Annual Financial & Sustainability Report 2024

Bahrain Islamic Bank B.S.C. ("BisB" or the "Bank") presents its Annual Financial and Sustainability Report (the Report) for the year 2024, highlighting the Bank's performance on financial as well as key material environmental, social, and governance (ESG) topics.

Reporting Boundary

All information disclosed in this Report corresponds to the year from 1 January to

31 December 2024, unless otherwise stated.

The consolidated financial statements cover the results of the Bank and its wholly owned subsidiaries (together the Group ("Group")) including BisB Abaad Real Estate W.L.L., in which BisB holds 100% of the share capital.

Sustainability disclosures cover solely BisB's banking operations in Bahrain, but do not include Abaad Real Estate W.L.L.

The Bank has eight branches, all operating in the Kingdom of Bahrain, all of which are included in the financial and sustainability disclosures as applicable. National Bank of Bahrain (NBB) owns 78.81% of BisB's shares and is considered as the Parent of the Bank for financial reporting purposes.

Reporting Frameworks

To ensure accountability and transparency, the Report has been prepared in accordance with internationally recognised financial and sustainability reporting standards and frameworks.

These include:

• The International Integrated Reporting Framework (IIRF) which requires complete

disclosure of financial and non-financial performance to provide a holistic overview of a company's long and short-term goals and value creation.

• The consolidated financial statements have been prepared in accordance with Financial Accounting Standards (FAS) issued by the Accounting and Auditing Organisation of Islamic Financial Institutions (AAOIFI) and applicable rules and regulations issued by the Central Bank of Bahrain (CBB).
• The Commercial Companies Law
• The Central Bank of Bahrain (CBB) and Financial Institutions Law 2006
• Sustainability disclosures are in accordance with the Global Reporting Initiative (GRI) Standards, including all Universal Standards and Material Topics Standards.
• The ESG Reporting Guide of the Bahrain Bourse and its 32 ESG metrics, wherever relevant.
• The CBB ESG rulebook and requirements module 2023 (updated January 2024) and all other applicable rules and regulations issued by the CBB.
• The Sustainable Development Goals (SDGs) considered most material to the Bank's activities.
• The Bahrain Economic Vision 2030.

Alignment with the reporting standards and frameworks is clearly indicated in the Appendix.

Assurance

The consolidated financial statements have been audited by KPMG Fakhro, an

internationally recognised audit firm, and have been approved by BisB's Board of Directors.

In addition, BisB has engaged the Centre for Sustainability & Excellence, an international provider of sustainability, ESG and CSR advisory and training solutions to conduct a limited assurance on a select number of ESG KPIs. The independent assurance statements and reports for the sustainability-related figures have been included as part of the report.

Board Responsibility

The Board of Directors acknowledges its responsibility for ensuring the integrity of this report and confirms that the information contained within fairly represents BisB's status and performance, and that the report faithfully and accurately references the standards and frameworks used.

Disclaimer: Forward-Looking

Statements

Forward-looking statements involve uncertainty given the many external factors that could

impact the environment in which the Bank operates. BisB bears no obligation to publicly update or revise any/all forward- looking statements included in the report unless required to do so by applicable laws

and regulations.

Feedback

BisB welcomes any feedback that may enhance its reporting. Readers can submit comments and questions via the following channels:

