Venture Capital Bank Reports Net Profit Of $13mfor First Half 2012

Bahrain-based regional Islamic investment bank, Venture Capital Bank (VCBank), reported a second consecutive quarter of profitable performance with the publication of its results for the first half of 2012 today.

The Bank reported net profit of $13m and total income of $20.7m for the first half of 2012 compared with a loss of $7.5m for the corresponding period in 2011, building on its already successful first quarter net profit of $8m.

Net profit and total income for the 2nd quarter of 2012 amounted to $5m and $9.1m respectively, compared to a loss of $4.5m and $3.2m respectively for the corresponding quarter in 2011.

Total income increased five-fold to $20.7m for the half year compared with $4.8m in the corresponding period in 2011, with income from investment banking activities rising significantly to $18.2m compared with $1.5m for the corresponding period in 2011.

Concurrently, total expenses decreased to $5.8m from $7.5m for the corresponding period in the previous year as a result of rigorous cost reduction efforts instituted in response to the current market crisis.

The results are also net of additional provisions of $1.3m which the board has booked in the period as a measure of prudence in the light of current market conditions.

The bank’s balance sheet has also seen good improvement with total assets increasing to $209.6m as at 30 Jun 2012 from $198.5m at the end of 2011 whilst continuing to remain unleveraged, and shareholders’ equity grew 6.9% to $192m from $179.7m at year-end 2011.

Chairman of VCBank, Dr. Ghassan Ahmed Al Sulaiman highlighted the significance of the strong contribution to total income from investment banking activities, which increased dramatically by 11 times to $18.1m from $1.52m for the corresponding period in 2011.

“These encouraging results have been achieved despite the challenges facing the banking sector in the region and the world and the investment sector in particular. The Bank’s results confirm the feasibility of our plans and strategies that have been followed in accordance with the new strategy of the Bank that includes restructuring the investments and focus on venture capital and private equity sector in the MENA region. Additionally, it supports and confirms our commitment to provide shareholders and investors with acceptable rates of return. Strongly capitalized at $250m, with liquid assets of $10.3m, and currently unleveraged, VCBank is a financially strong and solid institution. At the end of June 2012, our capital adequacy ratio was 43%, considerably higher than the minimum requirement of the Central Bank of Bahrain, while assets under management had risen by 12% to $863m compared to $749m as at 30 June 2011,” added Dr. Al Sulaiman.

In announcing the results for the quarter, Board Member and Chief Executive Officer, Mr. Abdullatif Mohamed Janahi, commented: “VCBank was able to achieve two consecutive quarters with impressive results in the first half of 2012, and these results affirm that Venture Capital Bank is moving in the right direction towards achieving strong growth. Our results underline the success of our strategic focus on key sectors in which we have built particular expertise, such as healthcare, agribusiness, oil and gas, and shipping; and on more economically and politically stable markets in the MENA region.”

The first six months of this year witnessed the conclusion of a number of deals that helped strengthen our current investments. VCBank took an indirect investment in 65% of the equity of Göknur Foods Import Export Trading & Distribution Company in Turkey, in a deal valued at $93.7m. Established in 1993, Göknur is the largest fruit juice concentrate and fruit puree producer and exporter in Turkey, with a 50% market share.

The Bank’s financial performance has noticeably improved with the achievement of this strong result with a net profit of $13m for the first half of 2012, which confirms the strength of the Bank’s foundation.

The Bank is on target to achieve an improvement in revenue during the third and fourth quarters and reduced administrative expenses and operating costs in line with the Bank’s new strategy and organization structure with a focus to maintain liquidity and build a solid base for the rights of shareholders.

“The results reflect the Bank’s high performance and the effectiveness of its diversification of investments. We are confident that VCBank will continue its excellent performance into the future through flexible strategies with the ability to adapt and capitalize on changes and opportunities in the market,” concluded Mr. Janahi.

Ameinfo