Cash And Trade Magazine For Cash and Trade professionals in the Middle East
26th July 2015
Gulf International Bank B.S.C. (GIB) reported consolidated net income after tax of $47.3 million for the six months ended 30th June 2015, compared to $50.2 million in the prior year period. Prior year income included an exceptional, one off recovery of a previously written off loan. Excluding this exceptional income item, net income was marginally up on the prior year despite an increase in expenses associated with GIB’s new innovative retail bank launched in the Kingdom of Saudi Arabia in December 2014. Net income after tax in the second quarter was $20.9 million.
Total income at $149.0 million was $14.6 million or 11 per cent up on the prior year with year-on-year increases recorded in all income categories with the exception of other income. The year-on-year increases in all core income categories reflects the successful progress in the implementation of the new business strategy to transform GIB into a leading pan-GCC universal bank providing innovative customer-centric solutions.
Net interest income at $85.6 million for the six months was $9.0 million or 12 per cent up on the prior year period. The year-on-year increase in net interest income reflected an increase in the loan volume as the Bank continues to successfully reorientate its lending activities from transactional-based long-term project and structured finance to relationship-based large and mid-cap corporates. Fee and commission income at $39.1 million was $3.7 million or 10 per cent up on the prior year, and comprised more than a quarter of total income. The year-on-year increase reflected continued success in GIB’s strategic focus on non-asset based, relationship-orientated products and services, and on supporting customers’ commercial and trade finance requirements. Foreign exchange income at $11.8 million was $1.6 million or 16 per cent up on the prior year period.
Foreign exchange income principally comprised revenue derived from customer-related activities, 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 $4.4 million was $2.0 million up on the prior year period. Trading income principally comprised gains on an investment in a fund managed by the Bank’s London-based subsidiary GIB (UK) Limited. Other income of $8.1 million for the six months compared to $9.8 million in the prior year period. However, prior year income included an exceptional, one-off $3.0 million recovery relating to a previously written off loan. Other income for the period principally comprised dividends on equity investments.
Total expenses at $91.0 million for the six months were $9.8 million or 12 per cent up on the prior year period. The year-on-year increase in expenses was attributable to the on-going investment in the implementation of GIB’s new retail banking proposition.
Consolidated total assets at the half year end were $23.1 billion, being $1.8 billion or 9 per cent higher than the 2014 year end level. The asset profile at 30th June 2015 reflected a high level of liquidity. Cash and other liquid assets, and short-term placements totalled $9.6 billion, representing an exceptionally high 41 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 $4.2 billion. Loans and advances amounted to $8.9 billion, being $0.9 billion or 12 per cent higher than at the 2014 year end, reflecting new relationship-based large and mid-cap corporate loans. There was a further improvement in the Bank’s funding profile in the first half of 2015 with a $1.9 billion increase in customer deposits. As a result, customer deposits comprised 90 per cent of total deposits. Securities sold under agreements to repurchase (repos) increased by $0.9 billion during the first six months of 2015 to $1.5 billion at 30th June 2015.
The increase in repos reflected a strategic initiative to fund a higher proportion of the investment security portfolio through repos in order to minimise the related funding costs. A $1.0 billion decrease in senior term financing was due to the maturity of a Saudi Riyal denominated bond issue while a $0.3 billion decrease in subordinated term financing reflected the early prepayment of a subordinated debt issue that was contractually due to mature in September 2015. 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 3 total and tier 1 capital adequacy ratios at the half year were an exceptionally strong 18.4 per cent and 17.2 per cent respectively.
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, Dhahran, Riyadh, Jeddah and Abu Dhabi, in addition to representative offices in Dubai and Beirut.
