Khaleeji Commercial warns of tough year

Khaleeji Commercial Bank posts a loss for the full year, compared with a profit the year prior. Choppy waters lie ahead this year, the Bahraini lender said.

Khaleeji Commercial Bank (KHCB) has warned choppy waters lie ahead this year after posting a loss for the full year, compared with a profit in 2009.

The bank, which is 37 per cent owned by Gulf Finance House, reported a net loss of 6.5 million Bahraini dinars last year compared with a profit of 3.1m dinars in 2009, with the loss attributed to higher provisioning.

The recent challenges facing the sector will continue through the rest of the year, the bank said in a filing to the Bahrain Stock Exchange. Shares, closing yesterday at 56 fils, have lost 26 per cent in the past six months. The bank reported net operating income of 2m dinars before accounting for provisions.

KHCB continues to maintain strong liquidity, with 20.9 per cent of its assets considered liquid, and boasts a regulatory capital adequacy ratio of 31.8 per cent, both comfortably in excess of regulatory requirements. The bank's total assets declined by 11.5 per cent to 419.2m dinars last year.

Revenue declined by 41.1 per cent, mainly because of lower income from investment banking activities when compared with previous years. Given the challenging credit and economic conditions, the lender's board also increased impairment provision by 8.6m dinars.

But the bank managed to increase its financing portfolio by 2.8 per cent to 211.1m dinars and revenue from commercial and retail banking activities by 7.1 per cent, confirming the success of the bank's strategy of expanding its commercial banking business.

"Like other financial institutions, the current market environment has had an adverse impact on the bank, both directly and indirectly," said Dr Fuad al Omar, the chairman of KHCB.

"However, we are pleased that through a combination of prudent and conservative management, the bank was able to navigate this difficult period successfully."

KHCB plans to expand its retail banking business. This year it will open four branches in Bahrain at Sanad, Muaharraq, Budaiya and Isa town.