MANAMA: International Investment Bank (IIB) remains hopeful of an improvement in investors' sentiment during the second half of the year after suffering a small loss in the first six months.
Several deals are being looked at for later in the year and the bank is in the healthy position of having no borrowings or off balance sheet commitments.
The Bahrain-based globally-focused investment bank yesterday posted total income for the first half of $3.8 million.
This was mainly derived from investment banking fees generated from the structuring, underwriting and placement of new investments, together with profit earned on Murabaha funds placed with financial institutions.
Total expenses were reduced to $4.9m in the period, reflecting the lower business activity compared to a year ago.
After booking an impairment loss of $300,000 on a listed investment, the bank incurred a net loss of $1.4m compared to a net profit of $11.3m 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 prudent measure during the current market situation.
The net loss for the second quarter of this year was $400,000, an improvement over the first quarter. Total assets at June 30 were $197.1m compared to $218.7m at the year-end last year.
The decrease principally arises following the payment this year of last year's cash dividend of 7pc and fair value writedowns on several available for sale investments, a prudent measure, given the prevailing market conditions
The Capital Adequacy Ratio was 66pc, more than five times 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," said chairman Saeed Abdul Jalil Mohammed Al Fahim.
"However, we remain hopeful of an improvement in investors' sentiment during the second half of this year.
"During the current difficult global conditions, the bank has adopted the strategy of prudent investing, strict liquidity management and capital protection.
"IIB's asset position demonstrates strength with 43pc of total assets represented by cash and short-dated Murabaha placements with financially-sound regional banks plus a further 12pc invested in regional listed equities, giving a total liquidity position of 55pc," he said.
"Since inception of the bank, 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," said chief executive officer and board member Aabed Al Zeera.
"During 2009, IIB has concluded the placement of its investment in a sugar refinery to be built in Bahrain and has recently invested in a project to develop a state-of-the-art real estate complex in Bosnia and Herzegovina.
"Several deals are being evaluated for product launches expected later in the year," he added.
"Due to the cyclical nature of the bank's operations whereby revenues are closely linked to completed investment transactions, the performance in the first half is not reflective of the expected outcome for the remainder of 2009.
"IIB's balance sheet is strong, evidenced by no borrowings or off balance sheet commitments."