The bank said its net profit declined to BD 488,000 from BD 3.785 million in 2010. Basic earnings per share fell to fils 1.145 versus fils 8.9 in 2010.
For a quarterly comparison operating income for the fourth quarter of 2011 was BD 1.821 million, compared to BD 2.625 million for the same period in 2010. Total expenses for the quarter were BD 969 thousand, compared to BD 1.115 million for the same period in 2010. Net Profit for the quarter was BD 852 thousand in comparison to BD1.510 million for the final quarter of 2010. Basic earnings per share were 2 fils for the quarter, compared to 3.55 fils for the same period in 2010.
Total assets at year-end contracted to BD 70.635 million from BD 81.23 million year-end 2010. However assets under management grew to BD 206 million, up from BD 201 million the previous year, while assets under custody with the Bank’s wholly-owned subsidiary – SICO Funds Services Company (SFS) – dropped to BD 864 million, from BD 1.28 billion in 2010, reflecting market-driven declines in net asset values.
With exceptionally low market interest rates, the Bank’s net interest income during the year dropped to BD 1.08 million (2010: BD 1.45 million), fee and commission income declined to BD 2.18 million (2010: BD 2.29 million), while brokerage and other income was almost on par with the previous year at BD 1.05 million (2010: BD 1.14 million). Net investment income fell to BD 318 thousand from BD 2.97 million in 2010, reflecting the extreme volatility of GCC and international markets during the year. Operating expenses, which include staff overheads, general administration and other expenses, declined by 3 per cent to BD 3.985 million compared with BD 4.1 million for the previous year.
The Bank continued to maintain a strong capital base, ending the year with BD 53.88 million in shareholders’ equity and a very solid consolidated capital adequacy ratio of 73.8 per cent, which is considerably higher than Central Bank of Bahrain’s requirements.
SICO currently has 28 per cent (or BD 19.96 million) of its balance sheet in cash and deposits, reflecting the continued prudent position adopted with regard to capital markets. Available-for-sale securities at the end of 2011 increased to BD 27.04 million (end-2010: BD 24.375 million), while investments at fair value through profit or loss rose slightly to BD 16.74 million (end-2010: BD 16.64 million). A significant amount of SICO’s market risk exposure is in short duration investment-rated bank and GCC government debt instruments.
“The year 2011 proved to be considerably more testing than expected for all financial institutions, particularly in the investment area, with the Bank responding proactively to the weak environment, and posting a commendable overall performance,” Shaikh Abdulla bin Khalifa Al-Khalifa, the Chairman of the Board of SICO, said.
In a year that was not dissimilar in many respects to 2008, the Bank’s performance was achieved against an unnerved global economic background, with unprecedented levels of volatility in regional and international capital markets.
Nonetheless, the GCC’s economies, although not immune to these challenges, continued to weather the worst consequences of the continued global financial crisis. The stability of oil and strong pro-cyclical economic measures undertaken by GCC governments countered much of the impact of adverse global macroeconomic challenges.”
“In May, the Central Bank of Bahrain granted SICO an unqualified conventional wholesale banking licence. This provides our Bank with greater leeway and flexibility for capturing new opportunities to grow. Secondly, towards the end of 2011, SICO successfully acquired a UAE brokerage licensed company in Abu Dhabi and is taking steps to substantially rebuild the operation, which is expected to go live during the second quarter of this year. This development, which could be replicated selectively elsewhere in the GCC region, will open up new business development and marketing opportunities.”
“With our strong financial position, continued focus on preserving capital, and a tested management team with a successful track record, our firm is well positioned to capture new business opportunities once markets recover, and continue providing shareholders with an acceptable risk-adjusted return. The Board of Directors is cautiously optimistic about the Bank’s prospects in 2012, although it is recognised that it will be another tough year,” the Chairman added.
“Despite very difficult market conditions and the consequent roller-coaster impact on our results over the past four quarters, our team continued to capture new opportunities in 2011, while controlling costs carefully. Our annuity activities helped to offset a drop in investment income from our trading activities. In parallel, the Bank maintained its research activities in contrast to many international and regional peers that have condensed this important service to investors. In the area of asset management, besides seeing modest growth, SICO launched a new equity fund, while the high ratings of the Bank’s equity funds were confirmed by Standard & Poor’s, and the performance of one fund was recognised by the receipt of a prestigious Lipper Fund Award,” Anthony Mallis, Securities & Investment Company CEO, said.