Bahrain: Sico 9M attributable net profit drops 23% to $7.5mln

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Bahrain - Sico, licensed as a conventional wholesale bank by the Central Bank of Bahrain (CBB), has seen its nine-month (9M) consolidated net profit attributable to shareholders drop 23% to BD2.81 million ($7.5 million).

However, Sico’s AUMs (assets under management) increased 5% to BD1.79 billion and net fee income grew by 85%.

Sico had made BD3.66 million net profit in 9M 2021. The drop is attributed to the decline in investment income and unrealised losses recorded on account of wide selloffs in the financial markets.

Income falls

EPS were 6.67 Bahraini fils for the nine months of 2022 compared to 8.68 Bahraini fils for the same period of 2021. Sico reported a total comprehensive income of BD2.48 million for the nine months of 2022 compared to a total comprehensive income of BD4.04 million booked for nine months 2021, representing a decrease of about 39%.

Total equity attributed to shareholders remained largely unchanged at BD69.18 million as of September 30, 2022 compared to BD68.87 million recorded at year-end 2021. Sico’s total assets recorded BD265.68 million as of September 30, 2022, an increase of 1% from the BD263.52 million recorded at year-end 2021.

The strong upward trajectory across the majority of Sico’s core business lines helped offset lower investment income, reflecting the success of its diversified operational strategy and its leading market position.

Net fee income grows

The nine months of 2022 saw impressive growth in Sico’s net fee income, which climbed to BD6.97 million, an 85% increase from the nine months of 2021 figure of BD3.76 million. Brokerage activities were stable in the face of volatility and recorded a 3% increase, reaching BD2.13 million in nine months 2022 compared to BD2.07 million in the same period last year.

Other interest income saw solid growth of 36% to BD1.82 million in nine months 2022 compared to BD1.34 million in the same period last year. On the other hand, Sico’s net investment income declined by 81% year-on-year to BD697,000 in nine months 2022 from BD3.67 million recorded in the same period last year, due to rising inflation and monetary tightening.

On a quarterly basis, Sico recorded a consolidated net profit attributable to shareholders amounting to BD336,000 in the third quarter of 2022 compared to BD871,000 recorded in the same quarter last year, a 61% year-on-year decline.

Turbulent global financial market

A consistently turbulent global financial market – where for the third consecutive quarter equities and bonds continued to slide and registered historical negative performance – had negatively impacted investment income during the quarter.

Earnings per share (EPS) were 0.80 Bahraini fils in the third quarter of the year compared to 2.07 Bahraini fils in the third quarter of 2021. Sico reported a total comprehensive income of BD183,000 for third quarter 2022 compared a total comprehensive income of BD816,000 booked in the same quarter last year, representing a 78% decline.

On a gross basis (including leverage), Sico’s assets under management (AUMs) increased 5% to BD1.79 billion as of September 30, 2022, compared to the BD1.7 billion recorded at year-end 2021. Meanwhile, on a net basis (excluding leverage), total AUMs increased 3% to BD1.6 billion as of September 30, 2022, compared to the BD1.55 billion recorded on December 31, 2021.

Maintaining resilience

Chairman of the Board of Sico, Shaikh Abdulla bin Khalifa Al Khalifa, said: “Sico has maintained its resilience in the face of increased volatility across markets, all the while continuing to make progress on its strategic initiatives and the enhancement of its business lines. Our efforts have reflected positively on Sico’s performance during the nine-month period, and helped accelerate growth of our income from asset management, brokerage, investment banking, and custody and fund administration.”

Chief Executive Officer of Sico, Najla Al-Shirawi, added: “While market conditions impacted Sico’s investment income in the nine months of 2022 versus the same period last year, the book managed to outperform the benchmark and generate positive returns. Most importantly, all other core business lines delivered a commendable performance despite the challenging conditions.

“Our net fee income experienced robust growth, driven by the increase in AUMs and performance fees. We are heading into the final months of year having retained our position as one of the top quartile fund managers in the GCC and the leading brokerage house in Bahrain. Our investment banking team successfully closed the cross-border acquisition of 100% of Ahli United Bank by Kuwait Finance House as the Bahrain receiving agent, execution advisor, and cross-listing advisor.

Solidifying presence

“We also solidified our presence in Saudi Arabia, by acquiring the remaining 27.29% stake held by Bank Muscat in Sico Capital, making it a fully-owned Sico subsidiary. Moving forward, we will maintain our emphasis on enhancing our position through adaptation to market trends and further diversifying our business lines.”