On behalf of the Board of Directors, it is my privilege to present the annual report and consolidated financial statements of Securities & Investment Company (SICO) for the year ended 31 December 2016. As predicted, this was another tough and testing twelve months, marked by continued economic and market volatility, a regional liquidity crunch, and subdued investor sentiment. It was also a year of the unexpected. Surprises such as the outcome of the Brexit referendum, results of elections in the US and Europe, and the devaluation of the Chinese currency, raised new concerns and heightened uncertainty.
Against such a challenging backdrop, SICO posted another positive financial performance. Operating income for the year was BD 7.9 million compared with BD 8.4 million in 2015, while total operating expenses amounted to BD 5.3 million against BD 5.5 million the previous year. The Bank reported a net profit of BD 2.3 million compared with BD 2.8 million in 2015, with basic earnings per share of Bahraini fils 5.5 versus 6.6 fils for the prior year. At the end of 2016, total balance sheet footings stood at BD 147.1 million compared with BD 112.8 million at the end of the previous year. SICO continued to maintain a solid capital base, with shareholders’ equity of BD 58.1 million against BD 58.4 million in 2015. The Bank also maintained a very strong consolidated capital adequacy ratio of 61.4 per cent, which is substantially higher than the Central Bank of Bahrain’s requirement.
Significantly, fee-based income accounted for 50 per cent of total income, while total assets under management exceeded US$ 1 billion, reflecting the resilient performance of our core business lines. Such achievements illustrate clients’ continued confidence in SICO’s ability to deliver a superior performance in challenging market conditions. They also reinforce the Bank’s enduring commitment to actively support the development of Bahrain’s banking sector, capital markets and economy.
From a strategic perspective, we further diversified our product offering during the year, with the introduction of new real estate-related business initiatives. Our entry into alternative investments asset management, which is not directly correlated to the performance of regional capital markets, will further diversify SICO’s revenue generators, and provide a new source of recurring income that will help us to withstand the impact of ongoing market volatility.
During 2016, we continued to strengthen our institutional capability, with further investments in information technology and human capital. We also enhanced our corporate governance and risk management frameworks to ensure ongoing compliance with regulatory authorities in the jurisdictions in which SICO operates. At the same time, we continued to implement our corporate social responsibility programme to support the social well-being and economic prosperity of the Kingdom of Bahrain.
Looking ahead, 2017 is likely to be another highly-testing and unpredictable period. . However, improved stability in oil prices, together with the economic reforms being implemented by regional governments, should have a beneficial future impact on GCC economies. The Board has every confidence in the Bank’s prospects, and its ability to seize growth opportunities, irrespective of the challenges that might lie ahead.
Based on SICO’s 2016 financial results and in accordance with the Bahrain Commercial Companies Law 2001, BD 234 thousand has been transferred to the Statutory Reserve.
The Board is recommending payment of a cash dividend of BD 2.142 million to shareholders, representing 5 per cent of paid-up capital; and BD 25 thousand towards supporting charitable, cultural and educational activities; for approval by the shareholders at the annual general meeting.
The Board takes this opportunity to acknowledge the continued confidence and encouragement of our shareholders; the trust and loyalty of our clients and business partners; and the commitment and professionalism of our management and staff. The Board also expresses its appreciation to the Central Bank of Bahrain and the Bahrain Bourse for their continued guidance and support. On behalf of the shareholders, management and staff of SICO, the Board conveys its best wishes and sincere gratitude to His Majesty the King, His Royal Highness the Prime Minister, and His Royal Highness the Crown Prince, for their wise leadership, visionary reform programme, and support of the Kingdom’s financial sector.
Abdulla bin Khalifa Al-Khalifa
Chairman of the Board