BMB Investment Bank's balance sheet strong
Manama, February 26, 2009
BMB Investment Bank has begun the year with a strong balance sheet and a sound capital position, in spite of going into the red last year.
The bank posted an annual loss of $14.3 million as compared to a profit of $24.6 million in 2007. This came as a result of a fourth quarter $13 million loss against profit of $8.4 million in the same period in 2007.
'Along with most other financial institutions across the world, BMB was impacted by the severe market conditions of the year and the global economic downturn,' a spokesman said.
The majority of this loss came in the fourth quarter as markets continued to deteriorate and the bank took the prudent measure of provisioning some of its private equity investments.
'BMB had correctly anticipated in 2007 the impending financial storm. However, it was impossible to predict the unprecedented magnitude and severity of the decline that has taken place,' the spokesman said.
'While obviously being impacted by the economic slowdown that has quickly turned into a global recession, the bank has taken a variety of prudent measures over the past year to reduce asset price exposure and strengthen its balance sheet by reducing leverage and extending maturities on its funding.
'The bank ended the year having reduced leverage from 1.4 at December 2007 to 1.1 at December last year. And the bank extended the maturity on $34.7 million of short-term liabilities from this year to 2011.'
Losses from foreign exchange totalled $1.6 million as compared to a profit of $1.9 million in 2007. The bank took impairment provisions of $4 million mainly related to its private equity portfolio as compared to $3.5 million in 2007.
Total assets stood at $100.5 million at the end of last year as compared to $180.9 million at the end of 2007.
Total shareholder's equity was $43 million as compared to $71.4 million at the end of 2007.
Total assets at declined to $100.5 million partly as a result of the bank repaying the outstanding amount of $28.5 million on its syndicated loan as well as the repayment of some bank and client deposits, repos and other borrowings.
Despite this, the bank's Basel II capital adequacy ratio remained robust at 22.8 per cent at the end of last year, only slightly changed from 24 per cent at the end of 2007.
'The year 2008 has certainly been a year of challenges and change,' said chairman Wilson Benjamin.
'Our confidence in the strength of our business model and strategy remain unscathed and we maintain our discipline in the face of market turmoil.
'While the coming year will not be without challenges, we remain confident in the bank's ability to produce solid returns in the coming years,' he said.
'Despite the difficulties of the past year, BMB enters 2009 with a strong balance sheet which has been tested and successfully proven itself over the years,' added chief executive Albert Kittaneh.
'Our capital position is sound and our investment portfolio remains fundamentally strong. While we prudently took provisions and negative fair value adjustments on our private equity portfolio, we firmly believe that these provisions will be recoverable as we realise these assets during the coming years.-TradeArabia News Service
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