Net profit for the nine months ended 30 September 2015 was BHD 2.3 million compared with BHD 6.8 million for the corresponding period in 2014, a decrease of 66 per cent mainly due to the volatility in regional and global markets, impacting in particular SICO’s proprietary book performance during the third quarter this year compared to the markets strong performance for the same period of last year. Total income was BHD 6.7 million versus BHD 11.7 million for the first nine months of the previous year, around 42 per cent lower. Basic earnings per share stood at Bahraini 5.3 fils (net of Bahraini 9 fils per share dividends distributed earlier this year) versus 15.8 fils for the first nine months of 2014.
For the third quarter of 2015, SICO reported a net loss of BHD 1.2 million compared with a net profit of BHD 1.7 million for third quarter of 2014, reflecting the mark-to-market losses incurred by SICO’s proprietary book. Total income was a negative BHD 16,000 compared to BHD 3.5 million the previous year. Basic earnings per share were a negative Bahraini fils 2.9 compared with 4.1 fils in the third quarter of 2014.
The contribution to total income during the third quarter of 2015 from interest income increased to BHD 406,000 (3Q14: BHD 369,000), which demonstrates SICO’s ability in effectively managing its cash and debt book. Contributions from net fee and commission income, and brokerage and other income, reduced to BHD 780,000 (3Q14: BHD 826,000) and BHD 316,000 (3Q14: BHD 443,000), respectively, as a result of the drop in the performance and turnover of GCC markets. Net investment income for the quarter was a negative BHD 1.5 million compared with a positive contribution of BHD 1.8 million for the third quarter in 2014. Total expenses reduced to BHD 1.2 million from BHD 1.7 million for the similar period in 2014.
For the first nine months of 2015, interest income contributed BHD 1.2 million (9M14: BHD 1 million), net fee and commission income totalled BHD 2.6 million (9M14: BHD 3.1 million), and brokerage and other income amounted to BHD 1.3 million (9M14: BHD 2 million); while net investment income reduced to BHD 1.6 million (9M14: BHD 5.5 million). Total expenses, which include staff and related expenses, other operating expenses and interest expense, reduced to BHD 4.5 million from BHD 4.9 million for the corresponding period in the previous year.
As at 30 September 2015, total balance sheet footings had increased to BHD 118.7 million from BHD 115.6 million at the end of December 2014; while shareholders’ equity had reduced slightly to BHD 58.1 million (net of dividends distributed earlier in the year) from BHD 61.1 million at the previous year-end.
Assets under management grew to BHD 349.6 million ($927.3 million) from BHD 338.8 million ($898.7 million) at the end of the previous year, an indication of clients’ confidence in SICO’s asset management capability to deliver better performance than its benchmarks and peer group, even in challenging market conditions. Assets under custody with the Bank’s wholly-owned subsidiary – SICO Funds Services Company (SFS) – increased to BHD 1.7 billion ($4.5 billion) from BHD 1.6 billion ($4.3 billion) at year-end 2014.
Commenting on these results, Shaikh Abdulla bin Khalifa Al Khalifa, Chairman of Securities Investment Company, said, “Despite the third quarter of 2015 proving to be considerably more challenging and volatile than had been predicted, SICO was successful in maintaining profitability for the first nine months of the year. Given the significantly more favourable economic and market background during the corresponding period in 2014, we view this as an encouraging performance, albeit below our earlier expectations.”
Putting the financial results for the first nine months of 2015 into context, Chief Executive Officer of SICO, Ms. Najla M. Al Shirawi, said, “During this period, all GCC markets performed dramatically lower than the corresponding period in 2014, when the SP Composite Index gained 22 per cent compared with a negative 12 per cent for the first nine months of 2015. Liquidity also dried up in GCC markets, with the average daily market turnover in US dollars declining between 40 and 50 per cent quarter-on-quarter across all markets, as investors became more risk averse and turned away from equities as an asset class. Oil prices fell by more than 30 per cent from second quarter 2015 levels, which exaggerated the sell-off across markets. Brent crude was US$ 95.6 per barrel at 30 September 2014 compared with $46.7 at the end of September 2015.
“Looking ahead, we expect markets to remain volatile, and oil prices to remain range bound. GCC markets are readjusting company earnings to reflect the impact of sustained low oil prices. The status of the GCC economies remains sound and able to address current challenges. In our opinion, interesting new investment opportunities will arise from market corrections.
“Our clients continue to place significant value in our services. We will continue to focus on serving their needs and managing shareholders’ capital prudently – a commitment which is central to our long-term value proposition,” Ms. Al Shirawi concluded.