Dr Ghassan Ahmed Al Sulaiman and Abdullatif Mohamed Janahi.
Venture Capital swings to $15m profit
Manama, November 13, 2012
Venture Capital Bank (VCBank), a Bahrain-based regional Islamic investment bank, said its net profit for the nine month-period ended September 30 rose to $15 million compared to a loss of $10.3 million the previous year.
Announcing the results, VCBank chairman Dr Ghassan Ahmed Al Sulaiman said the bank had reported a third consecutive quarter of profitable performance. Its net profit rose to $2 million for the third quarter compared to a loss of $2.8 million.
The Bahraini Islamic bank's total revenue surged to $8 million in the third quarter from $1.4 million last year, said the top official.
According to him, VCBank's revenue increased six-fold to $27.9 million for the nine months compared to $4.2 million the previous year, with income from investment banking activities rising significantly to $24.2 million compared with $2 million for the corresponding period in 2011, he stated.
Concurrently, total expenses decreased to $7.9 million in the current period as compared to $10.9 million for the corresponding period, thanks to rigorous cost reduction efforts instituted in response to the current market crisis, said Dr Ghassan.
The results are also net of additional impairment provisions of $3 million plus fair value losses of $2 million which the board has booked in the period as a measure of prudence in the light of current market conditions.
The bank's balance sheet has nevertheless seen good improvement with total assets increasing to $207.6 million as at September 30, compared to $198.5 million at the end of 2011 whilst continuing to remain unleveraged. The shareholders' equity grew 7.9 per cent to $194m from $179.7m at 31 December 2011.
Dr Ghassan highlighted the significance of the strong contribution to total income from investment banking activities, which increased dramatically by 12 times to $24.28 million from $2.01 million for the corresponding period 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 said.
Strongly capitalized and currently unleveraged, VCBank is a financially strong and solid institution. "At the end of September 2012, our capital adequacy ratio was 42 per cent, considerably higher than the minimum requirement of the Central Bank of Bahrain, while fiduciary assets under management had risen by 15 per cent to $876 million compared to $762 million as at 30 Sep 2011," he added.
Commenting on the results, CEO Abdullatif Mohamed Janahi said, "VCBank has been able to achieve three consecutive quarters with impressive results in the first nine months of 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," he added.
The first nine months of this year witnessed the conclusion of a number of deals that helped strengthen our current investments, said Janahi.
In the first half, 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 $93.7 million, which was followed on in the third quarter with the acquisition of an additional 12.3 per cent stake in a deal valued at $17.7 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, he noted.
According to Janahi, these results reflect the bank's high standards of performance and the effectiveness of its investment strategy.
"We are confident that VCBank will continue to build on this excellent performance into the future with the support of its Board, shareholders and investors and by continuing to adapt and capitalize on changes and opportunities in the market," Janahi added.-TradeArabia News Service