VC Bank swings to quarterly profit
Manama, June 5, 2013
Venture Capital Bank (VCBank), a Bahrain-based Islamic lender, has reported a net profit of $20.2 million for the 15-month period ended March 31 when compared to a loss of $58.7 million for the same period in 2011.
The Islamic bank on Wednesday reported its fifth consecutive quarter of profitable performance netting a total revenue of $39.6 million for the fifteen months ended 31 March 2013 compared to a total revenue of $6.7 million in 2011.
The total revenue increased 472 per cent on annualized basis to $39.6 million for the period to March 31, 2013 compared to $6.7 million for 2011, with income from investment banking activities rising significantly to $31.6 million compared with $3 million for 2011, said the bank in a statement.
VC Capital said its net profit and total revenue for the quarter ended 31 March 2013 amounted to $1.7 million and $5.08 million respectively, compared to $8 million and $11.3 million respectively for the corresponding quarter ended 31 March 2012.
These results are after recognition of impairment allowances totaling $3.4 million for the period including $0.4 million in the current quarter ended 31 March 2013, it added.
Concurrently, the total expenses decreased by 26 per cent on an annualized basis to $13.5 million for the 15-month period to March 31, 2013 as a result of cost reduction and organizational improvements instituted by the board and management in response to the challenging current market conditions.
The net profit for the period of $20.2 million is after fair value losses of $2 million and impairment provisions of $3.4 million booked as a prudent measure in light of current market conditions.
The bank’s balance sheet has continued to see good improvement with total assets increasing to $216.1 million as at 31 March 2013 compared to $198.5 million at the end of 2011 whilst continuing to remain unleveraged, and shareholders’ equity has grown by 9 per cent on an annualized basis to $199.2 million at 31 March 2013 from $179.7 million at 31 December 2011.
Commenting on the results, chairman Dr Ghassan Ahmed Al Sulaiman said: “These encouraging results have been achieved despite the very challenging conditions being faced by the banking sector in the region and the investment sector in particular. The results confirm the feasibility of our new plans and strategies that includes restructuring the investments and focusing on venture capital and private equity sector in the Mena region."
According to him, there has been a strong contribution from the investment banking activities which has grown by 9 times on an annualized basis to $31.6 million compared to $2.96 million in 2011. "Additionally, it supports and confirms our commitment to provide shareholders and investors with acceptable rates of return," he stated.
“Strongly capitalized and currently unleveraged, VCBank is a financially strong and solid institution. As of 31 March 2013, our capital adequacy ratio stood at a very robust 46 per cent, considerably higher than the minimum requirement of the CBB of 12 per cent, while fiduciary assets under management totals $899 million now compared to $810 million as at 31 December 2011,” Dr. Al Sulaiman added.
CEO Abdullatif Mohamed Janahi said VCBank had achieved five consecutive quarters with impressive results in 2012/13 and goes forward to its new year end of 30 June 2013 and the year ahead with strength and confidence.
"These results affirm that the bank is moving in the right direction towards achieving strong growth and 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 region," he added.-TradeArabia News Service