Unicorn Investment Bank B.S.C. (c) (Unicorn) announces a record 2008 operating profit of US$73.8 million before impairments and fair value write-downs, an increase of 46% from US$50.4 million in 2007. Net profit after impairments and fair value write-downs was US$35.0 million. Earnings per share were 18.7 US cents.
The results are the culmination of a strong year for Unicorn, in which the Bank also further strengthened its capital and funding base. In January, the Bank successfully closed a 3-year syndicated commodity Murabaha facility that was significantly oversubscribed, raising US$125 million. Despite the global financial crisis, Unicorn also successfully raised new capital through an international private placement. The increased capital resources, combined with the Bank’s modest degree of leverage and strong liquidity, will fund the Bank’s continuing regional and international business expansion.
As a very conservatively-run, Islamic bank, Unicorn has no exposure to the toxic assets that have caused major losses to be incurred across the global banking industry. The Bank has also deliberately avoided the real estate and listed equity markets and so has avoided the market losses that are affecting some institutions. The Bank has minimal holdings of listed equities and virtually no real estate exposure. Unicorn has a very low debt-to-equity or leverage ratio and is well-positioned to weather the shocks that are currently affecting the banking industry.
Unicorn completed several high profile transactions in 2008, including the acquisition of Bahrain Financing Company, one of the leading foreign exchange and remittance houses in the GCC. The acquisition includes Bahrain Exchange Company in Kuwait and EzRemit in the United Kingdom. Notable private equity transactions included the acquisition of Sun Well Services, a leading regional services provider to oil and gas exploration companies in the United States. Unicorn also sold its shares in UAE-based Orimix Concrete Products, generating a return on capital of 160% and an Internal Rate of Return (IRR) of 98%. The Orimix transaction was recently named the Islamic Finance Deal of the Year by Euromoney magazine. In asset management, Unicorn raised capital for Turquoise Coast Investment Company, a real estate investment company established to provide investors with an opportunity to benefit from the thriving vacation homes market on Turkey’s Aegean Coast.
The Bank recorded a fourth quarter operating profit (before impairments and fair value write-downs) of US$15.7 million. However, in light of the adverse effects of the global financial crisis, the Bank adopted a conservative and prudent approach to the valuation of its private equity portfolio and recorded investment write-downs of US$31.8 million. These write-downs reflect the current market uncertainties and the general drop in valuations across the globe and the long-term business prospects for the companies in question remain sound. The write-downs, together with impairment charges of US$7.0 million against Sukuk and equity securities, resulted in the Bank reporting a net loss of US$18.4 million in the fourth quarter of 2008.
Commenting on the Bank’s results and performance in 2008, Majid Al-Sayed Bader Al-Refai, Unicorn’s Managing Director & Chief Executive Officer, said: “At the close of a challenging year, and against the backdrop of an extremely difficult global economic environment, Unicorn is pleased to once again report strong results. In the five years since the Bank’s inception, Unicorn has adopted a conservative and prudent approach which, with Allah’s grace, has shielded us from the worst of the global economic crisis. The Bank maintains a prudent net cash surplus position and has minimised its dependence on short-term borrowings. Furthermore, Unicorn has very limited exposure to listed equities and the real estate sector. During 2008, we made important strides towards realising our vision of building a full-service, global Islamic investment bank and were able to successfully conclude a number of landmark transactions. I am confident that with Allah’s grace, Unicorn will continue to push back the boundaries of Islamic finance. We remain guided, as always, by a clearly defined strategy, an unwavering focus on disciplined growth, a commitment to sound corporate governance and prudent risk management and sustained investment in people, research and technology.”
