MANAMA: Gulf International Bank (GIB) has reported consolidated net income after tax of $84.6 million for the nine months ended Sept. 30. Net income after tax in the third quarter was $22.2 million.
Year-on-year increases were recorded in all income categories, with the exception of net interest income.
Net interest income at $105.5 million for the nine months was 13 percent down on the prior year period.
The year-on-year decrease was attributable to a lower average loan volume associated with ongoing delivering initiatives, and an increase in the cost of term finance as a result of actions taken to minimize the mismatch in the maturity profile of the bank's assets and liabilities.
While the increase in term finance has resulted in an additional cost, it has significantly reduced the bank's previous reliance on short term wholesale funding, thereby protecting the bank in the current stressed market environment.
At the end of September, short-term wholesale deposits funded only 13 percent of the loan portfolio.
As recognized by the international credit rating agencies, the managed reduction in the leverage of the loan portfolio to a lower, more prudent multiple of equity has strengthened the bank's risk positioning.
The impact on income of the reduction in the loan volume was partly offset by an increase in loan margins.
Fee and commission income at $37.0 million was $10.5 million or 40 percent higher than in the prior year period.
As a result, fee-based income comprised 22 percent of total income, reflecting continued success in the implementation of GIB's new strategic focus on non-asset-based, relationship-orientated services.
Significant year-on-year increases were recorded in both trade finance and investment banking fees.
Trading income at $14.6 million was $4.5 million or 45 percent up on the prior year, reflecting strong customer-related foreign exchange revenues.
Other income, largely comprising dividends on equity investments and profits realized on the sale of investment securities, at $13.0 million was $3.0 million or 30 percent up on the prior year.
Total expenses at $84.2 million for the nine months were 15 percent up on the prior year period.
The year-on-year increase in expenses reflected ongoing investment in the implementation of GIB's new GCC-focused universal banking strategy.
A net provision release of $1.1 million was recorded for the nine months.
The provision release arose on the repayment and settlement of provisioned exposures.
The absence of a net provisioning requirement reflected the prudent and conservative provisioning actions taken by the bank in previous years.
Consolidated total assets at the quarter end were $16.0 billion, being $0.5 billion higher than the 2010-end level.
The asset profile at Sept. 30 reflected an exceptionally high level of liquidity.
Cash and other liquid assets, and short-term placements totaled $5.5 billion, representing a very high 35 percent of total assets.
Investment securities at Sept. 30, which principally comprised highly rated and liquid debt securities, amounted to $3.3 billion.
© Arab News 2011
