GULF INTERNATIONAL BANK ACHIEVES 121% IN NET PROFIT FOR THE FIRST HALF OF 2022

Bahrin- Fatima Al Awami

The second quarter of 2022 reported a significant increase in net profit attributable to the Shareholders of the Bank reaching $26.3 million compared to $9.8 million in the same period last year representing an increase of 168%. This positive performance is attributable to a 28% growth in net interest income reaching $76.7 million driven by increasing yields, a 101% increase in net fee and commission income to $32.6 million largely related to lending underwriting fees, and a reduction of trading income to negative $10.7 million driven by current unfavourable market conditions. The second quarter provisions witnessed a release of $0.9 million, compared to a provision charge of $12.1 million in the second quarter of 2021.

The basic and diluted earnings per share attributable to the Shareholders of the Bank amounted to US1.05 cents during the second quarter of 2022, compared to US0.39 cents per share in the same period last year. Total comprehensive income attributable to the Shareholders of the Bank during the quarter amounted to $20.8 million, compared to $14.3 million reported for the same period last year representing an increase of 45% driven by strong performance as mentioned above.

For the first half of 2022, GIB achieved a notable increase of 121% in net profit attributable to the Shareholders of the Bank reaching $39.1 million compared to $17.7 million 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 67% amounting to $55.7 million reflective of success in the Bank’s strategic initiative of diversifying core income The Group’s net income for the half year ended 30th June 2022 reached $46.6 million compared to $28.5 million for the same period last year representing an increase of 64%.

Net interest income at $144.6 million was 25% 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 $55.7 million was 67% 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. Foreign exchange income of $9.3 million was slightly lower than the prior year period. The trading loss of $0.9 million was significantly lower than the trading income recorded in 2021 of $20.1 million, 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 $155.1 million for the six months were 20% 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 $8.9 million compared to a $21.9 million 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 US1.56 cents compared to US0.71 cents per share in the prior period. Total comprehensive income attributable to the Shareholders of the Bank reached $50.2 million compared to $37.6 million in the prior year period representing an increase of 34%, driven by a positive performance.

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

Consolidated total assets at the quarter end were $38.8 billion up by 22% from December 2021 level of $31.8 billion. Cash and other liquid assets including short-term placements reached $20.9 billion, representing a solid level of liquidity and accounted for 54% of total assets. Investment securities of $5.9 billion principally comprised highly rated and liquid debt securities issued by major financial institutions and regional government related entities. Loans and advances decreased by 10% during the period to reach $10.5 billion, 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 $28.6 billion 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 283.4% and net stable funding ratio of 156.1% 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 16.5%.

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.

Fitch Ratings have reaffirmed Gulf International Bank B.S.C.’s (GIB) Outlook as Positive.

Gulf International Bank B.S.C. is a pan GCC universal bank established in 1975 and regulated by the Central Bank of Bahrain. GIB’s services are delivered across the GCC and international markets through its subsidiaries: GIB Saudi Arabia, GIB (UK) Ltd. Additionally, the Bank has branches in London, New York, and Abu Dhabi, in addition to a representative office in Dubai.

GIB is owned by the governments of the Gulf Cooperation Council countries, with Saudi Arabia’s Public Investment Fund being the main shareholder.