The bank in a statement said that the financials are seen as healthy given the background of Bahrain, regional and international financial markets for the first six months of 2011 which proved to be more challenging than expected.
The bank in a statement said that the key factors which impacted the businesses included heightened political tensions and the continued volatility in stock market performance in first half of the year. “The Eurozone crisis remains a cause for considerable concern, and the US’s recent budget debacle and its subsequent downgrade by S&P, has created further unnecessary havoc with the global financial markets. Both ongoing crises could have significant knock-on effects, from investment perspectives, for the GCC. Additionally, China’s rapid economic growth of the last fifteen years is now showing signs of slowing, which could potentially adversely impact the demand for oil. As a result, there has been heightened risk aversion by investors, especially with regard to investment in the GCC and the wider MENA region. Overall, therefore, it was a rather pessimistic picture for the first half of the year. However, there are encouraging positive signs. After peaking at around $ 120 per barrel at the end of the first quarter, oil prices have since stabilised at a level ranging between $ 90 and $100,” the statement added.
“SICO currently has 50 per cent (BD44.3 million) of its balance sheet in cash and deposits, compared to 43.5 per cent at the end of the fourth quarter of 2010 (BD35.4million); this reflects the cautious position the bank continues taking in regards to domestic and international capital markets. Available-for-sale securities amounted to BD23.8 million as of the end of 1H11 (BD24.4 million as of the end 2010), while Investments at fair value through the profit and loss stood at BD15.4 million (BD16.6 million at the end of 2010). A significant amount of market exposure is in short duration investment rated bank and GCC government fixed income instruments.”
Total income for the first six months of 2011 was BD 499,000 (1H10: BD1.5 million) while earnings per share dropped to 1.17 Bahraini fils (1H10: 3.61 Bahraini fils). Total assets under management decreased to BD184.7 million at the end of June 2011, compared with BD201 million at the end of December 2010.
SICO maintained a strong capital base ending the first half of the year with BD 54.541million in shareholder equity. It should be noted that the firm paid a dividend for FY10 of BD 2.552 million during the first quarter of this year.
“SICO reported a good relative performance for the first half of 2011. The Firm saw a return to profitability after business started to pick up in May and June, compared with a loss during the first quarter when we saw major falls in stock and bond markets and our revenue generators witnessed substantial reduction flows,” Anthony Mallis, Chief Executive of SICO, said.
“We believe that the next six months will continue seeing substantial market volatility in all asset classes, as major economies reposition themselves to tackle the major imbalances that they, until very recently, did not seriously address.“