Gulf International Bank reports a 9.8 per cent increase in first quarter profits to $29.1 million
Gulf International Bank B.S.C. (GIB) reported consolidated net income after tax of $29.1 million for the three months ended 31st March 2014, being 9.8 per cent up on the prior year period.
Total income at $67.1 million was $3.0 million or 4.7 per cent up on the prior year with year-on-year increases recorded in all income categories with the exception of foreign exchange and trading income.
Net interest income at $38.6 million for the three months was $3.3 million or 9.3 per cent up on the prior year period. The year-on-year increase in net interest income reflected increases in both loan volumes and loan margins 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. During the first three months of 2014, the nurturing of relationships with large and mid-cap corporates as part of the new business strategy resulted in an increase in loan margin income as well as increased non-asset based customer-related revenues. In this context, fee and commission income at $16.7 million was $2.8 million or 20.1 per cent up on the prior year, and comprised a quarter of total income. The year-on-year increase reflected 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 $5.2 million compared to $6.5 million in the prior year period. Foreign exchange income entirely 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. Foreign exchange income in the prior year period was at an exceptionally high level due to an abnormally high volume of customer transactions. Trading income was breakeven for the period compared to a $7.4 million profit in the prior year period. However, the prior year profit included an exceptional $5.9 million fair value gain on a fund investment arising on the fund's recovery of a previously written off investment. There was also a more subdued market environment during 2014. Other income of $6.6 million for the three months compared to $1.0 million in the prior year period. However, other income included an exceptional, one-off $3.0 million recovery relating to a previously impaired loan. The remaining other income principally comprised dividends on equity investments.
Total expenses at $37.9 million for the three months were $4.1 million or 12.1 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 GCC-focused universal banking strategy.
Consolidated total assets at the quarter end were $22.8 billion, being $1.6 billion or 7.6 per cent higher than the 2013 year end level. The asset profile at 31st March 2014 reflected an exceptionally high level of liquidity. Cash and other liquid assets, and short-term placements totalled $10.6 billion, representing an exceptionally high 47 per cent of total assets. Investment securities at 31st March, which principally comprised highly rated and liquid debt securities issued by major financial institutions and regional government-related entities, amounted to $3.6 billion. Loans and advances amounted to $8.0 billion, being $0.3 billion lower than at the 2013 year end, reflecting the maturity of legacy transactional-based long-term project and structured finance facilities. There was a further improvement in the Bank's funding profile in the first three months of 2014 with a $1.1 billion increase in customer deposits. 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 2 total and tier 1 capital adequacy ratios at the end of the quarter were an exceptionally strong 19.4 per cent and 17.0 per cent respectively.