Gulf International Bank reports 14 per cent increase in first half profits
Gulf International Bank B.S.C. (GIB) reported consolidated net income after tax of $150.3 million for the six months ended 30th June 2007, representing an $18.7 million or 14 per cent increase over the prior year period. The year-on-year advance reflected increases in interest and fee-based income, and a lower level of provisions for credit losses. Net income for the period represented a return on average equity of 14.4 per cent.
Net interest income at $148.7 million was $29.6 million or 25 per cent up on the prior year period. Higher interest earnings were recorded by the Bank’s GCC lending activities as a result of significantly higher loan volumes. The robust pace of economic activity and growth throughout the Gulf region continues to provide a dynamic operating environment for the bank. Fee and commission income of $41.8 million was $12.0 million or 40 per cent up on the prior year. The significant year-on-year increase was attributable to strong asset and fund management fees, and corporate advisory fees. Fee and commission income represents the second largest income category and is an important and growing contributor to the Group’s earnings. GIB continues to be the pre-eminent regional provider of financial advisory services for structured financings, privatisations, IPOs, and mergers and acquisitions. GIB is also the largest commercial Arab-owned fund manager. Trading income and profits on available-for-sale securities were at lower levels than in the prior year period. Prior year trading and available-for-sale security profits were, however, at exceptionally high levels. Total operating expenses were $8.7 million up on the prior year reflecting the impact of the weaker US Dollar on foreign currency denominated expenses and higher performance-related remuneration. The cost-to-income ratio nevertheless declined further to 32.6 per cent. Net income is reported after a $3.5 million net release of provisions for credit losses. The provision releases arose on recoveries received from impaired credit facilities. At the half year end, past due loans amounted to only $15.2 million, representing less than 0.2 per cent of gross loans.
Consolidated total assets were $27.6 billion at the half year end, being $2.8 billion up on the 2006 year end level. This was principally attributable to a further increase in loans and advances. Loans and advances increased by $2.5 billion to $10.7 billion at the half year end reflecting the strong growth momentum of the regional economics. GIB continues to maintain its status as the primary provider of project and structured finance services in the Middle East. The high level of liquidity prevailing within the region contributed to a $1.9 billion increase in deposits from customers. Total equity increased to over $2.3 billion following a capital increase of $500 million in March and the payment of a $128 million dividend in respect of 2006 profits.
GIB is a leading merchant bank in the Middle East with its principal focus on the Gulf Cooperation Council (GCC) states. The six GCC governments, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, own 72.5 per cent of the bank, while the Saudi Arabian Monetary Agency (SAMA) owns 27.5 per cent. In addition to its main subsidiary Gulf International Bank (UK) Ltd., the Bank has branches in London, New York, Riyadh and Jeddah, in addition to representative offices in Beirut and Abu Dhabi.