The Birmingham-based Islamic Bank of Britain went further into the red last year following a downturn in revenues from investments on the Islamic interbank market.

The Edgbaston bank reported losses of £9.5 million, increasing its losses from £5.9 million in 2008, a drop which it said was down to ongoing market conditions.

Operating income was also reduced to £1.6 million, down from £4.9 million the year before.

The bank said it had been forced to reduce costs to counter the decline in revenues during the year, which included redundancies, and added it would continue to maintain "tight cost control" in 2010.

The bank’s chairman Mohsen Moustafa said in a statement: "A significant source of revenue for the bank is the return earned from investing customer deposits on the Islamic interbank market.

"Yields in the interbank markets declined during the first half of 2009 and have since remained at historic low levels"