BMB Investment Bank semi annual income at $4.2m

Second quarter total income from operations came in at $2.2m; however it was offset by operating expenses resulting in a net loss of $0.3m as compared to a profit of $11.8m for the second quarter of 2007, due to a substantial reduction in investment realisations.

As the Bank anticipated, the credit crunch which began in the fourth quarter of last year has severely affected market conditions, thus severely impacting the Bank's investment income. Income from investments declined from $19.4m in the first half of 2007 to $8.2m in the first half of 2008.

Performance fees from investment exits have decreased and as a result income from fees and commissions came in at $0.6m for the first half of this year versus $2.2m in the corresponding prior year period. Foreign exchange translation income increased from $0.7m in the first half of 2007 to $1.0m in the first half of 2008. Net interest expense continued to improve, coming in at a loss of $0.7m in the first half of 2008 versus a loss of $2.2m in the first half of 2007, mainly due to reduced borrowing.

The Bank's general and administrative expenses increased to $4.8m in the first half of 2008 from $3.6m in the first half of 2007, partly as a result of increased staffing levels necessary to support the Bank's growth strategy, as well as inflation driven salary increases at the beginning of the year and the resultant adjustment to accrued leaving indemnities. This increase was primarily due to the aforementioned one-time salary related actions in the first quarter of this year. Accordingly, the pace of the increase in ongoing expenses will begin to moderate.

Total assets at the end of June 2008 stood at $140.4m as compared to $180.9m at the end of 2007, mainly due to the Bank's repayment of its syndicated loan and other deposits. With the distribution of the 5% stock dividend to shareholders, the Bank's share capital increased from $52.3m at the end of 2007 to $55.0m at the end of June 2008. Total shareholders' equity stood at $69.8m at the end of June 2008 compared to $71.4m as the end of 2007 due to a decrease in the fair value reserve. The Bank's Basel II capital adequacy ratio stood at a robust 26.8% at 30 June 2008 as compared to 24.0% at 31 December 2007.

In commenting on the results the Bank's Chairman, Mr. Wilson Benjamin, said:
"While the current global economic slowdown has had an impact on the pace of investment realisations, our assets are of the highest quality and our portfolio has withstood the recent economic shocks and remains robust. Our policy of mitigating risk through diversification has paid off and we remain confident in our ability to continue producing solid returns going forward. "

Albert I. Kittaneh, Chief Executive, said:

"The second quarter of this year has seen the Bank make excellent strides for its future growth strategy with plans for a $75m capital increase on course for the fourth quarter of this year. The development of new and innovative products is well under way as the Bank plans to launch a private equity fund of funds as well as a guaranteed structured note based on the Asian markets in the near future. Along with our private equity portfolio, these new products will provide a very solid platform for the Bank's profitability in the coming years."

The Bank's semi annual report can be obtained through the Bank's web site at www.bmb.com.bh.