BMB Investment Bank (“BMB” or the “Bank”) announced today its 2008 third quarter results with an operating income of US $5.8 million as compared to US $24.7 million in the first nine months of 2007. After taking into account taxes and other expenses, the first nine months of this year showed a loss of US $1.3 million as compared to a profit of US $16.2 million in the corresponding prior year period.
The decline in the Bank’s income has come for the most part in the third quarter of the year with a net loss of US $5.5 million as compared to a loss of US $0.3 million in the second quarter. This is a direct result of the ongoing global credit crunch and lack of liquidity in the financial markets, which has negatively impacted the pace of the Bank’s realizations and private equity exits. Consequently, movement in the Bank’s income from investments showed a loss of US $1.3 million in the third quarter as compared to a profit of US $1.5 million in the second quarter. This decline is in part due to the slowdown in private equity income which shows a profit of US $8.4 million versus a second quarter profit of US $8.7 million. Trading equities and funds also declined to record a loss of US $1.2 million in the third quarter as compared to a loss of US $0.3 million in the second quarter of this year due to the severe decline in equity markets across the world.
The Bank recorded foreign exchange translation losses in the third quarter of US $1.8 million as compared to a profit of US $0.3 million in the second quarter as a result of the fact that the Bank has been unable to fully hedge its foreign currency denominated assets due to a lack of sufficient interbank foreign exchange lines at this time of the credit crisis.
Meanwhile, the Bank continues to prudently manage its expenses and the third quarter has seen general and administrative expenses running 9% below the average for the first six months of the year, from US $4.8 million in the first six months of the year to US $2.2 million in the third quarter.
Total assets at the end of September 2008 stood at US $126.7 million as compared to US $180.9 million at the end of 2007 as the Bank continued to reduce its liabilities, including the repayment of its syndicated loan and other deposits. Total shareholders’ equity stood at US $62.0 million at the end of September 2008 compared to US $71.4 million at the end of 2007 due to a decrease in the fair value reserve which fell by US $9.2 million. The Bank’s Basel II capital adequacy ratio stood at a robust 26.9 % at 30 September 2008 as compared to 24.0% at 31 December 2007.
In commenting on the results the Bank’s Chairman, Mr. Wilson Benjamin, said: “The Bank is weathering the decline in global financial markets fairly well, despite the anticipated impact on the pace of investment realizations. Our assets are of the highest quality and are withstanding the current economic shocks and therefore our confidence in our ability to continue producing solid returns in the years ahead remains unscathed.”
Albert I. Kittaneh, Chief Executive, said: “Despite the slowdown in income, the Bank’s financial position remains healthy and we have been able to continue reducing our liabilities. The Bank as always takes a medium term view and continues to invest in various categories of private equity, at the same time maintaining its innovative and dynamic approach to developing new ideas and products to benefit from the current attractive valuations in the global markets. In this vein the Bank has recently arranged and launched BMB DynAsia, a capital protected structured note designed to capture future Asian growth, particularly from the depressed levels we are currently witnessing.”
