- Associated Press - Monday, July 27, 2015

July 27—Manama: Bahrain-based Gulf International Bank (GIB) yesterday reported consolidated net income of $47.3 million for the six months ended June 30, as against $50.2m in the prior year period.

A statement by the bank owned by the six GCC governments, with the Public Investment Fund of Saudi Arabia holding a majority stake (97.2 per cent), said 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 retail bank launched in Saudi Arabia in December last year.

Net income after tax in the second quarter was $20.9m.

Total income at $149m was $14.6m or 11pc 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 $85.6m for the six months was $9m or 12pc 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 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 $39.1m was $3.7m or 10pc up on the prior year, and comprised more than a quarter of total income.

Foreign exchange income at $11.8m was $1.6m or 16pc up on the prior year period.

Trading income at $4.4m was $2m 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).

Other income stood at $8.1m for the six months compared to $9.8m in the prior year period.

However, prior year income included an exceptional, one-off $3m recovery relating to a previously written off loan.

Other income for the period principally comprised dividends on equity investments.

Total expenses at $91m for the six months were $9.8m or 12pc 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 $1.8bn or 9pc higher than the 2014 year end level. Cash and other liquid assets, and short-term placements totalled $9.6bn, representing 41pc of total assets.

Investment securities on June 30, which principally comprised highly rated and liquid debt securities issued by major financial institutions and regional government-related entities, amounted to $4.2bn.

Loans and advances amounted to $8.9bn, being $0.9bn or 12pc 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 $1.9bn increase in customer deposits.

As a result, customer deposits comprised 90pc of total deposits.

Securities sold under agreements to repurchase (repos) increased by $0.9bn during the first six months of the year to $1.5bn as on June 30.

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 $1bn decrease in senior term financing was due to the maturity of a Saudi Riyal denominated bond issue while a $0.3bn decrease in subordinated term financing reflected the early prepayment of a subordinated debt issue that was contractually due to mature in September.

GIB’s Basel 3 total and tier 1 capital adequacy ratios at the half year were 18.4pc and 17.2pc respectively.

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(c)2015 Gulf Daily News (Manama, Bahrain)

Visit the Gulf Daily News (Manama, Bahrain) at www.gulf-daily-news.com

Distributed by Tribune Content Agency, LLC.

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