The bank in a statement said that for the first nine months, operating income was BD 2.8 million (2010: BD 5.2 million), with negative net earnings of BD 364,000 (2010: positive BD 2.3 million) and basic earnings per share of negative 0.85 Bahraini fils (2010: positive 5.36 fils).
As at 30 September 2011, total balance sheet footings increased to BD 96.9 million from BD 81.2 million at the end of 2010. At the end of the third quarter of 2011, assets under management (AUM) remained healthy at BD 181.152 million, while assets under custody (AUC) with SICO’s wholly-owned subsidiary SICO Funds Services Company were BD 913.200 million.
Net interest income, net fee and commission income, and brokerage and other income during the third quarter of 2011 contributed BD 301,000, BD 488,000 and BD 173, 000 respectively to operating income. On the other hand net investment income was negative by BD 869, 000. Operating expenses for the third quarter were BD 956,000 decreasing slightly from the corresponding period in 2010.
Year to date, net interest income, net fee and commission income, and brokerage and other income contributed BD 785,000, BD 1.607 million and BD 792,000 and respectively to operating income, while net investment income was negative by BD 378,000. For the first nine months of 2011, operating expenses, which include staff overheads, general administration and other expenses, and impairment on available-for-sale investments, increased by 7.5 per cent to BD 3.170 million, compared with BD 2.949 million for the corresponding period the previous year.
“The three-month period of July to end-September saw unprecedented volatility in regional and international capital markets, dominated by concerns surrounding the weakened state of the global economy,” Anthony Mallis, Chief Executive Officer of SICO, said.
“The markets were focused mainly on sovereign risk within the Eurozone, specifically the risk of contagion from smaller to larger GDP countries. There was additional focus on how elevated sovereign risk would impact the Eurozone 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.
“The Eurozone concerns heightened worries regarding the implications of these challenges on economic prospects in the US. Similar to Europe, equity and debt markets reflected increased fears about the outlook for the US economy. The S&P 500 declined 14 per cent, while the volatility index (VIX) increased to its highest level in more than two years. Ultimately, economic concerns within Europe and the US permeated investor sentiment within the growth markets, as demonstrated by falling GCC composites. The S&P GCC Price Index posted a quarterly decline of 6.7 per cent, with a year-to-date fall of 10.7 per cent. Faced with such a challenging global economic outlook, investor sentiment remained stressed,” he added.
SICO continued to maintain a strong capital base, ending the first nine months of the year with BD 52.440 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 BD 51.157 million) of its balance sheet in cash and deposits, compared with 44 per cent (or BD 35.397 million) at the end of 2010, 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 2011 were slightly up at BD 25.938 million (end-2010: BD 24.375), while investments at fair value through profit or loss reduced to BD 14.871 million (end-2010: BD 16.643 million). A significant amount of SICO’s market risk exposure is in short duration investment-rated bank and GCC government fixed income instruments.
“While we are disappointed with our third-quarter results, we remain optimistic about the medium- and long-term outlook for SICO,” Mallis, said.
“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.”