2016 2016

ALSHAMAL ISLAMIC BANK ALSHAMAL ISLAMIC BANK

In the Name of Allah, the Compassionate, the Merciful

[And say: work (with righteousness), soon Allah will observe your work, and so will His Apostle and the believers; soon you will be brought back to the knower of the metaphysical and physical world, and he will show you what you had done. ]

Verse 105(Surat Al-Tawbah)

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The VisionWe look forward to be at the forefront of banks operating in Sudan to achieve excellence in devel-opment and social welfare, and to promote confi-dence in our dealings internally and externally.

The MissionTo achieve pioneering in Islamic banking by talent – developing of the human being, con-tributing in achieving the economical and social development, and to provide integrated solutions that satisfy concerned stakeholders.

Our ValuesOur values are derived from our faith, traditions and culture: trustiness, honesty and transparency.

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Contents:

Subject Page No. Directory of HQs, branches 4geographical distribution of branches 5Board of Directors 6Sharia’a Supervisory Board 7

Executive Management 8Economic Developments in 2016 10Chairman Board of Director addresses before the 27th Shareholders’ General Assembly 12Financial Indicators (2014 - 2016) 16General auditors reports 18

Statement of Financial position as at 31/12/2016 21Income Statement for the year Ended 31/12/2016 22Statement of Cash flows for the year Ended 31/12/2016 23Statement of Changes in owners’ equity for the year Ended 31/12/2016 24

Notes on Financial Statements 25Sharia’a Supervisory Board’s report 42Resolutions of the 27th Shareholders’ General Assembly 43Correspondents Network 44

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Operating Branches

Branch Tel FaxTower +249 183 795721 +249 183 795720Khartoum +249 183 783043 +249 183 785098Alsouque Alarabi (Kh). +249 183 783921 +249 183 783925Industrial Area (Kh). +249 183 472837 +249 183 472849Saggana +249 183 487958 +249 183 460714Alsouque Almahali +249 183 420183 +249 183 420182Elkalakla +249 183 722002 +249 183 722002Omdurman +249 187 553330 +249 187 554606Souque Shabi Om +249 187 454156 +249 187 997051Souque Libya +249 187 730515 +249 187 730514Indus. Area (Kh. North). +249 185 330582 +249 185 331141Souque “6” +249 120 819296 +249 155 117213

International University of Africa +249 183 731048 +249 183 731049Khartoum (2) +249 183 731561 +249 183 731563Gedarif +249 0441 843479 +249 0441 843479Dongola +249 0241 823839 +249 0241 822292Port- Sudan. +249 0311 826042 +249 0311 826046Wad Medani +249 0511 840445 +249 0511 840445Kosti +249 0571 824645 +249 0571 824850Alhafeer +249 183 730149 +249 183 730148Alobaid +249 0611 843910 +249 0611 843920Kasala +249 183 731613 +249 183 731620

Head Quarters’ AddressesElsayed Abdurrahman St.Khartoum- SudanTel: +249-183 779078 – 774728 - 771735 Fax: +249-183 784282 – 773585 - 766470

Swift: (isbssdkh) P.O Box: 10036, Khartoum- Sudan Postal Code: 11111Website: www.shib.sdE-mail: info@shib.sd

Directory Of The Head Quarters And Branches

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A map showing geographical distribution of branches

Branches of State of Khartoum- Tower- Khartoum- Al Souque Alarabi- Industrial Area (Kh. North)- Alsaganaa- Al Souque Almahali- Alkalakla

- Alsenaat Bahrie- Omdurman- Souque Shabi (Omdurman)- Souque Lybia- Souque 6- International University of Africa- Khartoum 2

Port Sudan

DongolaAlhafeer

Khartoum

Gadarif

Wad Madani

KostiElobied

Kassala

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Mr. Al Bagir Yusuf Mudawi Chairman of the Board of Directors

