Unicorn Investment Bank (Unicorn) reported an annual net loss for the first time, for the year 2010.

The bank’s net loss for the year was $229.5 million, compared to a profit of $2.2 million for 2009.

Unicorn’s net loss in the fourth quarter of 2010 was $70.1 million, against a net profit of $0.2 million for the fourth quarter of 2009.

Total income for 2010 was $12.3 million, down from $96.5 million in 2009. With limited exceptions, the reduction in income was due to a general lowering of deal flows, within a stressed financial and operating environment, the company said.

Unicorn made investment and other provisions of $53.9 million and fair value write-downs of $118.6 million in 2010, reflecting a general drop in the earnings multiples used for valuation within the private equity industry.

The bank did not realise any material credit losses in 2010 within its financing arrangements, and write-downs and provisions were mainly against investments made prior to 2008 when market valuations were significantly higher.

Unicorn saw major deleveraging of the balance sheet in 2010, which saw the timely repayment of over $250 million of short term funds. The bank also recently announced the successful repayment of a $125 million syndicated commodity murabaha facility upon its due repayment date on January 27, 2011. Unicorn’s liabilities have fallen from $610 million in 2009 to minimal levels currently.

“Although the global operating environment remained extremely challenging in 2010 and this had a marked impact on Unicorn, we took concrete measures in 2010 to strengthen the Bank’s balance sheet and improve its operating capabilities. We are pleased to have been able to reduce Unicorn’s long-term debt to zero without resorting to finance restructuring or selling the bank’s assets, and we have also taken important steps to reduce operating expenses, strengthen our senior management team and enhance our risk management capabilities,” stated Yousef A. Al-Shelash, chairman of Unicorn.

“Going forward, we will continue to pursue the growth of Unicorn’s business in our core markets, which are the GCC region, Malaysia and Turkey. We are confident that the positive steps that we have taken in 2010 will allow the bank to emerge as an institution of strength in 2011.”-TradeArabia News Service