GIB nets $26.5m income in Q1
Manama, April 30, 2013
Gulf International Bank (GIB) has reported consolidated net income of $26.5 million for the three months ended March 31 as against $31.8m in the prior year period.
Total income at $64.1 million was $2.3 million or four per cent up 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, reported the Gulf Daily News, our sister publication.
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 reorients its lending activity from transactional-based long- term project and structured finance to relationship-based large and mid-cap corporates.
As recognised by 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 risk positioning, the bank said in a statement.
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-oriented 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 the prior year period. This was attributable to an increase in customer-related foreign exchange revenue.
Trading income at $7.4 million was $2 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.
Other income was $1 million for the quarter compared with $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 $33.8m 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 $3m 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," GIB chairman Jammaz bin Abdullah Al Suhaimi said.
"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," he added.
GIB is owned by the six GCC governments, with the public investment fund of Saudi Arabia holding a majority stake of 97.2 per cent.-TradeArabia News Service