Bahrain based BMI Bank (BMI) today announced its financial results for the year ended December 31st 2008. Net interest income increased by BHD 5.6 million, an increase of 62% over 2007. Non interest income for the year grew from BHD 3.7 million to BHD 5.1 million, an increase of 38% over 2007. Total assets grew by 60% to BHD 815 million as compared to BHD 510 million in 2007 while total deposits grew by 42% to BHD 578 million as compared to BHD 406 million reported in 2007. Total Loans and Advances grew to BHD 487 million during the year 2008, a rise of 49% over 2007. As a consequence of the global financial crisis, the bank has prudently raised provisions for impaired assets of BHD 7.8 million, leading to a loss of BHD 6.6 million for the fourth quarter of 2008 and BHD 2.98 million for the year.

Announcing the results, Sheikh AbdulMalik bin Abdullah Al Khalili, Chairman of BMI said,

“Underlying the headline figures are investments in improving our product range and our operating capability, start up costs for our offshore business in Seychelles, our international branch in Qatar and our associate in Kenya, Gulf African Bank (21.33% owned by BMI), as well as our network expansion and our acquisition of the Diners franchise in Bahrain. BMI has a very strong capital adequacy ratio, strong liquidity and has positioned itself for the difficult markets that we foresee in 2009. By improving our product offering and growing the branch and ATM network in Bahrain, we have improved the customer offering and made BMI a stronger choice for our customers.

The recent financial crisis exposed stresses in some of our customers outside Bahrain and we have prudently provided for the amounts due from these customers. We have also reviewed our credit policies and procedures to ensure they are robust and have reduced our exposure to certain markets outside the GCC. Whilst we are disappointed by the need to raise such provisions, this is a prudent and sensible reaction to the recent significant deterioration in global financial markets.

The Management team has done a good job considering the turbulent market conditions in the last quarter of 2008 and have the support of the Board on the prudent steps taken as well as on the way forward”

During 2008, BMI launched 4 retail branches in Bahrain as well as 8 new offsite ATMs taking its total local network to 8 branches and 25 ATMs. In addition the bank also launched Sapphire, its Premier Banking service, acquired Diners Club, a premium brand card issuing and acquiring business and unveiled La Carte its first cobranded credit card in partnership with Geant. BMI also launched its offshore banking operations in Seychelles and opened its branch in Qatar in the 3rd and 4th quarter respectively.

Andrew Bainbridge, Chief Executive Officer BMI Bank, said,

“Obviously, I am disappointed to report these headline figures. At BMI, we do not have any exposure to Collateralized Debt Obligations (CDOs), Structured Investment Vehicles (SIVs) or other complex products. We do however have exposure to customers outside Bahrain and some of these have been stressed by the turbulence of the last quarter of 2008, hence our need to provision heavily against these loan exposures. We believe that the operating environment for banks will remain difficult in 2009, and our excellent capital position and strong liquidity, position us well for these difficult market conditions. We have a stable and growing business to leverage on with strong shareholder and customer support as demonstrated by the recent affirmation of our ratings by both Standard & Poor’s and Moodys as an investment grade rated bank.

Going forward we will continue to focus on our three pillars of customer service, infrastructure and control to create a stronger customer-focused business that succeeds throughout the economic cycle. I take this opportunity to thank the Central Bank of Bahrain, our shareholders and customers for their confidence in our capabilities and our staff for their continued commitment and support.”