GIB reports 16 per cent rise in first half profits to US$131.6 m
Gulf International Bank B.S.C. (GIB) reported consolidated net income after tax of US$131.6 million for the six months ended 30 June 2006, representing an US$18.1 million or 16 per cent increase over the prior year period. The year-on-year advance reflected increases in both interest and non-interest earnings, a decrease in expenses, and a lower level of provisions for credit losses.
Net interest income at $95.0 million was $6.0 million or 7 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. Other income at $104.5 million was $8.8 million or 9 per cent up on the prior year.
Year-on-year increases were recorded in almost all non-interest income categories. In particular, dividend income was $7.2 million or 34 per cent above the prior year, reflecting higher income from structured investments.
Investment banking and management fees at $18.6 million were 8 per cent up on the prior year. GIB continues to be the pre-eminent regional provider of financial advisory services for structured financing, privatisations, IPOs, and mergers and acquisitions. The year-on-year increase in investment banking fees was partly attributable to a further growth in assets under management, which increased by $2 billion to $20 billion at the half year end.
GIB is the largest commercial Arab-owned fund manager. Profits on trading activities, including foreign exchange, were $21.6 million for the period, being slightly higher than in the prior year period. Relative value, arbitrage and non-directional trading strategies minimised the negative impact of the extremely volatile market environment witnessed during the second quarter.
Total expenses were $1.6 million down on the prior year due to the ongoing effective management of costs. Net income is reported after a $1.5 million net provision release. The provision release arose on the repayment of impaired loans. At the half year end, past due loans amounted to only $27.4 million, representing less than 0.5 per cent of gross loans.
Consolidated total assets were $25.1 billion at the half year end, being $2.2 billion up on the 2005 year end level. This was principally attributable to a further increase in loans and advances. Loans and advances increased by $1.5 billion to $7.7 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 and North Africa region. The high level of liquidity prevailing within the region contributed to a $2.4 billion increase in deposits from customers. Total equity amounted to $1.7 billion after payment of a $101.5 million dividend in respect of 2005 profits.
The Group’s balance sheet-related financial ratios continue to remain strong with the liquid assets ratio standing at a particularly high 66.2 per cent.
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