International Investment Bank (IIB), a globally focused Islamic investment bank based in Bahrain, earned net income of $1.7 million in the first three months of 2012 compared with a net loss of $1.3m in the same period last year.
Total income for the first quarter ended on March 31 was $3.2m compared with $0.9m a year earlier, mainly derived from investment banking fees and profit earned on funds placed with financial institutions.
Total expenses were reduced to $1.4m in the period, a reflection of management’s stringent ongoing cost control policy. Share of loss from associates was $0.2m compared with $0.7m in the first quarter of 2011. The bank booked gains on foreign exchange of $0.1m in the first quarter.
Total assets at the end of first quarter were $151.4m compared with $148.5m in the fourth quarter last year. The increase principally arises from the purchase of investments of $3.4m in 2012 funded partially by the profit made during the first quarter.
Capital adequacy ratio was 36 per cent as at March 31 versus the Central Bank of Bahrain’s minimum requirement of 12pc, demonstrating IIB’s capacity to significantly increase its investment portfolio in the future from a regulatory capital perspective.
“Trading conditions in 2012 continue to be very challenging for investment banks for two principal reasons. Firstly, many investors have incurred significant losses during the past three years on their regional and global portfolios and have, therefore, been reluctant to commit to making new investments. Secondly, many regional banks have suspended the provision of financing of real estate development and private equity projects. Despite the challenging market environment, IIB’s stakeholders and investors have demonstrated their confidence in our strategy, that has resulted in IIB earning a net income of $1.7m during the three-month period,” IIB chairman Saeed Abdul Jalil Mohammed Al Fahim said.
“During the current difficult global conditions, the bank has adopted the strategies of prudent investing, strict liquidity management and capital protection. IIB’s asset position demonstrates core strength with 40pc of total assets represented by cash and short-term murabaha placements with financially-sound regional banks with a further 7pc invested in regional listed equities, giving a total liquidity position of 47pc,” he added.
“Our strategy has been to structure and market to clients a range of attractive investment offerings in the manufacturing, financial, energy and real estate sectors in various countries. During 2012, IIB has concluded one investment banking transaction in Bahrain and also purchased shares in a regional quoted company. The bank’s ‘pipeline’ of potential transactions has enabled it to evaluate several opportunities for possible future launches or direct investment. IIB’s balance sheet continues to be strong, evidenced by the fact that it had no borrowings or off balance sheet commitments during the year,” chief executive and board member Aabed Al Zeera said.