BMB Investment Bank announces US$ 6.2 million first quarter profit

Earnings from private equity played a major role in this profitability and amounted to US $10.9 million, an increase of 193% over the first quarter private equity income of 2004, which had amounted to US $3.7 million. On the foreign exchange side, the Bank declared a loss of US $1.5 million versus a profit of US $0.5 million in the first quarter of 2004. This loss was primarily as a result of the fact that the Bank was unable to hedge its foreign exchange positions due to lack of foreign exchange lines since September 2002.

The Bank also continued with its cost cutting and disciplined management of expenses as can be seen in the 21% decline in operating expenses from US $2.3 million in the first quarter of 2004 to US $1.8 million in the first quarter of 2005.

In commenting on the rights offering, Shaikh Ali Jarrah Al-Sabah, Chairman, said: 'We are extremely pleased with our strong performance in the first quarter of the year. With the negotiations with our loan syndicate now behind us, and the finalization of our capital increase over the next few weeks, BMB is poised to forge ahead on the path to recovery.'

Albert I. Kittaneh, Chief Executive, said: 'We have always been confident in the quality of the assets the Bank maintained in the private equity book and are pleased to see the fruits of that quality. While we have been hurt over the last three years by events outside our control, the Bank will reestablish its credibility in the marketplace and move forward as it rebuilds its franchise. However, until the Bank re-establishes its trading lines, its earnings will continue to be volatile and subject to market fluctuations as we are unable to hedge our exposure to foreign exchange.'

Bahrain Middle East Bank (E.C.) was established as an Offshore Banking Unit in 1982. Although currently not trading, its shares are listed on the Bahrain Stock Exchange under (BMEB.BH). The Bank's shares are held by over 13,000 shareholders throughout the Gulf.