Venture Capital swings to $58m profit
Manama, February 13, 2013
Bahrain-based Venture Capital Bank (VCBank), has reported a net profit of $18.5 million for the twelve months ended December 31, 2012 compared to a loss of $58.7 million the previous year.
A leading regional Islamic investment bank, VCBank on Wednesday reported its fourth consecutive quarter of profitable performance backed by strong investment banking activities.
The bank's total revenue in 2012 surged 515 per cent to $34.5 million compared to $6.7 million the year before, while the income from investment banking activities rose significantly to $29.1 million from $3 million in 2011, said the Bahraini lender in its statement.
VCBank said its net profit and total revenue for the fourth quarter amounted to $3.5 million and $6.7 million respectively, compared to a loss of $48.4 million and total revenue of $2.5 million in 2011.
Concurrently, the total expenses decreased to $10.6 million for 2012 as compared to $14.5 million for 2011 as a result of cost reduction efforts instituted in response to the current challenging market and financial conditions, it stated.
VCBank said the net profit of $18.5 million was after impairment provisions of $3 million and fair value losses of $ 2 million which have been booked in 2012 against the Bahraini bank’s investments and receivables exposures as a measure of prudence in the light of current market conditions.
The Bank’s balance sheet has continued to see good improvement with total assets increasing to $ 209.5 million as at 31 December 2012 compared to $198.5 million at the end of 2011 whilst continuing to remain unleveraged, said the statement.
According to the bank, the shareholders’ equity has grown by 9.9 per cent to $197.6 million at December 31, 2012 from $179.7 million the year before.
Commenting on the results, chairman Dr Ghassan Ahmed Al Sulaiman said, “These encouraging results have been achieved despite the challenges facing the banking sector in the region and the investment sector in particular. It confirms 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.
He highlighted the significance of the strong contribution to total income from investment banking activities, which has continued to show excellent improvement in the past year, having grown by 10 times to $ 29.13 million from $ 2.96 million in 2011.
"Additionally, it supports and confirms our commitment to provide shareholders and investors with acceptable rates of return," added Al Sulaiman.
At the end of December 2012, the bank's capital adequacy ratio was 43.6 per cent, considerably higher than the minimum requirement of the Central Bank of Bahrain, while fiduciary assets under management rose by 9.9 per cent to hit $ 890 million compared to $ 810 million as at 31 December 2011.
"Strongly capitalized and currently unleveraged, VCBank is a financially strong and solid institution," Al Sulaiman stated.
Board member and CEO Abdullatif Mohamed Janahi said VCBank has been able to achieve four consecutive quarters with impressive results in 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 stated.
The year 2012 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.
In the first half, VCBank took an indirect investment in 65 per cent 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 and a further acquisition in the fourth quarter of an additional 6.2 per cent stake in a deal valued at $8.8 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.
Janahi said the bank was on target to achieve further improvements in revenue growth and reduced operating costs in line with its 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. It 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," remarked Janahi.
"We are confident that VCBank will continue to build on this excellent performance into the future with the guidance and support of the board of directors and by continuing to adapt and capitalize on changes and opportunities in the market," he added.-TradeArabia News Service