Bahrain Middle East Bank (BMB) has consolidated its turnaround of 1993 with higher returns from investment activity and savings from the rationalisation of its international activities. This enabled BMB to increase its profits in the first half of 1994 despite facing difficult operating conditions and a big reduction in net interest income as the bank moved out of commercial lending to focus on investment, treasury and private banking business.

Rationalisation measures in the first six months saw the closure of BMB's New York agency in March and the transfer of commercial paper and US securities trading activity to the head office, the Manama-based offshore banking unit says.

BMB says it has retained its Cayman Islands branch and will continue to be an active participant in US financial markets. BMB retains operations in London, Amsterdam and Kuwait City. It plans to expand its UK activity to source unquoted equity deals for marketing in the Gulf and to manage European investment activity.

The senior management is being expanded as part of BMB's restructuring. Nico Limmen, a former senior executive of BP Europe and ABN-Amro Bank, has been appointed to expand and diversify BMB's treasury operations. Further new senior appointments are planned for the London operation, BMB says.

BMB's net profit rose to $2.33 million in the six months to 30 June. This compares with $2.21 million in the comparable period of 1993. In the 12 months to 31 December 1993, BMB made a $6.1 million net profit, having made an $18.5 million loss in 1992 (MEED 4:2:94).

Commenting on the results, BMB chief executive Albert Kittaneh said the sharp decline in global bond and equity markets, combined with the rise in US interest rates, has provided a difficult operating environment in the first half of 1994.

'We are pleased that the financial results continue to improve despite these unsettled market conditions and the ongoing strategic repositioning of the bank,' Kittaneh said.