Gulf International Bank B.S.C. reports an 8.5 per cent increase in first half profits to USD66.7 million

The year-on-year increase was attributable to a further significant advance in investment banking revenues and a lower level of provisions. Net income is reported after provisions for credit losses of $7.6 million, being $31.7 million lower than the provision charge of $39.3 million in the first half of 2003. The significant reduction in provisions reflects the benefits derived from the bank's strategic focus on the GCC region and the effective risk diversification provided by the bank's high quality, investment grade-rated securities portfolio. Net interest income at $85.8 million was marginally lower than in the prior year period. Higher margin income from the bank's core GCC banking activity was offset by a decrease in interest earnings resulting from the lower interest rate environment. Other income at $47.8 million was 32 per cent down on the prior year. Within other income, a further significant advance was recorded by investment banking and management fees. Investment banking and management fees at $12.8 million for the period were 33 per cent up on the prior year reflecting continued positive growth momentum derived from the bank's strategic emphasis on GCC-related merchant banking activities.

Profits on available-for-sale securities were also $5.0 million or 45 per cent up on the prior year. These positive developments were, however, more than offset by lower trading revenues reflecting a considerably more volatile and less favourable market environment than in the first half of 2003. A 4.6 per cent increase in total expenses was principally due to the impact of the weaker US Dollar on foreign currency denominated expenses.

Consolidated total assets at the half year were $18.3 billion, being $1.0 billion up on the 2003 year end level. This was principally attributable to a $0.8 billion increase in loans and advances. Deposits from customers increased by $1.2 billion or 25 per cent over the 2003 year end level. Deposits from banks decreased by a corresponding amount due to the associated lower requirement for interbank funding. Term financing also increased by a further $0.2 billion to total $1.7 billion at the half year end. The Group's balance sheet-related financial ratios remained strong with the liquid assets ratio standing at a particularly high 73.6 per cent. Shareholder's equity at the end of June 2004 was $1.4 billion, representing 7.9 per cent of total assets.