A reserve that is created by an Islamic bank by appropriating a specific amount out of the income of investment account holders (IAHs), after allocating the share of mudarib as a precaution (buffer) against future losses that might be incurred by investment account holders. The optimal amount of a profit equalization reserve is defined as that considered prudent by the management of the bank taking into account the interest of investment account holders.

At the end of a given financial year or period, the amount required to top off the balance of the reserve will be treated as an appropriation of income after the mudarib receives its share. If the balance exceeds the optimal amount, then the excess amount shall be debited from the reserve balance and simultaneously credited to URIA holders’ share of income relative to the relevant financial period after the mudarib receives its share.