GIB reported consolidated net income, after tax, of $60.6 million for the six months ended 30th June 2013, being 4.5 per cent up on the prior year period. Net income after tax in the second quarter was $34.1 million.
Total income at $129.6 million was $9.8 million or 8 per cent up on the prior year with year-on-year increases recorded in all income categories with the exception of other income.
“Loans and advances amounted to $7.8 billion, being $0.7 billion higher than at the 2012 year end, reflecting ongoing growth in the Bank’s lending activities. There was a further improvement in the Bank’s funding profile in the first half of 2013 with a $2.9 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 19.4 per cent and 16.2 per cent respectively,” the bank in a statement said.
Consolidated total assets at the half year end were $20.1 billion, being $2.4 billion or 14 per cent higher than the 2012 year end level. The asset profile at 30th June 2013 reflected an exceptionally high level of liquidity. Cash and other liquid assets, and short term placements totalled $8.1 billion, representing an exceptionally high 40 per cent of total assets. Investment securities at 30th June, which principally comprised highly rated and liquid debt securities issued by major financial institutions and regional government-related entities, amounted to $3.8 billion.
“The profitability reported in the first half of 2013 reflects 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.
Net interest income at $76.2 million for the six months was $8.7 million or 13 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-orientated its lending activities from transactional-based long term project and structured finance to relationship-based large and mid-cap corporates.
“As recognised by the international rating agencies, the managed reduction in the loan portfolio that took place over the last few years to a more prudent multiple of equity strengthened the Bank’s risk positioning. During the first half of 2013, the nurturing of relationships with large and mid-cap corporates since the adoption of the new business strategy resulted in a 10 per cent increase in loan volumes as well as increased non-asset based customer-related activities. Fee and commission income at $28.2 million comprised more than one fifth of total income, reflecting success in the implementation of GIB’s new strategic focus on non-asset based, relationship-orientated products and services, and on supporting customers’ commercial and trade finance requirements. Foreign exchange income at $11.7 million was 7 per cent up on the prior year period. This was attributable to an increase in customer-related foreign exchange revenue, and in particular revenues derived from structured products designed to assist customers in hedging their foreign exchange exposures in the current volatile markets. Trading income at $7.7 million was $2.5 million or 48 per cent up on the prior year period. Trading income comprised revaluation gains on investments in funds managed by the Bank’s London-based subsidiary, GIB (UK) Limited. Other income of $5.8 million for the six months compared to $8.6 million in the prior year period. Other income principally comprised dividends on equity investments. However, prior year income also included exceptional, one-off income items including the recognition of dividend income arising on the adoption of IFRS 9, and recoveries of impaired loans,” the bank in a statement added.
Total expenses at $68.9 million for the six months were $6.4 million or 10 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 $2.1 million net provision release was recorded in the first half of the year. The provision release arose on the sale of impaired loans. The sale proceeds exceeded the provisioned book value of the loans.
Gulf International Bank (GIB) is a leading bank in the Middle East with its principal focus on the Gulf Cooperation Council (GCC) states. The Bank is owned by the six GCC governments, with the Public Investment Fund of Saudi Arabia holding a majority stake (97.2 per cent). In addition to its main subsidiaries Gulf International Bank (UK) Ltd. and GIB Capital, the Bank has branches in London, New York, Riyadh and Jeddah, in addition to representative offices in Beirut and Abu Dhabi.