GIB nine-month profit hits $84.6m
Manama, October 23, 2011
Bahrain-based Gulf International Bank (GIB) has registered a consolidated net income of $84.6 million after tax for the first nine months ended September 30. The net income after tax in the third quarter was $22.2 million.
Announcing the results, GIB said the year-on-year increases were recorded in all income categories, with the exception of net interest income.
'Net interest income at $105.5 million for the nine months fell 13 per cent compred to prior year period,' the bank said in a statement.
'The year-on-year decrease was attributable to a lower average loan volume associated with ongoing delevering initiatives, and an increase in the cost of term finance as a result of actions taken to minimise mismatch in maturity profile of the bank’s assets and liabilities,' it added.
'While the increase in term finance has resulted in an additional cost, it has significantly reduced the Bank’s previous reliance on short term wholesale funding, thereby protecting the Bank in the current stressed market environment,' the bank said.
At the end of September 2011 only 13 per cent of the loan portfolio was funded by short term wholesale deposits.
As recognised by the international credit rating agencies, the managed reduction in the leverage of the loan portfolio to a lower, more prudent multiple of equity has strengthened the Bank’s risk positioning. The impact on income of the reduction in the loan volume was partly offset by an increase in loan margins.
Fee and commission income at $37 million was $10.5 million or 40 per cent higher than in the prior year period.
As a result, fee-based income comprised 22 per cent of total income, reflecting continued success in the implementation of GIB’s new strategic focus on non-asset-based, relationship-orientated services. Significant year-on-year increases were recorded in both trade finance and investment banking fees.
Trading income at $14.6 million was $4.5 million or 45 per cent up on the prior year, reflecting strong customer-related foreign exchange revenues.
Other income, largely comprising dividends on equity investments and profits realised on the sale of investment securities, at $13 million was $3 million or 30 per cent up on the prior year, the bank said.
Total expenses at $84.2 million for the nine months were 15 per cent up on the prior year period. The year-on-year increase in expenses reflected ongoing investment in the implementation of GIB’s new GCC-focussed universal banking strategy, it added.
According to GIB, a net provision release of $1.1 million was recorded for the nine months.
The provision release arose on the repayment and settlement of provisioned exposures. The absence of a net provisioning requirement reflected the prudent and conservative provisioning actions taken by the Bank in previous years.
Consolidated total assets at the quarter end were $16 billion, being $0.5 billion higher than the 2010 year end level. The asset profile reflected an exceptionally high level of liquidity, it added.
GIB is a leading bank in the region 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 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.-TradeArabia News Service