MANAMA: Bahrain-based Inter-national Investment Bank's (IIB) total income reached $1.8 million in the first quarter of this year.
This was mainly derived from investment banking fees generated from the structuring, underwriting and placement of new investments, together with profit earned on funds placed with financial institutions.
Total expenses reduced to $ 2.7m in the period, reflecting the lower business activity as compared to a year ago.
A net loss was incurred of $900,000 compared to a net profit of $5.4m earned in the same period last year.
The decrease is mainly attributed to fewer investment banking transactions and lower profit rates applicable to bank placements as the bank intentionally slowed down its investment activities as a measure of prudence during the current turbulent market situation.
Total assets were $198.5m at March 31 this year compared to $218.7m at year-end last year.
The decrease principally arises from the payment this year of last year's dividend and fair value writedowns on several available for sale investments.
Capital adequacy ratio was 86 per cent as at March 31 this year versus the Central Bank of Bahrain's minimum requirement of 12pc, demonstrating IIB's capacity to significantly increase its investment portfolio in the future from a regulatory capital perspective.
"Trading conditions in 2009 are very challenging for investment banks for two principal reasons," IIB chairman Saeed Abdul Jalil Mohammed Al Fahim said.
"Many investors have incurred significant losses during the past 12 months on their regional and global portfolios and have been reluctant to commit to making new investments.
"However, we foresee an improvement in investors' sentiment during the second half of this year.
"Secondly, many regional banks have suspended the provision of Sharia-compliant financing of real estate development and private equity projects.
"During the current difficult global conditions, the bank has adopted the strategies of prudent investing, strict liquidity management and capital protection.
"IIB's asset position demonstrates core strength with 52pc of total assets represented by cash and short-dated murabaha placements with financially-sound regional banks with a further 15pc invested in regional listed equities, giving a total liquidity position of 67pc."
"Our strategy has been to structure and market to clients a range of attractive investment offerings in the manufacturing, financial, energy and real estate sectors in various countries," chief executive and board member Aabed Al Zeera said.
"During 2009, IIB has concluded the sell down of its investment in a sugar refinery to be built in Bahrain.
"The bank's "pipeline" of potential transactions continues to be strong and several deals are being evaluated for product launches expected later in the year.
"Due to the cyclical nature of the bank's operations whereby revenues are closely linked to completed investment transactions, the performance in the first quarter is not reflective of the expected outcome for the remainder of 2009.
"IIB's balance sheet is strong, evidenced by the fact that it had no borrowings, off balance sheet commitments nor other exposures during the year."