Bahrain-based Securities and Investment Company (Sico) said its net profit for the third quarter fell to BD743,000 ($1.9 million) from BD1.57 million ($4.16 million) posted during the same period last year.

Announcing the results, Sico CEO Anthony Mallis said the net interest income during the third quarter accounted for 22.9 per cent of total income, while net fee and commission income contributed 31.2 per cent, brokerage and other income contributed 11.8 per cent, and net investment income 34.1 per cent.

The operating expenses too increased by 17.6 per cent from the corresponding period the previous year, he stated.

The company said its profit for the first nine months was BD2.27 million ($6 million) with earnings per share of 5.36 Bahraini fils compared to BD2.51m (earnings per share of 5.93 fils) for the same period last year, Mallis noted.

However, Sico witnessed a 48 per cent rise in profit when compared to the first half net profit of BD1.53 million, he added.

Sico, Mallis said, had posted a profit for each quarter of this year, making loss only in May, when international and regional equity and fixed income markets posted their worst monthly performance for over a year.

Year-to-date total expenses, including staff overheads, general administration and other expenses, increased by 18.4 per cent for the first nine months of this year to BD2.949 million compared to BD2.491 million for the same period the previous year.

'Given a still uncertain global background, this was an encouraging performance,' he added.

According to Mallis, the firm benefited from the buoyant trading conditions, with strong regional fixed income markets and from a turnaround in the GCC equity markets, with all markets partially recovering ground from what can only be described as the 'bloodbath' of the second quarter of this year.

'Our annuity businesses, although mostly subdued, are starting to see an uptick with interesting opportunities arising in the asset management and corporate finance spaces.'

Increased activity by Sico's asset management business resulted in funds under management growing by 14 per cent from the end of 2009 to BD171.7 million at the end of September.

At the same time, increased inflows to the firm's subsidiary, Sico Funds Services Company, generated a 34 per cent growth in securities under custody to BD1.46 billion.

Taking advantage of improved trading conditions during the third quarter of 2010, Sico increased its trading risk appetite.

Investments at fair value through profit or loss increased by 127 per cent to BD14.3 million at the end of third quarter compared with BD6.3 million at the end of 2009, while available-for-sale investments rose slightly to BD20.9 million.

The firm's held-to-maturity investments, which comprise quality GCC names, grew by more than 30 per cent to BD6.17 million, and understate their mark-to-market value.

The cash and bank balances saw a decline of 38 per cent from the end of 2009, falling to BD29.5 million, and represented 39 per cent of the balance sheetm, said the official.

Operationally, Sico made excellent progress during the first nine months of the year, said Mallis.

The highlights include the launch of the Sico Money Market Fund, the first locally-managed, offered by a Bahrain fund manager, and the fifth Sico fund to be listed on the Bahrain Stock Exchange (BSE).

With the signing of a depository participant agreement by Sico Funds Services Company (SFS) with the BSE, SFS became the only indigenous firm to be appointed as a custodian on the BSE.

Also during this period, the company maintained its position as the leading broker and market maker on the Bahrain Stock Exchange.

'With the GCC economic environment appearing to have stabilised, and the fourth quarter likely to be positive for regional equity markets, Sico has a reasonably optimistic outlook for the rest of the year,' Mallis said.

'The firm is well positioned to take advantage of new business opportunities as markets continue their recovery. Concurrently, though, we continue to maintain a fortress balance sheet,' he added.-TradeArabia News Service