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Board Members:Board Members:1- Mr. Ahmed Ali Ahmed Alhussain. 2- Mr. Badr El Dien Salih Abdul Rady.3- Mr. Abdullah Idrees Fadul Idrees.4- Mr. Suleiman Mohamed Ahmed Mohamed5- Dr. Abdul Rahiem Mohamed Bakhiet6- Eng. Ibrahim Musa Al- Khalifa.7- Mr. Mohamed Yahiya Mohamed El Jaldi 8- Mr Ali saeed Ahmed kambal.9- Mr Mahmood salah Rashid.Secretary of the Board of DirectorsMr. Mohamed Bushra KhalafallaSharia Supervisory Board: 1- Dr. Mohamed Alfatih Hamid Mohamed Hamid Chairman2- Dr. Ahmed Ibrahim Hamad Alturabi Member3- Dr. Abdel Wahid Osman Mustafa Member4- Dr. Saber Abas Mohamed Abudegen Reporter Legal Advisor:Mr. Mutasim Hassan Mahgoob. Legal Auditor:Messrs: the National Audit Chamber

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Executive Management

Mr. Hassan Mohamed Al-Hassan El-amienGeneral Manager

Mr. Abdulbaqi Dafa Allah El-amienDeputy General Manager

Mr. Abdullah Noureddin Ahmed MohamedG M A For administration, Researches and planning

Mr. Kamal El-Sheikh Al-Tayeb MohamedG M A For Investment , banking affairs and IT

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Managers of Departments:1- Mr. Hassan Mahmood Ahmed Abd El-Ghafar Legal Affairs 2- Mr. Salah Said Ahmed Bandi Executive Office3- Mr. Ahmed Abdel Hay Mohamed Ahmed Investment & Finance 4- Mr. Ali Hassan Hamad El-Hussain Administrative Affairs5- Mr. Satti Mohamed Satti Hamad Ziyada Information Technology 6- Mr. A’arif Mohamed Bashir Ali Banking Affairs & Branches7- Mr. Mutasim Abdel Aziz Fagier Ahmed Internal Control and Inspection8- Mr. Osama Ali Ibrahim El-Sadiq Financial Affairs 9- Mr. Mohamed Al-Hussain Ahmed Ja’al Human Resources 10- Mr. Badr Mohamed Al-Jack Al-Abbas Planning & Research 11- Mr. Ahmed Altaher Seid Ahmed Taher Training &Quality Control12- Mr. Mohamed Alnoor Aadm Alfadul Risk Department13- Mr. Mubark Musa Saad Alhaj External Relation & Foreign Currency14- Mr. Khalid Mohamed Adam Mohamed Marketing & Public Relations15- Mr. Mubarak Mamoon Abd Al-Samad Compliance OfficerBranches Managers 1- Mr. Ghazi Abdel Hay Bin Oaf Indus. Area Kh2- Mr. Kamal Abd Allah Mohamed Abd El-Qadir Saggana3- Mr. Osman Sa’ied Haj Noor Alburuj4- Mr. Abd El-wahab Mohamed Abd El-Kariem Khartoum5- Mr. Abd El-Moniem Ibrahim Al-Sheikh Indus. Area (Kh. North). 6- Mr. Mutawakil Ahmed Mohamed Ahmed Port – Sudan7- Mr. Sir Al-Khatim Hassan Sir Al-Khatim Alsouque Almahali8- Mr. Osama Mohamed Said Ahmed Alfadel Alsouque Alarabi (Kh).9- Mr. Salah Mustafa Mohamed Abd El-Kariem Omdurman10- Mr. Salah Eldien Ibrahim Sheikh Ibrahim Wad Madani11- Mr. Mubarak Mohamed Abd Alghani Babeker Kasala12- Mr. Fat’h Alaliem Osman Farah Alsheikh International University of Africa13- Mr. Mohamed Ahmed Mohamed El-Sheikh Souque “6”14- Mr. Nazar Mohammed Alzain Abdulrahman Alobaid15-Mr. Aadel Hussain Hassan Alfaki Khartoum “2”16- Mr. Mohamed Hassan Dahab Mohamed Souque Libya17- Mr. Nor Aldein Abd Alhaleim Hamed Arbab Kosti 18- Mr. Gamar Alanbia Abd Alkareim Ali Ahmed Gedarif 19- Mr. Sir Al-Khatim Hussain Mohamed Ali Souque Shabi Om.20- Mr. Abd El-Haliem Bashier Haroon Bashier Dongola21- Mr. Waz Eldeen Ibraheem Abd ulrahman Alhafeer 22-Mr. Mohamed Abd Allah Mohamed Abd Alkareim El-Kalakla

