BMB Investment Bank said that its net income for the second quarter of 2008 fell to $4.2 million compared to $12.8 million in the same period in 2007. BMB said second quarter total income from operations came in at $2.2 million; however it said it was offset by operating expenses which resulted in a net loss of $300,000 compared to a profit of $11.8 million for the second quarter of 2007, due to what it called “a substantial reduction in investment realisations.”
It said 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 fell by more than half from $19.4 million in the first half of 2007 to $8.2 million 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 $600,000 for the first half of the year versus $2.2 million in the corresponding prior year period.
Foreign exchange translation income increased from $700,000 in the first half of 2007 to $1 million in the first half of 2008.
Net interest expense continued to improve, coming in at a loss of $700,000 in the first half of 2008 versus a loss of $2.2 million in the first half of 2007, mainly due to reduced borrowing.
The bank’s general and administrative expenses increased to $4.8 million in the first half of 2008 from $3.6 million 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 $140.4 million compared to $180.9 million 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 per cent stock dividend to shareholders, the bank’s share capital increased from $52.3 million at the end of 2007 to $55 million at the end of June 2008. Total shareholders’ equity stood at $69.8 million at the end of June 2008 compared to $71.4 million as the end of 2007 due to a decrease in the fair value reserve. The bank’s Basel II capital adequacy ratio stood at 26.8 per cent at 30 June 2008 as compared to 24 per cent at 31 December 2007.