In the name of Allah, the Most Gracious, the Most Merciful

To the Shareholders of the European Islamic Investment Bank Plc

2007 has been a challenging year for global financial markets. Despite this, the Bank has continued to develop and make progress during the year, even though the very challenging macro economic environment was also reflected in a slowdown in Islamic capital market issuance in the second half of the year. We continued to build our distribution capabilities and marketing strengths in the Middle East and Europe and began to leverage our capital markets team to deliver value to our shareholders.

The underlying results of the Bank were pre-tax profits of £4,821,507 which were built on increasing revenues and a well managed cost base. Taking account of the impairment provisions associated with the consolidation of the assets and liabilities of the EIIB Pan-European Islamic Real Estate Fund our results show a pre-tax loss of £2,482,486 and a loss after tax of £4,476,781. The impairment provisions that have been made in the interim and annual financial statements do not in any way suggest that there are any underlying concerns with the portfolio of properties held by the Fund. This is a portfolio of good commercial properties and we are confident that, as we actively manage it going forward, we will be able to recognize value for our shareholders.

We continually review the soundness of our business model and, as expected by our shareholders, regularly evaluate how we can leverage our strengths and capabilities. Accordingly, the Board has tasked management to further utilise the capabilities of the London market place to develop innovative and sophisticated product solutions for our investor base. We believe that the recent credit market correction will, in the medium term, present an opportunity where we can use the strengths of our team in new business areas and our strong capital base to penetrate new market opportunities for our investor base.

The Board and Management recognise that we operate in a highly competitive environment and embrace the challenges and opportunities presented by the rapid growth in the Islamic market place. London continues to expand as a centre for Islamic finance and we are very confident that the new players entering the City will bring ever increased scale and dynamism to the industry which, in our view, will increase EIIB’s market opportunities as well.