international investment bank’s first half net income rises by 79.5%
International Investment Bank (IIB), a globally focused investment bank based in the Kingdom of Bahrain, today announced a substantial increase in its Net Income for the first half of 2007, reflecting the continued growth of IIB's business and its ability to effectively develop and offer a diverse range of compelling investment opportunities.
The Net Income of US$ 9.6 million for the first six months of 2007 compares favorably with US$ 5.4 million for the same period last year. Total Income increased by 120.4% to US$ 18.7 million in the first half of 2007, mainly from investment banking fees that increased by US$ 8.5 million or 114.5% to US$ 15.9 million, generated from the structuring, underwriting and placement of new investments. In addition, the Bank registered a gain on sale of investment property in the Seef district of Bahrain of US$ 1.4 million. Total Expenses increased by US$ 5.9 million, as IIB continued to build up its staff and operating infrastructure to support its growing business activities. Reflecting lower commodity murabaha receivables and payables with financial institutions, Total Assets reduced by 7.2% from the 2006 year end to US$ 87.7 million. The Profitability Ratios for the six-month period of 2007 were strong, evidenced by an annualized return on Paid up Capital and Average Equity of 44.8% and 30.1% respectively and on Average Assets of 21.2%, while the capital adequacy ratio of 58% is almost five times greater than the minimum requirement of the Central Bank of Bahrain.
Commenting on the Bank's results, His Excellency Mr. Saeed Abdul Jalil Mohammed Al Fahim, Chairman of IIB, said: "IIB has again achieved a significant improvement in its financial performance, based on its ongoing strategy of investing across diverse asset classes and geographic regions, with excellent returns for the Bank's shareholders and investors. During the first half of 2007, the Bank has concluded investment transactions ranging from a manufacturing project in Bahrain, a fully-tenanted commercial building in Europe and real estate development projects in Saudi Arabia and the UAE. The pipeline of deals under preparation continues to be strong and accordingly the outlook for further growth in earnings in 2007 and beyond looks very positive. Based on rigorous due diligence and efficient execution, IIB has been able to deliver ever stronger results and to meet the expectations of our investors and shareholders in what is a highly competitive environment."
Mr. Aabed Al-Zeera, CEO of the Bank commented: “During the first half of 2007, IIB acquired on behalf of its investors a 35% stake in a US$ 37 million Bahrain-based steel reinforcement bar manufacturer. Exit from the investment is intended to be within five years and an internal rate of return (IRR) in excess of 23% p.a. is targeted by IIB. Steel reinforcement bars (“rebars”) are an important component in construction projects and generally represent around 15% of total construction costs. UNIROL is constructing an industrial facility which will be the first steel rolling mill in Bahrain.”
Mr. Al- Zeera added: “The Bank has also recently acquired a high-quality portfolio of commercial real estate properties in Munich, Germany, valued at US$ 210 million. IIB owns a 95% stake in this portfolio, comprising three commercial properties which are rented to “Siemens Corporation” (a blue chip German company) and strategically located in Munich. The Bank and its co-investors can effectively leverage continued growth and strong demand for office space in the German commercial property sector. The projected IRR on the investment is in excess of 10.1% p.a. over an investment horizon of five years, with a cash yield of 7% p.a. payable on a quarterly basis”.
“The German investment, which marks IIB’s fourth European investment in total, and its third real estate acquisition in Europe, is aimed at providing the Bank’s GCC-based investors with access to the buoyant German commercial property market, which continues to expand at a rapid rate and is expected to deliver opportunities for both healthy returns as well as diversification”, said the CEO.
In addition, IIB has recently partnered with Islamic Corporation for the Development of the Private Sector (ICD), an affiliate of the Islamic Development Bank Group, by signing a shareholders’ agreement with several strategic partners for the establishment of Ewaan Capital in Saudi Arabia. Ewaan Capital, an asset management company with an authorized capital of 50 million Saudi Riyal, will come under the direct supervision of the Saudi Capital Markets Authority. It aims to engage in capital markets activities, fund management, investment banking and advisory services.
The principal investment offering to clients during the second quarter of 2007 was a US$ 65 million property fund which will invest in the development of land located within the Danet Abu Dhabi Master Development Project in Abu Dhabi in the United Arab Emirates. The fund will purchase two plots of land at Danet Abu Dhabi and will develop the land into a mixed-use, 21-storey twin-tower building. One tower will comprise office units whilst the other will be a mix of office and residential units. The buildings will also include retail and entertainment units, as well as car parking for 632 cars. The office and residential units will be let initially and then sold. The fund will exit from the investment within four years and is targeting an IRR of 24% p.a.
Mr. Al-Zeera continued: “Both residential and office property markets have seen significant growth in Abu Dhabi and both markets are set to deliver future growth due to a number of factors. Abu Dhabi’s population growth is driving a need for new housing units. Demand for state-of-the-art office units remains strong, and despite the upcoming supply, market projections indicate high demand and occupancy rates will continue in the coming years.”
