Venture Capital swings to H1 profit of $13m
Manama, August 14, 2012
The Bahrain-based regional Islamic investment bank Venture Capital Bank is back in the black with a net profit of $13 million in the first-half, building on its already successful first-quarter net profit of $8 million.
The bank had reported a loss of $7.5 million for the corresponding period last year.
Net profit and total income for the second quarter amounted to $5 million and $9.1 million respectively, compared with a loss of $4.5 million and $3.2 million respectively for the corresponding quarter last year.
Total income increased five-fold to $20.7 million for the half year compared to $4.8 million in the corresponding period last year, with income from investment banking activities rising significantly to $18.2 million compared with $1.5 million last time.
Concurrently, total expenses decreased to $5.8 million from $7.5 million for the corresponding period in the previous year as a result of rigorous cost-reduction efforts instituted in response to the current market crisis.
The results are also net of additional provisions of $1.3 million which the board had booked in the period as a measure of prudence in the light of current market conditions.
The bank's balance sheet has also seen good improvement with total assets increasing to $209.6 million at the half-year from $198.5 million at year-end while continuing to remain unleveraged.
Shareholders' equity grew 6.9 per cent to $192 million from $179.7 million at year-end.
Total income from investment banking activities increased dramatically by 11 times to $18.1 million from $1.52 million for the corresponding period in 2011, said chairman Dr Ghassan Ahmed Al Sulaiman.
"These encouraging results have been achieved despite the challenges facing the banking sector in the region and the world and the investment sector in particular," he said.
"The bank's results confirm the feasibility of our plans, followed in accordance with the new strategy of the bank that includes restructuring investments and focusing on venture capital and private equity sector in the Middle East and North Africa region.
"Additionally, it supports and confirms our commitment to provide shareholders and investors with acceptable rates of return.
"Strongly capitalised at $250 million, with liquid assets of $10.3 million and currently unleveraged, Venture Capital Bank is a financially strong and solid institution," Dr Al Sulaiman added.
At half-year, capital adequacy ratio was 43 per cent, considerably higher than the minimum requirement of the Central Bank of Bahrain. Assets under management had risen by 12 per cent to $863 million compared with $749 million as of June 30 2011, he said.
"The results reflect the bank's high performance and effectiveness of its diversification of investments," said chief executive and board member Abdullatif Mohamed Janahi.
"The first six months of this year witnessed the conclusion of a number of deals that helped strengthen our current investments.
"Venture Capital Bank took an indirect investment in 65 per cent of the equity of Goknur Foods Import Export Trading and Distribution Company in Turkey, in a deal valued at $93.7 million," he said.
"We are confident that the bank will continue its excellent performance into the future through flexible strategies with the ability to adapt and capitalise on changes and opportunities in the market," he added. – TradeArabia News Service