The offshore Manama-based Bahrain Middle East Bank (BMB) saw a turnaround in its performance in 1993, reporting profits of $6.1 million after a $18.5 million loss in 1992 .The recovery took place amid a radical restructuring including a 32 per cent cut in the bank’s loan portfolio.

In the past year, BMB made far-reaching changes in its senior management and operations, and placed more emphasis on investments, treasury operations and private banking (MEED 5:11:93; 23:4:93)

The improvement is due to increased profitability from foreign exchange operations, and the reorganisation of the investments portfolio, BMB says. Investment income rose by more than 300 per cent to $7.1 million and foreign exchange trading profits increased to $2.8 million in 1993, compared with a loss of $170,000 in the previous year.

‘BMB’s future strategy will be to continue to diversify away from commercial lending activities and focus more on treasury operations, investments and private banking,’ chairman Abdul Rahman Salem al-Ateeqi says.

Total assets declined by 17 per cent to $499 million mainly due to the strategic move away from lending. Loans and advances fell by 32 per cent to $147.7 million. Loan loss provisions were cut by 88 per cent to $2 million. Customer deposits shrank by 27 per cent to $178.2 million. Net operating income, before provisions and restructuring costs, rose to $14 million from $2.7 million.

Al-Ateeqi says that private-sector investment and asset management services will be an important market for the bank. BMB will be introducing a range of funds for a niche base of clients this year. The first, the Profex foreign exchange services fund, was introduced in January.

As part of its continued restructuring, BMB has announced it is closing its New York agency in the first quarter of 1994. ‘The bank plans to continue to run its commercial paper programme, Cayman Islands branch and its securities activity out of its head office in Bahrain,’ chief executive Albert Kittaneh says.

BMB closed its European banking subsidiary, European Universal Bank, in June 1993. However, the bank will retain a presence in London, Amsterdam and Kuwait, Kittaneh says.