Contact Number or WhatsApp: (+973) 17 51 51 51

Email: callcentre@bisb.com

Website: www.bisb.com

Mailing Address: P.O. Box 5240, Manama, Kingdom of Bahrain

01 Who

We Are

1. Bank Profile

1. Our Activities

1. Financial Highlights

1. Overall Key Highlights

1. ESG Highlights

1. Board of Directors Report

1. Board of Directors

1. Shari'a Supervisory Board Report

1. Shari'a Supervisory Board

1. Chief Executive O"cer Report

1. Executive Management

02 Our Strategic

Direction

1. The Riyadah Strategy

1. Relationship with NBB

1. Our Approach to ESG

03 Value Creation

Model

82 Value Creation Model

04 Financial

Capital

1. Financial Capital
2. Economic Impact

05 Human

Capital

1. Human Capital
2. Workforce Well-being

108 Diversity, Inclusion and Equal Opportunities

115 Employee Training and Development

06 Intellectual

Capital

1. Digital Transformation

1. Data Privacy and Security

07 Natural

Capital

132 Natural Capital

134 Managing Our Operational Footprint

136 Managing Climate Risks and Opportunities

137 Environmental Data

08 Social and

Relationship Capital

144 Community Investment

145 CSR and Initiatives

150 Financial Inclusion & Literacy

1. Responsible Sourcing
2. Responsible Customer Relationship

09 Safeguarding

Values

158 Robust Governance Structure

1. Compliance

1. Internal Audit
2. Risk Management
3. Business Continuity Management

10 Corporate

Governance Review

168 Corporate Governance Review

11 Remuneration

Disclosures

200 Remuneration Disclosures

211 Consolidated Financial Statements

305 Risk and Capital Management Disclosures

352 GRI, CBB and Bahrain Bourse Index

380 CSE Independent Assurance Statement

Bahrain's Leader in Digital Islamic Financial Services

BisB has been serving the community of the Kingdom of Bahrain since its establishment in 1979. BisB operates under an Islamic Retail Banking license authorised by the Central Bank of Bahrain (CBB) and is listed on the Bahrain Bourse. As Bahrain's first Islamic bank, and the fourth Islamic banking entity in the GCC, BisB continues to play a leading role in developing the local and global Islamic banking industry as well as the Kingdom's economy.

continually evolves through the incorporation of innovative strategies and global best practices in line with Shari'a principles. Embracing this agile yet thoughtful approach to banking allows the Bank to stay ahead of changes in local financial markets while maintaining a competitive edge. This approach enables the Bank to understand and better serve clients, whilst anticipating their financial needs, and avoiding excessive risks.

The Bank's vision is to empower dreams through innovative and simplified financial

each customer. BisB's pledge to customers is to strive to provide solutions with remarkable speed, ensuring swift and efficient outcomes that surpass expectations.

Guided by Islamic principles, BisB continuously strives to enhance products and service offerings by removing barriers and simplifying

banking. These principles guide every aspect of the Bank's operations in a sustainable manner ranging from customer services to stakeholder interactions. BisB's steadfast pursuit of excellence, and trust in its values has enabled the Bank to have a positive impact on the communities it looks to serve.

The Bank's success is built on robust and enduring client relationships, attributable to a customer-centric approach complemented by innovative solutioning strategies. This is supported by a dedication to maintaining robust corporate governance, significant risk management expertise, commitment to safeguarding customer assets, and investment in talent development.

A customer-first approach is central to how BisB does business, and the Bank strives to improve the banking experience at every touch point through improved business practices and technological innovation. By providing superior, safe and trusting financial services across

the board that enable economic growth and progress, BisB has cemented its position as a trusted and innovative Shari'a-compliant Bank establishing the next era of global banking.

A Pioneer in Islamic Banking

Islamic principles guide BisB's banking approach and diverse portfolio of integrated financial solutions. To improve services and stay at the forefront of the banking industry, BisB

solutions. This vision shapes the way BisB manages business through strong customer relationships, innovation, streamlined operational methodologies, employee engagement and open communication with all stakeholders to add value and build stronger financial ecosystems.

BisB's DNA

BisB is proud to play a pivotal role in the development of the Islamic Banking industry in the Kingdom of Bahrain. Since 1979, the Bank has been continuously innovating and embracing the latest technologies, allowing the Bank to provide customers with a modernised and reimagined user experience, adding value to Bahrain's economy and infrastructure by facilitating greater business and commercial growth.

Today, BisB's mission is to be the bank of choice by converting customer needs into fit-to- market solutions and engaging experiences. The goal is to attain this mission through the delivery of simplified customer experiences characterised by personalised service and to comprehend and address the distinct needs of

BANK PROFILE (CONTINUED)

Our Values

Embracing responsibility

We place a high emphasis on accountability and reliability across every facet of our business assuming full ownership of our commitments to ensure our customers can place their trust in us with confidence. By being dependable, trustworthy, and adhering to Shari'a principles, we secure a powerful trust foundation with our customers, fostering a sense of value and care.

Creating opportunities

We are committed to empowering our customers for growth and success, and are actively pursuing avenues for improvement, innovation, and advancement while aiming to provide them with opportunities that foster progress. Through customised solutions, guidance, and resources, we strive to create opportunities for growth, learning, and ultimate success.

Crafting Experiences

We recognize the individuality of each customer therefore our goal is to craft personalized experiences and services that align with their distinct needs, preferences, and aspirations. Making our customers feel exceptional necessitates moving beyond a one-size-fits- all approach. We dedicate time and effort to comprehend our customers' specific requirements, customizing our products, services, and interactions accordingly.

Solving Problems

We are dedicated to maintaining accessibility, responsiveness, and proactivity in addressing our customers' challenges. Our goal is to offer timely solutions that surpass their expectations. Creating a sense of uniqueness for

our customers involves positioning ourselves as their dependable problem- solving ally. We prioritize accessibility and responsiveness, guaranteeing that customers can reach us whenever assistance is required. Furthermore, by proactively anticipating and tackling their concerns and challenges, presenting innovative solutions and going above

Our

Differentiators

and beyond to ensure their issues are resolved promptly and effectively.

