens’ right to enjoy banking services around the country.

Working with Covid Implications

The year 2020 was full of challenges, especially those which were imposed by the Coronavirus pandemic and which cast its shadows on many different sectors, including the banking sector. The Bank established an example to be followed in handling these challenges, owing to the preemptive digitization and risk management plans which were issued by the Board of Directors, in addition to the cooperation by all levels of management and team-spirit, which allowed the Bank to maintain the continuity of its operation, continue to provide its services to its clients and maintain the safety of its assets and investors’ interests.

From the first day of the pandemic, the Bank operated in accordance with a wellthought-out emergency program which included plans for the sustainability of operation comprised of the following aspects:

Improve Health Security Procedures

The Bank implemented several procedures which included continuous sanitization operations of all headquarters, adhering to social distancing, providing protective kits for employees and clients, and organizing access procedures to branches and offices.

The Bank also worked on raising employee awareness on proper hygiene procedures, in addition to releasing social-media campaigns to raise public awareness in close coordination with the Ministry of Health.

Initiating Working Remotely and from Alternative Sites

The plans for continuity of operations reflected on the internal work environment, whereby the Bank worked on using the most recent available technologies to allow employees to work and communicate remotely, while following the highest standards of health and safety. The Bank also worked to operationalize work from alternative sites, dividing employees into groups which work on a rotational basis and suspending any internal activities or events which may lead to gatherings.

Improving Electronic Services

With the aim of allowing customers to enjoy the Bank’s services and to access their accounts despite of the closure, the Bank worked to improve its electronic services and enabled its customers to order a special package of services using their certified accounts on Facebook.

In culmination of these efforts and and in harmony with its digitization strategy, the Bank launched the Digital Contact Center with its many digital channels which provides a special package of banking services to customers without requiring them to leave their homes. More than 30,000 communication processes are being carried out monthly since the launch of the Center, whereby services are provided to customers whether via digital channels or phone.

These digital services are added to a benefits package provided by the Bank through the services of Islami Online and Islami Mobile, in addition to the network of ATMS which is spread all over the country.

Improving Security and Protection Networks and Activating Risk Aversion Plans

In the interest of protecting investors and clients’ interests, the Bank worked on improving security networks and protection systems for its assets and implemented risk-aversion plans via maintaining the durability of its portfolio and improving cash liquidity indicators, in addition to contacting clients to limit defaults and research the effect the pandemic has had on them and help them overcome it.

Constant Coordination with Oversight and Government Authorities and Compliance with their Instructions

From day one of the pandemic, the Bank has worked to comply with the instructions of the Government and Palestinian Monetary Authority, which required the banking sector to continue its operations as it mediates the production process and acts as a stimulus for economic growth. The Bank also complied with all instructions issued by the Palestinian Monetary Authority, such as postponing cheques, postponing finance installments and providing customers with services amidst the closure, especially for the corporate sector.

The Bank had also been in constant coordination with governors and security agencies to arrange for the operation of 45 branches and offices in all provinces during the complete lockdown.

Significant Projects

Cards Instant Issuance

As part of the Bank’s efforts to increase quality of services provided to customers, and to facilitate the process of obtaining their cards and enjoying their privileges, the Bank launched the Cards Instant Issuance service at all its branches and offices for ATM cards with special Palestinian designs.

The Bank launched this project, taking advantage of its cooperation with the international company MasterCard, through which the Bank became a Principal Member in its worldwide network, where the Bank seeks to benefit from the advanced technological solutions and lifestyle privileges which it offers.

Instant Issuance formed a new addition to the benefits acquired by the Bank’s issued ATM cards, by which customers, using the Bank’s network of ATMs supporting this service, can perform daily cash withdrawals of up to USD 3,000, daily deposits of up to USD 4,500 or their equivalent in other currencies and subscribe to the services of Islami Online and Islami Mobile without visiting a branch. Customers can also perform purchases locally or internationally through points of sale and use the contactless payment feature, which allows customers to complete payment quickly and easily.

PCIDSS Certificate

In the time which the Bank continued to develop its services and supplemented it with many new benefits, the Bank made sure to provide such services with the highest levels of safety and protection. As a result of the Bank’s special and successful efforts in this aspect, it received the Certificate of Compliance with Payment Card Industry Data Security Standards (PCI DSS), which is considered a universal standard in this field, and is aimed at avoiding fraud and breach, and protecting card holders’ information.

The Bank acquired this certificate after Sovereign Secure, an international company specializing in data security, completed an audit and inspection of the Bank’s applied security procedures and requirements in dealing with payment cards. This confirms the Bank’s commitment to strict international standards in the area of card data security, whereby it implemented hundreds of related requirements, such as building a secure network for devices dealing with cards and taking strong measures for related systems, in addition to surveillance and regular testing of networks, protecting card holder details and encrypting them when sending them through the internet.

