Bahrain-based regional Islamic investment bank, Venture Capital Bank (VCBank), reported a net profit of $21.1 million from total revenue of $43.9 million for the eighteen months ended 30 June 2013 compared with a loss of $58.7 million and total revenue of $6.7 million for the calendar year 2011.
The bank in a statement said that it was a sixth consecutive quarter of profitable performance with the publication of its results for the eighteen months period ended 30 June 2013 following review clearance by independent auditors Ernst & Young and approval of the results by the Board of Directors.
The Bank Net profit and total revenue for the quarter ended 30 June 2013 amounted to $ 1 million and $ 4.3 million respectively compared to net loss of $ 4.5 million and total revenue of $ 2.8 million for the corresponding quarter ended 30 June 2011. These results are after recognition of fair value losses and impairment allowances totaling $ 11.4 million for the 18 month period including $ 6 million in the quarter ended 30 June 2013.
Total revenue increased 485% on an annualized basis to US$ 43.9 million for the period with income from investment banking activities rising significantly to US$ 35 million compared to US$ 3 million for 2011. Concurrently, total expenses decreased by 27% on an annualized basis to US$ 15.9 million for the 18 month period as a result of cost reductions and organizational improvements instituted by the board and management in response to the challenging current market conditions. The net profit for the period of US$ 21.1 million is after fair value losses of US$ 7.3 million and impairment charges of US$ 4.1 million booked as a prudent measure in the light of current market conditions. The Bank’s balance sheet has continued to see good improvement with total assets increasing to US$ 221.6 million as at 30 June 2013 compared to US$ 198.5 million at the end of 2011 whilst continuing to remain unleveraged, and shareholders’ equity has grown by 8% on an annualized basis to US$ 200.5 million at 30 June 2013 from US$ 179.7 million at 31 December 2011.
The Chairman of the Board of VCBank, Dr. Ghassan Ahmed Al Sulaiman, in announcing the excellent results highlighted the significance of the strong contribution to total income from investment banking activities which has grown by 12 times to US$ 35 million for the period compared to US$ 3 million in 2011, representing an annualized growth of almost 8 times.
“These encouraging results have been achieved despite the very challenging conditions being faced by the banking sector in the region and the investment banking sector in particular. The Bank’s results confirm the feasibility of our new plans and strategies that includes restructuring the investments and focusing on venture capital and private equity sector in the MENA region,” he said. “Additionally, it supports and confirms our commitment to provide shareholders and investors with acceptable rates of return.”
“Strongly capitalized and currently unleveraged, VCBank is a financially strong and solid institution. As of 30 June 2013, our capital adequacy ratio stood at a very robust 47 per cent, considerably higher than the minimum requirement of the Central Bank of Bahrain of 12%, while fiduciary assets under management totals US$ 925 million now compared to US$ 810 million as at 31 December 2011,” Dr. Al Sulaiman, addded.
“VCBank has achieved six consecutive quarters with impressive results in 2012/13 and goes forward to the year ahead with strength and confidence. These results affirm that the Bank is moving in the right direction towards achieving strong growth and 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 period to 30 June 2013 has 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. During the quarter ended 30 June 2013, VCBank successfully closed an innovative and attractive deal in a prime residential property in Central London. Earlier during 2012, VCBank took an indirect investment in 83.5% of the equity of Göknur Foods Import Export Trading & Distribution Company in Turkey, in a deal valued at US$ 120 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. We are currently working on a number of very attractive deals which we hope to crystallize during the coming quarter and the year ahead.”
“The Bank’s financial performance has noticeably improved with the achievement of these excellent results with a net profit of US$ 21.1 million for the period which confirms the strength of the Bank’s foundation. We also changed the Bank’s fiscal year from January-December to July-June which was approved by the Bank’s Shareholders and all concerned parties during the Extraordinary General Meeting on April 25, 2013. Designed to align the Bank’s reporting year with the annual cycle of investment structuring and placement, and minimize the impact of the holiday season, this will provide investors with a more timely and convenient service. The Bank is also 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 be able to continue to build on this excellent performance into the future with the guidance and support of the Central Bank of Bahrain and the Board of Directors and by continuing to adapt and capitalize on changes and opportunities in the market,” Janahi, added