OUR ACTIVITIES

2024 Update and Highlights

Performance Highlights

As Bahrain's leading institution for Islamic financing and banking, BisB serves a wide range of customers, from individuals and SMEs to large multinational corporations and global financial institutions. To cater effectively for the diverse needs of different client segments,

individuals with an extensive range of Shari'a compliant financing and transactional services. BisB offers traditional retail products, such as current and savings accounts, debit and credit card services, and consumer financing solutions.

BisB's core business is split into three business units, each offering a wide range of products and services.

Retail Banking

Retail banking operations focus on providing Bahraini nationals, Bahraini residents, and GCC

Retail customers have convenient and easy access to all products and services through the Bank's vast branch network, online banking platform, mobile application, Automated Teller Machines (ATM), Interactive Teller Machines (ITM), and bulk Cash Deposit Machines (CDM).

New products and services launched

Products and Services

01. Accounts

BisB offers an extensive range of accounts to cater to various customer segments and their needs. Some of the products are as follows:

• Tejoori Al Islami
• Tejoori Premium and Premium Lite
• Iqra Investment Account
• Special Investment Deposits
• Call Account
• Vevo Account
• Other Accounts

03. Cards

BisB offers a wide range of features and benefits through its cards:

• VISA Credit Card
• Mastercard Credit Card
• VISA Arcade Card (1st Card of its kind in the GCC)
• MasterCard FutureLeader Program
• BisB Rewards
• Seasonal Promotions

02. Financing

BisB facilitates the path of acquiring Shari'a compliant financing:

• Personal Finance
• Mortgage Finance
• Ministry of Housing Programs
• Special Projects

• Auto Finance

04. Services

BisB offers a wide range of services through its digital platforms:

• BisB Digital
• Contact Center
• BisB Digital Branch
• BisB Kiosk
• WhatsApp service

Other Initiatives

OUR ACTIVITIES (CONTINUED)

2024 Update/Highlights

Performance Highlights

Corporate Banking

BisB is committed to providing customers with an exceptional corporate banking experience where digital transformation plays a central role. The Bank strives to be the preferred choice for

Products and Services

01. Accounts

BisB offers a comprehensive range of accounts to suit all business needs.

• Current Accounts
• Investment Deposits
• Call Accounts
• RERA Escrow Accounts
• Sukuk Custody
• Tejoori Savings Accounts

03. Services

BisB offers services to simplify business operations:

• BisB Corporate Digital
• Remittances and Foreign Exchange Transactions
• Drafts and Managerial Cheques
• Corporate Credit Cards
• Cash Management Services
• Trade Finance Services

customers using state of-the-art digital banking services, offering seamless digital account opening and high frequency services such as transfers, foreign exchange transactions, and payroll.

02. Financing

BisB offers a suite of financing products tailored to suit all requirements

• Short and Long-Term Financing
• Tamkeen Capital Expenditure Financing
• Tamkeen Working Capital Financing
• Capital Expenditure Financing
• Working Capital Financing
• Enterprise Financing

• Export Bahrain Financing

• Specialised Trade Financing Instruments

04. Corporate Onboarding

BisB presents a new era of corporate banking:

• Now businesses can open corporate accounts directly through the BisB Mobile App

New products and services launched

• Al Tamweel Al Islami, a criteria-based financing solution catering to SME financing requirements up to BD 100,000
• Launched Standby Letters of Credit (SBLCs) to meet clients' agency requirements particularly benefiting those seeking to establish retail franchises in Bahrain
• Host-to-Hostsolution launched to facilitate seamless and secure data exchange between clients systems and BisB's banking platform

Other Initiatives

• Revamped agreement with Tamkeen to secure increased subsidies for our clients utilizing Tamkeen financing. This initiative reduces the cost of financing for clients without impacting the bank's profitability by increasing subsidies for SMEs from 4% to 6% and for corporates from 2% to 4%
• Implemented Corklink Solution to streamline the process of receiving client's pending receivables expediting the cash collection cycle and relaxing the client cash flow pressures

• Introduced the "Jaser" suite of Islamic financial solutions to bolster and streamline exports to KSA in a partnership with Export Bahrain
• Improved asset quality by targeting higher- quality segments such as large financially strong Bahraini corporates and Government and Related Entities (GREs)
• Introduced POS & Acquiring Services to increase cash flow and support our clients payment processing needs enhancing their business operations, and provided efficient and secure cash handling solutions through our Cash Collection Services
• Acted as agent bank for the inaugral Eskan Bank Syndicated Facility
• Created an In-Business Risk unit
• Created Transactional Banking Function which was awarded a strategic client cash inflows bid
• Converted pricing structure of majority corporate finance facilities from fixed to floating rates

% Growth of Corporate financing portfolio

21.59%

2024