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Bahraini Saudi Bank in net loss of $15.3 million.

Byline: (Staff Writer)

"2008 has been an extremely challenging year in the histor y of financial markets globally," said Bahraini Saudi Bank (BSB) in a press release posted on the website of the Bahrain Stock Exchange.

"The sheer magnitude and rapidity of the meltdown across every market has been unprecedented. During the first half of 2008 it was a commonly held belief that somehow the GCC markets were immune from developments in the international markets - this proved to be misplaced. Rather than being uncorrelated with international markets, Gulf Cooperation Council (GCC) markets actually trended in a correlated manner with significant volatility particularly during the last quarter. The Bahrain market declined by 35 per cent and the Saudi market by 57 per cent. In addition to the above, the softening of the real estate sector both in Bahrain and the GCC as well as the steep decline in oil prices made matters worse." it added.

When viewed in the context of this environment, the BSB said the bank's results have been "satisfactory." The core banking business of the bank generated a net profit of BHD 6.7 million ($15.9 million) in what it called "an extremely difficult and highly competitive environment."

However, provisioning for impairment in investments of BHD 12.5 million ($33.1 million) resulted in an overall net loss for BSB of BHD 5.8 million ($15.3 million) for the whole year. The net loss for the fourth quarter was BHD 9.4 million ($24.9 million).

While investments have performed poorly on an absolute basis, BSB said the portfolio has "performed superior" to every relevant benchmark index.

With regard to the investment portfolio, BSB said the following factors deserve consideration:

The losses have arisen due to a prudent mark down in estimated fair values and represent unrealised losses;

Valuations are a function of accounting standards which recently have undergone significant changes and could change yet again in 2009;

When the local and regional economies bounce back the underlying investments are expected to revert from their historic lows resulting in potential write backs based on accounting standards then prevailing;

Even after providing for the impairment in the investment portfolio, the bank said it remains well capitalised with a capital adequacy ratio of 26 per cent.

The cumulative effect of the above activities resulted in total assets declining to BHD 196 million ($519.6 million) from BHD 230 million ($610.1 million) for the previous year. In the interests of "prudence and abundant caution", the bank said it consciously decided not to increase asset footings unless they met predetermined risk acceptance criteria. "We expect this trend to continue in 2009 with emphasis being on value preservation," it added. <p>Bahraini Saudi Bank is a retail bank with a paid up capital of BHD 50 million ($132.6 million) and authorised capital of BHD 200 million ($530.7 million). BSB was established by an Amiri Decree on 15 December 1983 and was founded with a paid-up capital held between Bahraini and Saudi shareholders. BSB offers commercial and retail banking services in Bahrain through its six branches and network of ATMs. The bank's shares are listed on the Bahrain Stock Exchange.

2009 CPI Financial. All rights reserved.

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Publication:CPI Financial
Article Type:Financial report
Date:Feb 9, 2009
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