BMB Investment Bank, a premier Gulf-based investment bank, said it has posted a first quarter loss of $5.7 million when compared to a profit of $4.4 million in the first quarter of last year.

Since the end of the first quarter of the year both market conditions and performance had improved significantly, the bank said in a statement.

The bank is now expecting this upturn to have a positive impact on the private equity industry as a whole and on the bank's own investment portfolio.

'The bank is, therefore, optimistic that its investment portfolio will stabilise and improve its earning power in line with the recovery in market conditions,' said a BMB spokesman.

This came as a direct consequence of the global economic downturn that continued to severely impact market conditions in the first quarter of the year. The bank has continued its prudent approach in provisioning some of its private equity fund investments, he added.

The foreign exchange income on the other hand has turned around since the end of last year to produce a profit of $800,000 in the first quarter as compared to a profit $600,000 last time.

Total assets at March 31 declined to $89m primarily as a result of decreases in fair values on the private equity funds and fixed income portfolios.

Shareholder's equity declined to $34.9 million as compared to $43m at the year-end due to the losses for the quarter and the negative adjustment to fair value.

The bank's Basel II capital adequacy ratio remains at a healthy 20.18 per cent at the end of the quarter as compared to 22.8pc at the end of last year.

'Despite disappointing results in the first quarter, we are forging ahead with great confidence,' said chairman Wilson Benjamin.

'Already there are signs of recovery in the global market and as markets improve, our existing asset base should once again positively contribute to the bank's earnings.'

'More importantly, the bank is embarking on an ambitious plan to develop and expand our business franchise.'

'Various initiatives have already been taken which promise to take the bank in an exciting new direction. The board and I are very optimistic about the future.'

'Our new strategic direction is clear and we are moving forward in a disciplined and gradual manner towards implementing this new strategy,' said chief executive officer Akbar A Habib.

'We are in the process of restructuring the bank and expanding its business line by establishing platforms that will assist the bank in diversifying its business mix and securing sustainable income streams that are to a greater degree neutral to market cycles.'

'We are positioning the bank to serve specific market segments with special needs and therefore add value to clients' investment requirements.'

'The bank is also currently assessing the sizing and structure of its staffing levels in order to bring about an optimum level of efficiency and effectiveness in implementing our new strategy,' he added.

'While the bank is continuing with the various restructuring measures, we are driving a campaign to raise new capital and attract investors that would be able to provide a strategic and synergistic fit.'-TradeArabia News Service