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Economic Developments In 2016World Economy Indicators:Economy growth Rate:The world economy growth rate reached 3,1% by the end of the year 2016 , It is expected to increase to the rate of 3,4% for the year 2017. In the Middle East and North Africa countries it reached 2,9% in the year 2016, and it is expected to reach 3,3% in the year 2017.Inflation rate:The average of inflation rate in the developed countries reached 1% in 2016, and it is expected to increase to 1,4% in the year 2017.In the developing countries it reached 4,5% by the end of year 2016 ,and it is expected to decrease to 4,2% by the end of the year 2017.Saving:Global saving levels reached 25,2% of GDP in the year 2016, it expected to be stable at the same level by the end of the year 2017.In the Middle East and North Africa it is expected to increase from 20,6% in the year 2016 to 22,1% in the year 2017. Unemployment:The unemployment rate in developed countries reached 6,9% in the year 2016, it is expected to de-crease to 6,7% by the end of the year 2017 .

The Local Economy Indicators: Growth Rate:GDP is expected to increase from 4% by the end of the year 2016 to 5,3% by the end of year 2017.Inflation rate:The inflation rate increased from 12,6% by the end of year 2015 to 30,5% by the end of year 2016.Unemployment:The unemployment rate is decreased from 21,6% in the year 2015 to 20,6% in the year 2016. The Money Supply:The money supply reached 120,800m. SDG by the end of the year 2016,compared with 93,643m.SDG by the end of the year 2015 with increase percentage of 29%, where the monetary base outside the banking system reached 38,712 m SDG by the end of the year 2016 compared with 27,496 m SDG by the end of the year 2015 with increase percentage of 41%.

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The Developments in the Banking Environments:Banking Deposits:The banking deposits in local currency increased from 50,546 m.SDG by the end of the year 2015 to 65,692 m.SDG by the end of December 2016 with an increase percentage of 30%. The total foreign currencies deposits increased from 13,338 m.SDG by the end of the year 2015 to 14,226 m.SDG by the end of December 2016 with an increase percentage of 7%.The Banking Financing: The balance of banking financing increased from 50,019,5 m.SDG in the year 2015 to 64,197,5m. SDG in December 2016 with an increase according to 28%.The sectoral distribution of the total banking financing, the agriculture registered the highest per-centage of 18,4%, constructions 15,9%, local trade 13,5% ,the industrial sector 12,5%, transportation 6,9%, others 32,8%. The Average of Murabaha Profits Margins:The average of Murabaha profits margins reached 12 % in December 2016 while applied murabaha margin in the banks fluctuated between 2% and 24% .

References:- World Economic Outlook.- Central Bank of Sudan, Economic periodical.- The Periodical Journal of Central Bank of Sudan.

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The Speech of H.E./ The Chairman of the Board of Directors before the 27th General Assembly of shareholders for the fiscal year ending on 31st December/ 2016Praise be to Allah, the sustainer of the universes. Prayers and peace upon our Prophet Mohammed, his family, and the followers.The generous brothers/ Al-shamal Islamic Bank shareholders.The virtuous brothers/ The representatives of the Central Bank of Sudan.The virtuous brother/ Khartoum Stock Exchange Market.The virtuous brother/ The representative of the Auditor General of Sudan.The virtuous brother/ The legal advisor of the bank. The virtuous brother/ The representative of commercial registrar of companies sudan.The virtuous brothers/ The chairman and members of Sharia’a Supervisory Board.Dear brothers / The Board of Directors members.The honorable guests.The dear brothers / The staff of the bank.Alsalam alaikum wa rahmatu Allah wa barakatuOn behalf of the members of the board of directors, it is pleasure to address you and inform you of the annual report for the year 2016 on the honor of your 27th general assembly meeting, reviewing with you the most important achievements, and the main events which affected the bank locally and globally. Dear brothers:I would like to launch this address with the report of the protective control requirements according to (CAEL) indicators as it is an international indicator with a high level of credibility, issued by the Central Bank of Sudan and it urged the Sudanese banking system to act accordingly, which rated your bank on 31December 2016 as satisfactory, with following details : Capital: Rating is strong. Assets: Fair. Revenues: Strong. Liquidity: satisfactory.

