“We are pleased to report continued profitability growth in the first quarter of 2012 despite the initiatives we took in the past couple of years to de-risk the wholesale lending portfolio and improve the funding profile of the Bank, while at the same time investing in the future of the Bank through new strategic initiatives,” announcing the Q1 results Chairman of the bank Jammaz Al-Suhaimi, GIB’s Chairman, said.
Consolidated total assets at the quarter end were $18.5 billion, being $1.7 billion or 10 per cent higher than the 2011 year end level. The asset profile at 31st March 2012 reflected an exceptionally high level of liquidity. Cash and other liquid assets, and short term placements totalled $8.2 billion, representing a very high 44 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 $6.3 billion, being $0.4 billion lower than at the 2011 year end level. There was a further improvement in the Bank’s funding profile in the first quarter of 2012 with a $1.3 billion increase in customer deposits and a $0.3 billion increase in bank deposits. The exceptionally high level of liquidity was partially being maintained in preparation for the repayment of a $1.2 billion term loan in May. GIB is in an extremely comfortable funding position in advance of the maturity of the term loan facility. GIB’s robust funding position reflects the confidence of the Bank’s customers and counterparties based on its strong ownership and financial strength. In the recent Fitch Ratings report it was stated “GIB has a strong liquidity position…even without relying on its investment portfolio which provides a sizeable liquidity buffer”. The Basel 2 total and tier 1 capital adequacy ratios at the end of the quarter were an exceptionally strong 22.9 per cent and 18.6 per cent respectively.
Net interest income of $31.9 million for Q1 was up $0.6 million on the prior year period. A reduction in the loan volume during the first quarter of the year was offset by an increase in loan margins as the bank re-orientates its lending activity from transactional-based long term project and structured finance to relationship-based large and mid-cap corporates.
Fee and commission income at $15.4 million was $0.8 million or 5 per cent higher than in the prior year period. As a result, fee-based income comprised almost one quarter of total income, reflecting the successful implementation of GIB’s new strategic focus on non-asset based, relationship-orientated services and on supporting customers’ commercial and trade finance requirements. In particular, a significant year-on-year increase was recorded in commissions on letters of credit and guarantee. Trading income at $8.1 million for the quarter was $4.1 million up on or more than doubled the prior year period. This was attributable to a year-on-year increase in customer-related foreign exchange revenue as well as profits on investments in emerging market debt. Other income of $6.4 million was $2.9 million up on the prior year. Other income principally comprised dividends on equity investments, profits realised on the sale of investment securities, and recoveries of impaired loans. Total expenses at $30.1 million for the three months were 11 per cent 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 $0.5 million was recorded in the first quarter.