Objectives for Implementing PCI DSS

• Protecting card-holders’ data
• Regular supervision of networks relating to cards and routine maintenance
• Following safe working procedures and policies in the area of dealing with cards
• Raising client awareness on maintaining secrecy and privacy of their card details

Strategic Partnership with the National Bonds Corporation in the United Arab Emirates

The Bank signed a strategic partnership agreement with the National Bonds Corporation in UAE during 2020. This agreement allowed the Bank’s clients to invest in bonds, whether through sale or purchase.

Applying Centralization Plan

Following the Bank’s certification of the Centralization Plan in 2019, which comes in conformity with its strategy to increase the efficiency and quality of work, the Bank throughout 2020 carried out the requirements and amendments provided for in the plan and which contribute to achieving its objectives. The Bank began restructuring branches and offices in line with modern guidelines for institutions delivering banking services by transforming them into distinguished service centers to customers and transferring the transaction execution processes to relevant support centers at General Management.

Strategic Partnership with Jawwal Pay

The Bank signed a partnership agreement with the National Electronic Payment Company, Jawwal Pay, within its strategic framework for technological investment and providing innovative payment solutions to clients. This agreement allows the Bank to provide new customers with registration services to Jawwal Pay’s electronic wallet and current customers with wallet deposit and withdrawal transactions. This agreement is considered an introduction to a number of services which the Bank will provide in cooperation with Jawwal Pay.

Jawwal Pay is considered the first multifunctional mobile e-wallet in Palestine, as well as the first company to obtain licensing from the Palestinian Monetary Authority to provide e-wallet services.

Developing Infrastructure

The Bank throughout 2020 worked on the finalization of its efforts to develop its infrastructure in accordance with the most recent systems and technologies in this field, consistent with its endeavors to raise the efficiency of its work and provide banking services at universal standards.

In this regard, the Bank signed a strategic partnership agreement with the Palestinian Telecommunication Company “Paltel”, one of Palestinian Telecommunication Group’s companies, to provide it with ICT integrated technological solution services and hosting services in Paltel’s data centers. This agreement will contribute to supporting the continuation of the Bank’s work in all circumstances in line with its digital transformation strategy.

Providing ICT integrated technological solution services to the Bank will contribute to ensuring secrecy and safety of client information when receiving the best banking services.

The Bank had signed an agreement with Paltel in 2019 with the aim of connecting all branches, offices and ATMs with a central network and another backup network through fiber optic technology.

Award for Safest Islamic Bank in Palestine

Due to the Bank’s persistent efforts at all levels to develop its strategies in different fields in support of digital transformation and risk management plans, and adhering to the highest global standards which ensure its efficient and effective work, the Bank was awarded Safest Islamic Bank in Palestine for the year 2020 by the World Union of Arab Banks and its magazine, The Banking Executive.

Receiving this award comes as a confirmation of the soundness of the Bank’s procedures, persistence of its performance, and the success of its preemptive strategic plans which it applied during 2020, a year which was full of challenges, especially those imposed by the Coronavirus pandemic and which affected various sectors including the banking sector.

Digitization Strategy

Digital Contact Center

In accordance with the Bank’s digital transformation strategy and investment in the most recent digitization technologies to save customers time and effort, and in response to the challenges the coronavirus pandemic imposed, the Bank launched The Digital Contact Center. The Center provides customers with a special package of banking services relating to cards, account management, cheques, financing, and transfers, in addition to answering various queries around-the-clock regarding client accounts and the Bank’s services.

To enable it to provide the best services, the Center was provided with the most-recent remote communication technologies, as well as employing a qualified and capable team and training them to easily provide high quality customer services. The Center carries out over 30,000 communication processes with customers per month.

The Center provides its services to customers 24 hours without interruption, including official holidays and working days. It also provides its services through a competent and qualified team dedicated to assisting customers.

Communication Channels

• WhatsApp: +970 59 444 3 444
• Facebook: PalIslamicbank/me.m
• Direct phoneline: 1700 220 220
• Landline: +970 (2) 296 7888
• Website: https://www.islamicbank.ps
• Email: service@islamicbank.ps

Continue Preparations for Implementing the New Core Banking System

The Bank, in cooperation with Temenos, spent 2020 preparing and equipping for the implementation of the new core banking system. The Bank began working with the world-known Temenos in 2019 to prepare and provide all required possibilities and experiences.Through this project, the Bank aims to satisfy current and future client and supervisory authority’s needs. It also conforms with its aims to provide better banking services.

Application of the new banking system, characterized by its durable and flexible components, will assist the Bank in simplifying its systems, enhancing its clients’ digital experience and adapting with fast-changing regulatory environment, in addition to dealing with the next generation of Islamic banking developments.

Electronic Channels

During 2020, the Bank worked to enhance its electronic services by supplementing them with additional qualities which save clients time and effort and are available to them at all times. Foremost among these qualities is electronic top-up and payment, provided within Islami Online and Islami Mobile’s services, whereby agreements for inclusion in this service were signed with various new companies.

