MANAMA – Gulf International Bank B.S.C. (GIB) reported consolidated net income after tax of $60.6 million for the six months ended June 30, 2013, or an increase of 4.5 percent over the prior year period. Net income after tax in the second quarter was $34.1 million. Total income at $129.6 million was $9.8 million or 8 percent 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 percent 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 reorientated its lending activities from transactional-based long-term project and structured finance to relationship-based large and mid-cap corporates. As recognized 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 of 2013, the nurturing of relationships with large and mid-cap corporates since the adoption of the new business strategy resulted in a 10 percent 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 7 percent up 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 or 48 percent 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 of $5.8 million for the six months compared to $8.6 million in the prior year period. Other income principally comprised dividends on equity investments. However, prior year income also included 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 $68.9 million for the six months were $6.4 million or 10 percent 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 $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. Jammaz bin Abdullah Al-Suhaimi, GIB's chairman, said: “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. 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.” Dr. Yahya Alyahya, CEO, said: ‘The financial strength of the Bank and the ongoing growth in profitability is recognized by the international rating agencies, who have reaffirmed GIB's investment grade ratings. The rating agencies have also commented favorably on the strength of GIB's funding profile and capital adequacy, as well as its GCC-focused universal banking strategy”. – SG
