Gulf International Bank net profit rises 168%

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Bahrain - The second quarter of 2022 reported a significant increase in net profit attributable to the shareholders of the Gulf International Bank reaching $26.3 million compared to $9.8m in the same period last year representing an increase of 168 per cent.

This positive performance is attributable to a 28 per cent growth in net interest income reaching $76.7m driven by increasing yields, a 101pc increase in net fee and commission income to $32.6m largely related to lending underwriting fees, and a reduction of trading income to negative $10.7m driven by current unfavourable market conditions.

The second quarter provisions witnessed a release of $0.9m, compared to a provision charge of $12.1m in the second quarter of 2021.

The basic and diluted earnings per share attributable to the shareholders of the bank amounted to 1.05 cents during the second quarter of 2022, compared to 0.39 cents per share in the same period last year.

Total comprehensive income attributable to the shareholders of the bank during the quarter amounted to $20.8m, compared to $14.3m reported for the same period last year representing an increase of 45pc driven by strong performance as mentioned above.

For the first half of 2022, GIB achieved a notable increase of 121pc in net profit attributable to the shareholders of the bank reaching $39.1m compared to $17.7m in the prior year period.

The enhanced performance reflects management’s success in achieving the bank’s strategic objectives. This was primarily related to a notable increase in net fee and commission of 67pc amounting to $55.7m reflective of success in the bank’s strategic initiative of diversifying core income.

The group’s net income for the half year ended June 30, 2022 reached $46.6m compared to $28.5m for the same period last year representing an increase of 64pc.

Net interest income at $144.6m was 25pc higher than prior year, due to enhanced lending margins, and the rising interest rates environment resulting in higher balance sheet spreads.

Net fee and commission income of $55.7m was 67pc up on the previous year, again reflecting the effective and consistent execution of diversification initiatives to reduce reliance on lending-related NII while expanding asset management and corporate advisory fees.

Expenses

Foreign exchange income of $9.3m was slightly lower than the prior year period. The trading loss of $0.9m was significantly lower than the trading income recorded in 2021 of $20.1m, and largely related to fair market value of equity and managed funds managed by the bank’s Saudi-Arabian based subsidiary (GIB Capital) and the London-based subsidiary (GIB UK).

Total expenses of $155.1m for the six months were 20pc higher than the prior year period due to the bank’s continued strategic investment in human capital.

The provision charge for the first half of $8.9m compared to a $21.9m charge in the first half of 2021, as the Bank has taken actions to actively increase its provisioning coverage in the past few years, reflecting the prudent approach to risk management.

Basic and diluted earnings per share attributable to the shareholders of the bank reached 1.56 cents compared to 0.71 cents per share in the prior period.

Total comprehensive income attributable to the shareholders of the bank reached $50.2m compared to $37.6m in the prior year period representing an increase of 34pc, driven by a positive performance.

Total shareholders’ equity excluding minority interest increased by 2pc during the period to reach $2.2bn (December 31, 2021: $2.1bn) and include accumulated losses of $752.8m that represent 30pc of capital and reserves of $448.4m which represent 18pc of capital.

Consolidated total assets at the quarter end were $38.8bn up by 22pc from December 2021 level of $31.8bn. Cash and other liquid assets including short-term placements reached $20.9bn, representing a solid level of liquidity and accounted for 54pc of total assets.

Investment securities of $5.9bn principally comprised highly rated and liquid debt securities issued by major financial institutions and regional government related entities.

Loans and advances decreased by 10pc during the period to reach $10.5bn, reflecting strategic and targeted acquisition and reduction in low margin transactions, coupled with selective underwriting.

The bank’s funding profile remained robust in the first half of 2022 with customer deposits of $28.6bn comprising the majority of total deposits.

GIB’s strong funding position demonstrates the confidence of the bank’s customers and counterparties based on its strong ownership and financial strength.

The bank’s liquidity coverage ratio of 283.4pc and net stable funding ratio of 156.1pc are both significantly above regulatory limits reflecting on the bank’s strong liquidity.

The Basel 3 total capital adequacy ratio at the quarter end was strong at 16.5pc.

The financial statements for the first half of 2022 were reviewed by the external auditors Ernst & Young (EY) and comply with International Accounting Standard (IAS) 34 - Interim Financial Reporting.