BMB Investment Bank profit at $24.6m

The Bank's Board of Directors is recommending to its shareholders a 5% stock dividend, subject to the approval of the Central Bank of Bahrain and the Bank's Ordinary General Meeting.

The main highlights of the year's performance include:
• Net income rose to $24.6m in 2007 from $21.1m in 2006
• Income from investments came in at $23.2m as compared to $27.2m in 2006
• The Bank completed the sale of its headquarters building late in 2007 resulting in a net income of $13.2m
• Income from foreign exchange translation was $1.9m as compared to $6.1m in 2006
• General and administrative expenses declined to $8.7m in 2007 from $9.3m in 2006
• Total assets rose to $180.9m in 2007 from $172.7m in 2006
• Total shareholders equity increased to $71.4m as compared to $46.4m
• Basel I capital adequacy ratio improved to 31.4% as compared to 20.2% in 2006
• Basel II capital adequacy ratio on 1 January 2008 stood at 24.0%

Increase in net income

The Bank's core private equity business continues to drive profitability as net income for the year amounted to $24.6m an increase of 16.6% from $21.1m in 2006. Despite a slight decrease in investment income due to the slowdown witnessed in the global markets in the second half of the year, income from investments still came in at a healthy $23.2m as compared to $27.2m in 2006.

With a view to strengthening its paid-in capital, the Bank's Board of Directors is recommending a 5% stock dividend to its shareholders.

Sale of "BMB Centre"

The Bank completed the private sale of its headquarters building in Manama, "BMB Centre", for a net income of $13.2m. In view of the substantial boom in the real estate market the Bank determined that it was in its best interest to realize the gains on its building.

Foreign exchange translation income

Foreign exchange translation income amounted to $1.9m versus $6.1m in 2006 as the Bank took the prudent approach of maintaining lower foreign currency positions to reduce the volatility.

Fees and commissions

Fees and commissions income came in at $2.5m as compared to $3.2m in 2006. This decrease was attributed to the Bank's decision to reduce its placement activities with the onset of the U.S. sub-prime and credit crisis.

Increase in total assets and shareholders' equity

Total assets at 31 December 2007 were $180.9m as compared to $172.7m at 31 December 2006. Meanwhile shareholders' equity increased by over 53.9% from $46.4m in 2006 to $71.4m in 2007. Consequently, the Bank's Basil I capital adequacy ratio improved from 20.2% at the end of 2006 to 31.4% at the end of 2007. With the implementation of Basel II effective 1 January 2008, the Bank's capital adequacy ratio stood at 24.0%.

Prepayment of syndicated loan

The Bank intends to fully prepay the remaining balance of $28.5m of its $75m syndicated loan in February 2008; a full four months ahead of schedule. This move will provide additional operational and strategic flexibility for the Bank and should increase the Bank's access to funding.

In commenting on the results the Bank's Chairman, Mr. Wilson Benjamin, said:
"Over the past three years BMB has clearly demonstrated both its strong earning power and the validity of its business model under what can be described as nothing short of extremely challenging circumstances.

Our financial foundation has been rebuilt; our spirit and vision revitalized. In 2008 we will begin moving forward with several new product and business initiatives. In doing so, we will retain our strategic focus on the medium to long term, identifying fundamental shifts in macroeconomic and market trends and aligning our strategies to take advantage of them."

Albert I. Kittaneh, Chief Executive, said:
"We are extremely pleased to report that 2007 was another year of significant and sustained progress at BMB. The Bank has come through the years of adversity with a renewed strength and increased vigor.

As we embark on the exciting new phase of expanding the depth and breadth of our business through added market and geographic penetration, we will do so in a prudent and incremental manner, always cognizant of the risks in global markets."

Bahrain Middle East Bank (BSC) was established in 1982. The Bank's shares are listed on the Bahrain Stock Exchange under (BMEB.BH) and are held by shareholders primarily across the GCC.