MANAMA, 29 June 2007 — Bahrain-based BBK has successfully completed the issuance of its inaugural $275 million Lower Tier II Debt Issue under its 1 billion euro medium-term note program with an end maturity of 10 years, callable after five years. The notes, rated A3 by Moody’s and BBB+ by Fitch, pays a coupon of 75 bps over 3-month $ LIBOR. Citibank and Standard Chartered Bank were the joint lead managers and book-runners for this transaction.
The transaction was launched on June 10 with comprehensive roadshows in the key financial centers of Middle East, Asia and Europe. BBK was represented on the roadshows by its senior management who presented the bank’s credit story during the investor meetings and group presentations. The roadshows were very well attended in all the above centers.
The transaction closed within 24 hours from the release of price guidance, with very strong demand from international investors. The syndicate and marketing strategies resulted in an oversubscribed order book allowing BBK to price the transaction below its price guidance. At the time of pricing, the book was 2 times oversubscribed.
Due to the strong investor response, the transaction was evenly placed between Asia (29 percent), Europe (32 percent) and the Middle East (39 percent).
Within the final order book, banks accounted for 60 percent, asset managers 28 percent, and others 12 percent.
Dr. Farid Al-Mulla, general manager CEO of BBK, said: “BBK fully achieved its objectives from this transaction. While the bank enjoys comfortable levels of capital, it took this opportunity to strengthen its capital base ahead of expected ongoing asset growth. The transaction was competitively priced and reached out to new investors in Asia, Europe and the Middle East. I would like to extend my gratitude to all parties involved in this transaction.”
BBK has announced a net profit of BD9.6 million for the first quarter of 2007, an increase of 6 percent over the last year’s first quarter profits of BD 9 million. However, the income for 2006 included seasonal dividend income of BD 0.48 million.
received from a particular investment while similar income for 2007 was not recorded in the first quarter pending shareholders approval. If adjusted for comparison purposes, the underlying net profit for the current year would be higher by BD 1.0 million or 12 percent as compared to last year.
The improvement in profitability was mainly driven by continuous growth in net interest income, which at BD 11.5 million grew impressively by 19.5 percent when compared to the same period in 2006. The growth was driven by sharp increase in customer loans and investment securities.
The bank’s FX and fees income for the period also increased to BD4.2 million, an increase of 13 percent over previous year. The main contributors to the increase were foreign exchange income, card income and corporate commission.
The operating expenses for the bank increased by about BD 1.0 million (16 percent) as the bank continued to invest in further building the business. Despite the increase, the bank’s cost to income ratio improved further to 40 percent, compared to 41.4 percent for the year 2006. The bank continued to provide prudently against impaired assets, which resulted in a net provision charge of BD0.93 million for the quarter.