Total income at $64.1 million was up $2.3 million or 4 per cent on the prior year with year-on-year increases recorded in all income categories with the exception of fee and commission income and other income.
Net interest income at $35.3 million for the three months was $3.4 million or 11 per cent up on the prior year period. The year-on-year increase in net interest income principally reflected increases in both loan volumes and loan margins as the Bank successfully re-orientates its lending activity from transactional-based long term project and structured finance to relationship-based large and mid-cap corporate. As recognised by the international rating agencies, the managed reduction in the leverage of the loan portfolio that has taken place over the last few years to a more prudent multiple of equity has strengthened the Bank’s risk positioning. Fee and commission income at $13.9 million comprised almost one quarter of total income, reflecting the successful implementation of GIB’s new strategic focus on non-asset based, relationship-orientated services and on supporting customers’ commercial and trade finance requirements.
A slight year-on-year decrease in fee and commission income was attributable to an exceptionally high level of commissions on letters of credit and guarantee in the prior year period. Foreign exchange income at $6.5 million for the quarter was $3.8 million up on or more than doubles, the prior year period. This was attributable to an increase in customer-related foreign exchange revenue. Trading income at $7.4 million was $2.0 million or 37 per cent up on the prior year. Trading income comprised revaluation gains on investments in funds managed by the Bank’s London-based subsidiary, GIB (UK) Limited. Other income of $1.0 million for the quarter compared to $6.4 million in the prior year period. However, prior year income principally comprised exceptional, one-off income items including the recognition of dividend income arising on the adoption of IFRS 9, and recoveries of impaired loans.
Total expenses at $33.8 million for the three months were $3.7 million or 12 per cent up on the prior year period. The year-on-year increase in expenses was attributable to ongoing investment in the implementation of GIB’s new GCC-focused universal banking strategy. A $3.0 million provision charge was recorded in the first quarter. The limited provisioning requirement reflected prudent and conservative provisioning actions taken in prior years.
“The profitability reported in the first quarter of 2013 reflects the benefits derived from the derisking initiatives we have undertaken over the past few years. The first quarter results also reflect the new business model that has been implemented in order to achieve a diversification of revenues and to strengthen the Bank’s funding and liquidity. This has resulted in an increase in interest earnings derived from higher yielding lending to large and mid-cap corporate clients as well as enhanced non-asset based income generated from the provision of products and services that meet the business requirements of our clients,” Jammaz bin Abdullah Al-Suhaimi, GIB’s Chairman, said.
Consolidated total assets at the quarter end were $19.8 billion, being $2.1 billion or 12 per cent higher than the 2012 year end level. The asset profile at 31st March 2013 reflected an exceptionally high level of liquidity. Cash and other liquid assets, and short term placements totalled $8.2 billion, representing an exceptionally high 42 per cent of total assets. Investment securities at 31st March, which principally comprised highly rated and liquid debt securities issued by major financial institutions and regional government-related entities, amounted to $3.7 billion.
Loans and advances amounted to $7.4 billion, being $0.3 billion higher than at the 2012 year end level reflecting ongoing growth in the Bank’s lending activities. There was a further improvement in the Bank’s funding profile in the first quarter of 2013 with a $2.3 billion increase in customer deposits. GIB’s robust funding position demonstrates the confidence of the Bank’s customers and counterparties based on its strong ownership and financial strength. The Basel 2 total and tier 1 capital adequacy ratios at the end of the quarter were an exceptionally strong 19.6 per cent and 16.7 per cent respectively.