International Investment Bank (IIB), a globally focused investment bank based in Bahrain, today announced its results for the year ended 31 December 2006, during which time the Bank posted strong growth and further improved its financial performance.
2006 was IIB’s third full year of operations. In addition to arranging several new major real estate investments in Dubai, France and Saudi Arabia, the Bank made strategic direct investments in Islamic financial services institutions in the UK and Kuwait, which will complement its existing stake in European Islamic Investment Bank. IIB’s investors and shareholders are already reaping the rewards of the Bank’s highly selective and rigorous investment strategy, with two very profitable early exits being achieved from recent real estate investments in the UK and Dubai. A total return of 98% was generated in only 17 months on the UK property and the Dubai investment yielded a 25% IRR over a period of only 11 months. These exits represented an important milestone in IIB’s development, as they are tangible evidence of the Bank’s successful strategies and capabilities in delivering exceptional performance.
IIB’s net profit grew by 92.2% over the previous year to US$13.5 million, reflecting the continued progress in the Bank’s business and its ability to effectively develop and offer a diverse range of compelling investment opportunities. Total income almost doubled, reaching US$24.6 million, compared with US$12.4 million for 2005.
The growth in business volumes was also reflected in the balance sheet, with total footings increasing by 49.2% to US$94.5 million. Investments increased by 20.0% to US$16.4 million, represented by the Bank’s net participation in new transactions less exits during 2006. Assets under management at year end 2006 stood at US$181.7 million, a 54.5% increase over the US$117.6 million total in the previous year.
The Bank continued to maintain a high degree of liquidity, with surplus funds being placed on short-term murabaha with selected investment-grade banks. Cash and cash equivalents at US$62.7 million showed a healthy increase from US$27.2 million a year earlier. The Capital Adequacy Ratio at 89% remained comfortably above the regulatory minimum requirement of 12%.
Therefore, from both the regulatory and liquidity standpoint, there is considerable scope to underwrite larger and more numerous investment transactions in 2007 and beyond. This prudent approach to liquidity and solvency is a cornerstone of the risk management policy laid down by the Board of Directors of the Bank and is designed to ensure that IIB can withstand any external financial or economic shocks that may arise.
In addition, IIB saw considerable gains in its return on capital, which rose to 31.3% versus 16.3% for 2005. Similarly, its return on average shareholders equity saw a significant rise, increasing to 24.0% for 2006 from 14.8% for the previous year. The return on average total assets in 2006 was 17.1% compared with 13.0% in 2005. Earnings per share rose from 16 cents to 31 cents, while book value per share was US$1.43 versus US$1.18 in 2005. The Bank’s cost/income ratio increased slightly from 43% in 2005 to 45% in 2006, which still compares very favourably with our regional and international peers.
Commenting on the Bank’s financial results, Mr. Saeed Abdul Jalil Al Fahim, Chairman of IIB, said: “The Bank has completed another very successful year as reflected by marked improvements in its financial performance as well as an expanding portfolio of high-quality investments. Our continued focus on value creation and the development of a well-diversified investment offer enable us to deliver ever stronger results and to effectively meet the expectations of our investors and shareholders in what is a highly competitive environment.”
In 2006, IIB concluded two real estate investments totaling US$180 million in Dubai’s Business Bay development, which is being planned by the Dubai Government as the new dynamic ‘downtown’ area of Dubai. These included investments in West Bay Tower and One Business Bay. IIB also recently concluded its exit from One Business Bay well in advance of initial projects and with a return on investment of 25%. Other real estate investments in 2006 included the launch of Ewaan, a US$100 million company that will focus on investment in the Saudi Arabian real estate market. Based in Saudi Arabia, the new firm will seek to invest some SR2 billion (US$533 million) in the fast-developing Saudi property sector over the next three years.
Mr. Aabed Al-Zeera, Chief Executive Officer of IIB, said, “We are again pleased to announce another set of enhanced financial results, which serve to underscore the strength of our strategy and our ongoing ability to identify and conclude compelling investment opportunities. Our success continues to be derived from investing across multiple asset classes and geographical locations, a strategy that has enabled us to effectively leverage opportunities that currently exist in a number of well-performing sectors and markets. Working with world class partners, comprised of high caliber financial institutions and technical partners, from within the region and internationally, we have been able to meet our clients’ demands for access to a well diversified portfolio of investments as well as superior risk-adjusted returns. ”
Given these excellent results, the Board is proposing to distribute a cash dividend of 10% for 2006, subject to regulatory and shareholder approval, while retaining US$7.8 million to further strengthen the Bank’s capital base.
The Bank enters 2007 with a strong investment pipeline developed in conjunction with its broad network of high caliber financial institutions and technical partners from around the world. IIB expects to announce a number of compelling deals in the months ahead.
In addition to reporting strong financial results and the conclusion of a number of highly successful transactions during 2006, IIB’s continued growth and excellent prospects are further reflected in the Bank’s intention to increase its current paid-up capital. The rights issue, to commence during the first quarter of 2007, was announced in response to strong demand from both current shareholders and other strategic investors who are keen to acquire an equity stake in IIB.
For full details on IIB’s financial results, please see the ‘Financial Section’ on IIB’s website at www.iib-bahrain.com
About International Investment Bank
International Investment Bank B.S.C. (IIB) was incorporated in Bahrain in October 2003 as an Islamic investment bank, with an authorised capital of US$200 million and a paid up capital of US$43 million. Its shareholders are high net worth individuals, business houses and institutions from the GCC states. The Bank undertakes three core business activities - private equity, real estate and asset management – and aims to offer its clients an internationally diversified range of investments generated through its network of strategic partnerships.