Taking into account the difficult circumstances and the lockdown imposed by the Coronavirus pandemic during 2020, electronic services played a vital role in facilitating communication between the Bank and its clients and accelerating the reply and follow up to their queries. This was achieved through various electronic channels including the Bank’s accounts on social networking sites.

Improving these services is added to a special package of benefits which are provided, including obtaining special currency exchange pricing, transfers between the client’s personal accounts or to beneficiaries within or outside the bank, besides cheque service, account management and credit card management services among others.

External Audit Report

Financial Statements

To download Financial Statements for the year 2020 Click Here

Key financial indicators

Financial statements compared with the previous year in US dollars

Trading activity on the Bank's stock in US dollars

Legal procedures and issues:

The number of cases filed against the Bank within its normal activity was 63 and 69 cases as of December 31, 2020 and December 31, 2019, respectively. The value of the cases filed against the Bank amounted to $ 8,612,159 and $15,321,521 as of December 31, 2020 and December 31, 2019, respectively. In the opinion of the Bank’s management and legal department, the Bank will not incur any further liabilities from these cases and has sufficient provisions to deal with them.

Government protection and benefits:

There are no governmental protections or privileges enjoyed by the Bank or any of its products in relation to laws or regulations and there are no patents or franchises obtained by the Bank.

Decisions with material impact on international quality standards:

There are no decisions issued by the executive, judicial, or legislative authorities; international organizations; Israeli Occupation, or by any other entity, which have a material impact on the work of the Bank, its products, or its ability to continue as a going concern.

Related party contracts and deals:

There are no contracts and deals with related members of the board of directors not disclosed in the financial statements.

The Bank's subsidiaries:

The bank has no subsidiaries.

Relying on major suppliers and customers:

There are no specific suppliers or major domestic or external clients who make up 10% or more of the bank's total purchases.

External auditing:

The bank, based on the relevant instructions and regulations, has a contract with an external auditing company for the purpose of submitting a report on the fairness of the annual financial statements to the shareholders of the Bank based on international standards for the practice of auditing and the professional rules, principles and ethics.

External auditor:

Ernst & Young

Investing in affiliated companies

Below are the details of investing in affiliated companies as of December 31, 2020:

• Al-Takaful Insurance Company PLC was established at the end of 2006 as an insurance and reinsurance business, in accordance with the provisions of Islamic Sharia, through its main center in Ramallah and its branches in Palestine. As of December 31, 2020, the Company’s capital amounted to $10,000,000.
• Palestine Ijara Company was established with its head office in Ramallah in November 2013 and started its activities in the middle of 2014. The Company offers Islamic Ijara for small and medium projects in accordance with the provisions of Islamic Sharia. Its capital as of December 31, 2020 amounted to $12,000,000.

The following table shows a summary of the financial information related to the Bank’s investment in its affiliated companies as of December 31, 2020:

The General Assembly

Date of the general assembly meeting

The General Assembly meeting is expected to be held on Tuesday, the 23rd of March 2021.

Ordinary General Assembly meeting agenda

• Reviewing, discussing and approving the Board of Director’s report on the Company’s business for the fiscal year ending on 31/12/2020.
• Listening to and discussing the Company’s auditors’ report and ratifying and approving the financial statements as they were on 31/12/2020.
• Listening to the Company’s Sharia Supervisory Board’s report for the fiscal year ending on 31/12/2020.
• Approving the Board of Director’s recommendation regarding the distribution of stock dividends to shareholders in the value of 5 million shares/US Dollars, through retained earnings (free shares) having a par value of one US Dollar per share, and therefore being 6.25% of the share’s par value, whereby paid/nominal share capital becomes 85 million shares/US Dollars.
• Approving compensation of the Board of Directors for results of the Bank’s work for the year 2020.
• Discharge of the Board of Directors for the financial year of 2020.
• Electing the Company’s auditors for the financial year of 2021 and authorizing the Board of Directors to determine their fees.
• Approval and recommendation of the Board of Directors to conclude the work relationship with a member of the Company’s Sharia Supervisory Board and appoint a replacement member.

Summary of the Previous Ordinary General Assembly’s Significant Findings on 20 April 2020

• Ratifying the Board of Director’s report on the Company’s business for the fiscal year ending on 31/12/2019.
• Ratifying the Sharia Supervisory Board’s report for the year 2019.
• Ratifying 2019’s financial statements.
• Ratifying the Board of Director’s recommendation to distribute stock dividends to shareholders in the value of 3 million shares/US Dollars through retained earnings (free shares) having a par value of one US Dollar per share, and therefore being 3.90% of the share’s par value, whereby the paid/nominal share capital becomes 80 million shares/US Dollars.
• Ratifying the compensation of the Board of Directors for the work in 2019.
• Discharging the Board of Directors for the financial year of 2019.
• Electing Messrs Earnest & Young as external auditors for the year 2020 and authorizing the Board of Directors to determine their fees.
• Ratifying the Board of Director’s decision to restructure the Sharia Supervisory Board and to determine their fees.
•