To branch out to more GCC countries
The Gulf Investment Corporation (GIC) board at a meeting yesterday reviewed and approved the audited financial statements for the year 2007 with a net profit $253 million after provisions, it represents credit and return on equity of 15 per cent. GIC's capital base increased by $283 million to $1.96 billion in 2007.
GIC, with an authorised capital of $2.1 billion, continues to be one of the most strongly capitalised financial institutions within the region.
The Chairman of the Board Dr Yousef Hamad Al Ebraheem, said: "GIC achieved good results particularly in such a difficult year where the international capital markets in general and liquidity markets in particular faced one of the hardest shakes. GIC once again proved its ability to achieve good results reflecting sound strategic planning in its diversified assets and revenue sources and managing the risks in scientific methods.
GIC successfully won the bid to construct and develop Shuqaiq and Marafiq , two major power and utilities projects in Saudi Arabia, taking into consideration that Marafiq project won the international awards for best energy project in the Middle East, Europe and Africa. In 2007, El Ezzel power project and the stainless steel factory in Bahrain became operational; in addition, the iron pellets factory doubled its capacity."
Dr Al Ebraheem also mentioned GIC's intention to open branches in some of the GCC countries in 2008 to execute its expansion strategy in the coming five years.
GIC has a well diversified portfolio of good quality assets and good geographical distribution. In building its balance sheet, GIC uses advanced methods in risk diversification and capital allocation.
Hisham A. Al-Razzuqi, Chief Executive Officer added: "GIC made provisions for the impairment in the value of its portfolio of Structured credits and SIVs amounted to $246 million.
It is worth mentioning that these SIVs did not suffer from the quality of its underlying assets but the main problem was the lack of liquidity internationally, which affected the way and the cost of financing these funds. The exposure to subprime and monoline insurers is very limited and of good quality. The value of the unrated subprime and monoline is limited and GIC has made full provision for it."
Al-Razzuqi added: "GIC achieved good results from its various investment activities in hedge funds and GCC equities, also the projects portfolio achieved good results that were not totally added to the year results according to international accounting standards.
Despite the mentioned provisions, the results of various activities added $283 million to the corporation's capital base to reach $2,000 million with a total capital ratio of 20% computed as per Basel II guidelines.
Gulf Investment Corporation is a leading regional financial institution that was established under the auspices of the Gulf Cooperation Council and is equally owned by the six-member states of the Council:
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
By Mahmood Rafique Business Correspondent
© Bahrain Tribune 2008