RatingComposite ratingLEACBank NameSatisfactory1.752131AL-Shamal Islamic Bank

Note that your bank has achieved a strong rating of: Its capital, which increased by 100% after the board of directors marketed all the shares of the bank

during the year 2016.

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Its revenues, increased by 5% higher than in the year 2015.Brothers, general assembly members:Despite the challenges of the year such as the low performance of the economy, and low prices of raw materials as it is one of the most important sources of Sudan income, your bank has maintained its performance, this is illustrated by the indicator that reflects the results of your bank’s performance in the year 2016 compared to 2015,results, as follows :(Amounts in thousands Sudanese pounds)

Details years Grows rate2014 2015 2016 2015 2016

1.Total assets 1,534,332 1,863,486 2,245,855 21 ٪ 21 ٪2.Total deposits 1,158,139 1,547,846 1,741,713 33 ٪ 13 ٪3.Total financing 1,109,492 1,389,542 1,695,974 25 ٪ 22 ٪4.Total revenues 147,186 190,754 200,065 29 ٪ 5 ٪5.Total shareholders equity 181,287 144,537 295,317 - 20 ٪ 104 ٪

Generous brothers:During the last year and within the framework of its organizational approach under a direct super-vision of its board of directors, your bank achieved excellent performance results due to appreciated efforts of the bank’s employees according to specific objectives aimed to maximize shareholders equity and all stakeholders aims for:· Mobilizing the local and foreign resource.· Providing excellent banking services. · Developing human capacities.· Your bank commitment to social and environmental responsibility. The virtuous brothers: The total finance and investment reached the sum of 1,695,974 thousands SDG by the end of the year 2016, compared with 1,389,542 thousands SDG by the end of the year 2015 with an increase of 22% where various economic sectors have been funded, as follow: trade 28..4%, services 27,6%, industrial 23,3%, export 9,9%, agricultures 9,2%,others 1,6%.The bank has performed its role in social finance, where the micro finance reached (104,5) m SDG in 31/12/2016.Generous brothers:-The bank has made a quantum leap in the field of banking technology such as:

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Enhancing the current products to produce new ones to satisfy the needs of clients, like (mini bank) service. Improve and secure the banking technology programs. Within the content of the improvement of the working environment, the Omdurman branch has

been built and started its banking activities. To increase the geographical distribution it opened a new branch in Khartoum Bahri it is construct-

ed on a land owned to the bank. The design is modern. In the field of HR the bank appointed (14) employees and (12) workers according to the planned

budget. Also training courses were carried out to build staff capacities as follows:

- 19) Training courses in the training center of the bank.- 14) workshops and seminars targeted (293) participants.- The bank participated in (62) training courses outside its training center targeted (106) trainees. - The bank sent (20) participants for training courses outside Sudan in the area of supervision.- The bank held several workshops and seminars in the areas of money laundering, financing of terrorism and the tax complain, law (FATCA).

As part of its social mission the bank continued its micro finance policy, it also made donations to education, health and worship places. It also provided training opportunities for higher education students.Generous brothers:The achievement of the board of directors during the third year of its third session as the following: Held number of meetings during the last year 2016 and issued its decisions and instructions accord-

ing to requirements of the statutes and the rules of the bank. The board of directors has sold all the shares of the bank been offered for subscription, amounted to

(125) million share, so its full paid up capital amounted to (250) million Sudanese pounds. As part of the bank policy to establish branches on its own land, it purchased two pieces of land for

its branches in Elgedarif and Elobaid. The board of directors reviewed and approved all the decisions issued by its committees such as:

-Board of directors committee.-Audit and control committee.-Policies committee.-Risk committee.-Tower committee.

