Bahrain-based Gulf International Bank (GIB) has reported consolidated net income after tax of $60.6 million for the first half of the year, marking an increase of 4.5 per cent on the previous year period.

Net income after tax in the second quarter was $34.1 million, according to a report in the Gulf Daily News, our sister publication.

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.

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-oriented 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, 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 up 7 per cent 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 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 was $5.8 million for the six months compared with $8.6 million in the prior year period. Other income principally comprised dividends on equity investments.

Total expenses at $68.9 million were $6.4 million up on the prior year period. The year-on-year increase in expenses was attributable to on-going 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.

"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," said GIB chairman Jammaz bin Abdullah Al Suhaimi.

"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.

"The financial strength of the bank and the on-going growth in profitability is recognised by the international rating agencies, who have reaffirmed GIB's investment grade ratings," said chief executive Dr Yahya Alyahya.

"The rating agencies have also commented favourably on the strength of GIB's funding profile and capital adequacy, as well as its GCC-focused universal banking strategy," he added.

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.

Cash and other liquid assets, and short-term placements totalled $8.1 billion, representing an exceptionally high 40 per cent of total assets.

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.

GIB is a leading bank in the Middle East with its principal focus on the GCC states. The bank 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