Securities and Investment Company reports net profit of BD2.74m for 2012

Operating income for the final quarter of 2012 increased to BD2.22m compared to BD1.82m for the corresponding 2011 period while total expenses for the 4Q2012 rose slightly to BD1.05m from BD967 thousand for the 4Q11.

The net profit for the fourth quarter of 2012 is BD1.14m, compared with BD852 thousand for the previous year.

SICO's financial performance in 2012 showed a significant improvement over the previous year. Net profit grew more than five-fold to BD2.74m compared to BD488 thousand in 2011;

while operating income increased to BD7.35m (2011: BD4.63m), with basic earnings per share rising to 6.41 Bahraini fils (2011: 1.14 fils). As of 31 December 2012, total balance-sheet footings had grown by over 11% to BD78.36m, from BD70.64m at the end of 2011. A strong performance by SICO's asset management business resulted in total assets under management increasing to BD228.2m (2011: 206 million); while securities under custody with the Bank's wholly-owned subsidiary, SICO Funds Services Company BSC, remained strong at BD824m (2011: BD864m), due to the success of concerted marketing activities.

Commenting on these financial results, Shaikh Abdulla bin Khalifa Al-Khalifa, SICO's Board Chairman, said: "Set against a very challenging economic and market background in 2012, this is a creditable performance. These financial results reflect the success of SICO's long-held prudent risk philosophy, which seeks to capture new business opportunities while limiting undue risk; combined with carefully aligning the Bank's interests with those of clients. We continued to focus on addressing our clients' GCC investment requirements, both in the equity and fixed income spaces. In addition through our wholly owned subsidiary SFS we continue to offer a distinct and service oriented product for custody and administration."

The Chairman also noted: "Growing and diversifying our business lines and revenue streams, extending our regional footprint, and enhancing client service remain key pillars of our consistent strategy. Examples include the start of operations by our new brokerage subsidiary in the UAE in September, which is opening up new business opportunities in this very important market; the winning of new mandates in the areas of agency brokerage, asset management, and custody and administration; and the approval from the Central Bank of Bahrain for the launch of a new Fixed Income Fund in early 2013.

"At the same time, we further strengthened the Bank's corporate governance and risk management framework; and also enhanced our operating infrastructure with successful initiatives in the areas of human resources and information technology, providing a solid basis for future growth," concluded Shaikh Abdulla.

Net interest income, net fee and commission income, and brokerage and other income during 2012 contributed BD1.29m, BD2.25m and BD668 thousand respectively to operating income. Net investment income grew substantially to BD3.13m compared with BD318 thousand the previous year. Operating expenses, which include staff overheads, general administration and other expenses, rose to BD4.43m compared with BD3.98m for 2011, due largely to the establishment of SICO UAE; while impairment on available-for-sale investments remained modest at BD184 thousand (2011: BD 154thousand).

The Bank continued to maintain a strong capital base, ending the year with BD57.29m in shareholders' equity and a very strong consolidated capital adequacy ratio of 77.28%, substantially higher than the Central Bank of Bahrain requirement. SICO currently has 41.5% (or BD32.52m) of its balance sheet in cash and deposits, compared with 28.3% (or BD19.96m) at the end of 2011. Available-for-sale securities at the end of December 2012 stood at BD23.15m (end-2011: BD27.04m), while investments at fair value through profit or loss were BD14.72m (end-2011: BD16.74m). A significant amount of SICO's market risk exposure continues to be in short duration investment-rated corporate, bank and GCC government fixed income instruments.

According to Anthony Mallis, CEO of Securities & Investment Company: "Our successful overall performance in 2012 underscores the continued effectiveness of SICO's consistent strategy; and sensible management principles based on product and asset diversification. It also highlights the dedicated commitment of the Bank's team to deliver high quality and innovative services with integrity and professionalism, while retaining the confidence, trust and loyalty of our clients. We will continue to focus on serving our clients' needs while managing shareholders' capital prudently - a commitment which is central to our long-term value proposition.

"Despite the challenges that lie ahead, we remain optimistic about the medium- and long-term outlook for SICO. We have identified promising business opportunities in all our core business lines, and we are strongly positioned to capture such opportunities as the markets recover. In the meantime, until we see greater clarity, SICO will continue to stay on track, focus on what we do best, and try to do it better; always acting in the best interests of our clients, shareholders and employees," Mr Mallis pointed out.