The bank also reported net profit and total revenue for the Q4 of $3.5 million and $6.7 million respectively, compared to a loss of $ 48.4 million and total revenue of $ 2.5 million for the corresponding 4th quarter of 2011.
Total revenue increased 515% to US$ 34.5 million for 2012 compared to US$ 6.7 million for 2011, with income from investment banking activities rising significantly to US$ 29.1 million compared with US$ 3 million for 2011. Concurrently, total expenses decreased to US$ 10.6 million for 2012 as compared to US$ 14.5 million for 2011 as a result of cost reduction efforts instituted in response to the current challenging market and financial conditions. The net profit of US$ 18.5 million is after impairment provisions of US$ 3 million and fair value losses of US$ 2 million which have been booked in 2012 against the Bank’s investments and receivables exposures as a measure of prudence in the light of current market conditions. The Bank’s balance sheet has continued to see good improvement with total assets increasing to US$ 209.5 million as at 31 December 2012 compared to US$ 198.5 million at the end of 2011 whilst continuing to remain unleveraged, and shareholders’ equity has grown by 9.9% to US$ 197.6 million at 31 December 2012 from US$ 179.7 million at 31 December 2011.
The Chairman of the Board of VCBank, Dr. Ghassan Ahmed Al Sulaiman, in announcing the positive net results highlighted the significance of the strong contribution to total income from investment banking activities, which has continued to show excellent improvement in the past year, having grown by 10 times to US$ 29.13 million from US$ 2.96 million in 2011.
“These encouraging results have been achieved despite the challenges facing the banking sector in the region and the investment sector in particular. The Bank’s results confirm the feasibility of our plans and strategies that have been followed in accordance with the new strategy of the Bank that includes restructuring the investments and focus on venture capital and private equity sector in the MENA region. Additionally, it supports and confirms our commitment to provide shareholders and investors with acceptable rates of return,” he added.
“Strongly capitalized and currently unleveraged, VCBank is a financially strong and solid institution. At the end of December 2012, our capital adequacy ratio was 43.6 per cent, considerably higher than the minimum requirement of the Central Bank of Bahrain, while fiduciary assets under management has risen by 9.9% to $890 million now compared to $810 million as at 31 December 2011,” Dr. Al Sulaiman, added.
“VCBank has been able to achieve four consecutive quarters with impressive results in 2012, and these results affirm that the Bank is moving in the right direction towards achieving strong growth. Our results underline the success of our strategic focus on key sectors in which we have built particular expertise, such as healthcare, agribusiness, oil and gas, and shipping; and in the more economically and politically stable markets in the MENA region,” board member and Chief Executive Officer Abdullatif Mohamed Janahi, said.
The year 2012 witnessed the conclusion of a number of solid deals that have strengthened our current investments portfolio and boosted our market reputation for attractive and innovative investment offerings. In the first half of the year VCBank took an indirect investment in 65% of the equity of Göknur Foods Import Export Trading & Distribution Company in Turkey, in a deal valued at US$ 93.7 million, which was followed on in the third quarter with the acquisition of an additional 12.3% stake in a deal valued at US$ 17.7 million and a further acquisition in the fourth quarter of an additional 6.2% stake in a deal valued at US 8.8 million. Established in 1993, Göknur is the largest fruit juice concentrate and fruit puree producer and exporter in Turkey, with a 50 per cent market share.
The Bank’s financial performance has noticeably improved with the achievement of this excellent result with a net profit of US$ 18.5 million for 2012, which confirms the strength of the Bank’s foundation. The Bank is on target to achieve further improvements in revenue growth and reduced operating costs in line with the Bank’s new strategy that focuses on generating and sustaining profitability, maintaining adequate liquidity and building a solid foundation for providing acceptable returns to our shareholders.”
“These positive results are testimony to the Bank’s high standards of performance and the effectiveness of its investment strategy. The Bank has an investor base that has been and remains immensely supportive, and these results wouldn’t have been possible without their trust and continued support of VCBank’s Investment products. We are confident that VCBank will continue to build on this excellent performance into the future with the guidance and support of the Board of Directors and by continuing to adapt and capitalize on changes and opportunities in the market,” Janahi, added.