MANAMA, March 12: International Investment Bank (IIB), a globally foced investment bank based in the Kingdom of Bahrain operating in line with Shari’ah principles, today announced its results for 2009.
IIB has incurred a net loss for the year of $27.9 million compared to a Net Profit of $13.5 million in 2008, being the first loss in its 6-year history. Total income of $ 6.3 million was $ 28.7 million lower than 2008, mainly due to lower investment banking fees as the Bank has intentionally scaled down its investment activities as a measure of prudence in the current market situation. 2008 results also included unrealised fair value gains on investments of $ 5.5 million.
Total Expenses were $7.7 million (46 percent) lower than 2008 and are consistent with the reduced business activity. 2009 also reflected unrealized impairment losses on available for sale investments of $21.4 million and provisions of $3.8 million against possible future losses that may occur as a result of currently unidentifiable risks on investments and receivables.
In the fourth quarter of 2009, Total Income was $ 1.2 million, mainly derived from investment banking fees and profit earned on murabaha funds placed with financial institutions and corporate clients. total expenses were $2.1 million in the period and the Bank incurred an Operating Loss of $ 0.9 million compared to operating Income of $6.3 million in the 2008 fourth quarter. Reflecting the unrealized impairment losses and provisions of $25.2 million, the Bank made a net loss in the quarter of $25.9 compared to Net Income of $1.5 million for the corresponding period of the previo year.
Total Assets at 31 December 2009 were $179.5 million compared to $218.7 million at year end 2008. The decrease mainly relates to the payment in 2009 of the 2008 cash dividend of 7percent and fair value write downs on several available for sale investments.
Capital adequacy ratio was 59 percent as at Dec 31, 2009 which is almost five times the Central Bank of Bahrain’s minimum requirement of 12percent, demonstrating IIB’s capacity to significantly increase its investment portfolio in the future from a regulatory capital perspective.
Commenting on the bank’s results, Saeed Abdul Jalil Mohammed Al Fahim, Chairman of IIB, said: “In line with our expectations, 2009 has prdoven to be a difficult year for the world economy and financial markets. Demand from regional investors for higher yielding, longer maturity offerings in real estate and private equity, the primary biness proposition of IIB, has not returned to the levels previoly experienced. In addition, regional banks continue to be highly cautio in their financing especially of real estate development and private equity projects, as they continue to suffer from a lack of liquidity. In keeping with our strategy, the Bank closely monitored the market and invested in only two transactions that we believe will offer investors superior risk adjted returns. In addition, IIB has selectively invested in listed regional equities and has profitably exited in one case, while retaining the shares in other investments until share prices increase.
The Bank’s asset and capital positions demonstrate core strength, with 31 percent of Total Assets represented by murabaha short-dated placements with banks and a further 8 percent invested in regional listed equities, thereby maintaining 39 percent of the total assets in liquid and semi-liquid form. The Bank has no leverage and this not under any liquidity pressure.”
Referring to the results, Aabed Al-Zeera, CEO and Board Member said: “During 2009, IIB has concluded the sell down of the 14.3 percent stake, carried over from 2008, in the first sugar plant to be constructed in the Kingdom of Bahrain. From a review of numerous proposals received during 2009 that constitute the deal pipeline, the Bank has structured two investment transactions, underscoring its strategy of only investing in very carefully selected transactions. During the third quarter of 2009, construction work commenced on IIB’s recently acquired project to develop a state-of-the-art commercial real estate complex in Bosnia and Herzegovina, Eastern Europe. Secondly, the Bank has invested in the fourth quarter of 2009 in a well-positioned residential project in Saudi Arabia to build affordable homes for middle-income Saudis.
Both transactions are awaiting final regulatory approvals from the Central Bank of Bahrain to be offered to investors in 2010. In addition, several deals have been evaluated for possible product launches in the second half of 2010 but are subject to the return of favorable market conditions and completion of the detailed due diligence thereon.”