The board of directors reassured the quality of performance and institutional discipline in the bank as a result of applying the regulations. The board of directors remained committed to the timely submission of the periodical reports re-

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quested by the central bank of Sudan according to corporate governance. The board of directors paid great attention to training and marketing and it has budgeted enough

amounts for them as follows:- Training 3,391,675 SDG- Marketing 4,432,000 SDG

The board of directors keeps on following up the collection of bad debts by its committees, the fol-lowing table illustrated that:

Month Default ratio Standard ratioDecember 2012 4.57 ٪ 8 ٪December 2013 2.46 ٪ 6 ٪December 2014 2.85 ٪ 6 ٪December 2015 3.27 ٪ 6 ٪December 2016 3.30. ٪ 6 ٪

The board of directors continues its contacts through the tower committee to provide financing for the tower investment project.As mentioned in my speech before your previous assembly, the benefits of after service for beneficia-ries were paid with an additional bonus of 89,3 million pounds, and this have satisfied the employees. As a result, the balance sheet for the year 2016 was free of after service benefits. So this year’s profits were free of that burden. Finally, I would like to convey the greetings, appreciation and thanks of the board of directors to:All founders and shareholders of the bank for their continuous supports, particularly the major share-holders whom had a deep impact for achieving success. I also thank Central Bank of Sudan, Khar-toum Stock of Exchange, the Legal Advisor of the Bank, the Commercial Registrar of Companies, Deposit Security Fund, the National Audit Chamber, the Sharia’a Supervisory Board, the Executive Administration, all the bank staff and customer for their proposal and views which were of significant impact on improvement and progress of the bank performance and its banking services. We also ap-preciate the efforts of the brothers who left us at the beginning of the year 2017 and we wish them success in their coming days. As the session of the board of directors will be finished at the end of this meeting, I would like to extend my sincere thanks and appreciation to the board of directors, for what they have done in the service of this good institution, and for their valuable opinions and con-tributions for prompting performance. And I wish the new board of directors success in the future.Assalamu alaikum wa rahmatu Allah wa barakatu

Albagir Yusuf MudawiChief of the Board of Directors

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Financial indicators (2014- 2016)

Total Assets:(Amounts in thousands Sudanese pounds)

YearAmount20141.534.33220151.863.48620162.245.855

Total Deposits:(Amounts in thousands Sudanese pounds)

YearAmount20141.158.13920151.547.84620161.741.713

Total Finance:(Amounts in thousands Sudanese pounds)

YearAmount20141.109.49220151.389.54220161.695.974

2.245.855

1.863.486

1.534.332 2014

2015

2016

2500

000

2000

000

1500

000

1000

000

5000

00 0

1.741.713

1.547.846

1.158.139 2014

2015

2016

2000

000

1500

000

1000

000

5000

00 0

1.695.974

1.389.542

1.109.492 2014

2015

2016

2000

000

1500

000

1000

000

5000

00 0

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Total Income:(Amounts in thousands Sudanese pounds)

YearAmount2014147.1862015190.7542016200.065

Total Shareholders Equity:(Amounts in thousands Sudanese pounds)

YearAmount2014181.2872015144.5372016295.317

200.065

190.754

147.186 2014

2015

2016

2500

000

2000

000

1500

000

1000

000

5000

00 0

295.317

144.537

181.287 2014

2015

2016

3000

0025

0000

020

0000

1500

0010

0000

5000

0 0

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Correspondents Network

1/ Abu Dhabi Islamic Bank- Abu Dhabi

2/ Masherq Bank PSC-Dubai

3/ Arab Bank for Investment and foreign Trade-

Abu Dhabi

4/ Alnilein Bank –Abu Dhabi

5/ British Arab Commercial Bank

6/ Al Baraka Turkish Finance House- Islamic

7/ Banque De Commerce ET De Placements

8/ Bank Credit Dnepr

9/ Qatar Islamic Bank-Doha

10/ Arab Banking Corporation B.S.C.manama

11/ Arab Investment Company- Manama

12/ Bahrain Islamic Bank

13/ Saba Islamic Bank – Sana’a

14/ Bank of Beirut-Beirut

15/ Banque Lebanon- Francaise-Beirut

16/ Faisal Islamic of Egypt- Cairo

17/ Arab Banking Corporation Egypt-Cairo

18/ Al Rajhi Banking & I investment Corp

19/ National Commercial Bank- Jeddah

20/ Send Exchange- Abu Dhabi

21/ International Development Exchange-Dubai

22/ Arabian Exchange- Dubai