Bahrain-based Securities & Investment Company (Sico) had a disappointing third quarter because of volatility in regional and international capital markets, but said it remained optimistic about the medium and long term.

Operating income for the third quarter was BD93,000 ($246,658) compared with BD1.71 million for the corresponding period last year, the investment house said in a statement.

While net earnings were negative at BD863,000 against a positive BD743,000 last year with basic losses per share of 2.03 fils compared to earnings of 1.75 fils last time.

For the first nine months, the operating income was BD2.8 million, down from BD5.2 million, with net losses of BD364,000, compared with a profit of BD2.3 million last time and basic losses per share of 0.85 fils compared with a positive 5.36 fils.

At the end of third quarter, total balance sheet footings increased to BD96.9 million from BD81.2 million at the end of last year.

Assets under management remained healthy at BD181.152 million, while assets under custody with Sico's wholly-owned subsidiary Sico Funds Services Company were BD913.2 million.

"The first three-month period of the year saw unprecedented volatility in regional and international capital markets, dominated by concerns surrounding the weakened state of the global economy," said chief executive Anthony Mallis.

"The markets were focused mainly on sovereign risk within the euro zone, specifically the risk of contagion from smaller to larger GDP countries.

"There was additional focus on how elevated sovereign risk would impact the euro zone and international banking systems, within the background of a generally shrinking regional European economy.

"The uncertainty surrounding the potential policy responses to these complex issues amplified the level of concern among market participants, substantially reducing global risk appetite."

Sico continued to maintain a strong capital base, ending the first nine months of the year with BD52.44 million in shareholders' equity and a very strong consolidated capital adequacy ratio of 64.4 per cent, which is substantially much higher than Central Bank of Bahrain requirements.

The bank currently has 53 per cent or BD51.157 million of its balance sheet in cash and deposits, reflecting the cautious position that Sico continues to take with regard to the domestic and international capital markets.

Available-for-sale securities at the end of September were slightly up at BD25.938 million from BD24.375 million at the end of last year.

"While we are disappointed with our third-quarter results, we remain optimistic about the medium- and long-term outlook for Sico," said Mallis.

"Our clients continue to place significant value on our services. We will continue to focus on serving our clients' needs and managing shareholders' capital prudently - a commitment which is central to our long-term value proposition," he added.-TradeArabia News Service