Bahrain-based Securities & Investment Company (SICO) today announced its financial performance for the third quarter of 2010 and for the first nine months ended 30 September 2010. Net profit for the third quarter 2010 was BD 743 thousand (US$1.96 million) compared with BD 1.57 million (US$4.082 million) for the corresponding period in 2009. For the first nine months of 2010, net profit was BD 2.27 million (earnings per share of 5.36 Bahraini fils) compared with BD 2.51 million (earnings per share of 5.93 Bahraini fils) for the corresponding period the previous year, increasing by 48 per cent over the net profit of BD 1.53 million for the first half of 2010.
SICO has posted a profit for each quarter to date in 2010, with only one loss-making month in May, when international and regional equity and fixed income markets posted their worst monthly performance for over a year.
Net interest income during the third quarter accounted for 22.9 per cent of total income, while net fee and commission income contributed 31.2 per cent, brokerage and other income contributed 11.8 per cent, and net investment income 34.1 per cent.
Operating expenses for the third quarter increased by 17.6 per cent from the corresponding period the previous year. Year-to-date total expenses, which include staff overheads, general administration and other expenses, increased by 18.4 per cent for the first nine months of 2010 to BD 2.949 million compared to BD 2.491 million for the same period the previous year. Head count remained largely unchanged.
Commenting on these results, Anthony Mallis, Chief Executive Officer of SICO, said: "Given a still uncertain global background, this was an encouraging performance. The Firm benefited from the buoyant trading conditions, with strong regional fixed income markets and from a turnaround in the GCC equity markets, with all markets partially recovering ground from what can only be described as the 'bloodbath' of the second quarter of this year. Our annuity businesses, although mostly subdued, are starting to see an uptick with interesting opportunities arising in the asset management and corporate finance spaces."
Increased activity by SICO's asset management business resulted in funds under management growing by 14 per cent from the end of 2009 to total BD 171.7 million as at 30 September 2010. At the same time, increased inflows to the Firm's subsidiary, SICO Funds Services Company, generated a 34 per cent growth in securities under custody to BD 1.46 billion.
Taking advantage of improved trading conditions during the third quarter of 2010, SICO increased its trading risk appetite. Investments at fair value through profit or loss increased by 127 per cent to BD 14.3 million as at 30 September 2010 compared with BD 6.3 million at the end of 2009, while available-for-sale investments rose slightly to BD 20.9 million. The Firm's held-to-maturity investments, which comprise quality GCC names, grew by over 30 per cent to BD 6.17 million, and understate their mark-to-market value. Cash and bank balances saw a significant decline of 38 per cent from the end of 2009, falling to BD 29.5 million, and represented 39 per cent of the balance sheet.
Operationally, SICO made excellent progress during the first nine months of the year. Highlights include the launch of the SICO Money Market Fund, the first locally-managed money market fund to be offered by a Bahrain fund manager, and the fifth SICO fund to be listed on the Bahrain Stock Exchange. With the signing of a depository participant agreement by SICO Funds Services Company (SFS) with the Bahrain Stock Exchange (BSE), SFS became the first and only indigenous firm to be appointed as a custodian on the BSE. Also during this period, SICO maintained its position as the leading broker and market maker on the Bahrain Stock Exchange.
According to CEO Anthony Mallis: "With the GCC economic environment appearing to have stabilised, and the fourth quarter likely to be positive for regional equity markets, SICO has a reasonably optimistic outlook for the rest of the year. The Firm is well positioned to take advantage of new business opportunities as markets continue their recovery. Concurrently, though, we continue to maintain a fortress balance sheet."