“We are pleased to report continued profitability in the first half of 2012 despite the impact of the initiatives we took in the past couple of years to derisk 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,” Jammaz Al-Suhaimi, GIB’s Chairman, said.
Year-on-year increases were recorded in all income categories with the exception of net interest income. Net interest income at $67.5 million for the six months was 9 per cent down on the prior year period. However, prior year interest earnings benefited from a $7.5 million recovery of past due interest on a non-performing loan. Excluding this one off exceptional income item, net interest income was marginally up on the prior year. Fee and commission income at $27.6 million was $1.1 million or 4 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 24 per cent year-on-year increase was recorded in commissions on letters of credit and guarantee. Trading income at $16.1 million for the six months was $6.3 million or 64 per cent up on 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 $8.6 million was marginally 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 $62.5 million for the six months were 13 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 US$1.6 million was recorded in the first half of the year. The absence of any provisioning requirement reflected prudent and conservative provisioning actions taken in prior years.
Consolidated total assets at the half year end were $18 billion, being $1.2 billion or 7 per cent higher than the 2011 year end level. The asset profile at 30th June 2012 reflected an exceptionally high level of liquidity. Cash and other liquid assets, and short term placements totalled $7.7 billion, representing a very high 43 per cent of total assets. Investment securities at 30th June, which principally comprised highly rated and liquid debt securities issued by major financial institutions and regional government-related entities, amounted to $3.5 billion. Loans and advances amounted to $6.4 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 half of 2012 with a $2.1 billion increase in customer deposits and a $0.1 billion increase in bank deposits. GIB’s robust funding position reflects the confidence of the Bank’s customers and counterparties based on its strong ownership and financial strength.