MANAMA, 6 March 2005 — Gulf International Bank’s (GIB) 2004 consolidated accounts were ratified at the 28th meeting of the general assembly here yesterday.
GIB recorded consolidated net income after tax of $150.2 million for the year being $44.1 million or 42 percent up on the previous year. This represented the highest ever result in the bank’s history. The general assembly also approved the payment of a $75.1 million dividend from the 2004 profits.
Commenting after the meeting, Sheikh Ebrahim K. Al-Khalifa, GIB’s chairman and undersecretary at the Ministry of Finance, said: “2004 proved to be an excellent year for GIB. I am delighted to report that as a result of our efforts to consolidate on significant improvements across the bank’s major operating activities in recent years, GIB recorded the highest ever profit. in its history. The strong performance reflects further improvements across all of the bank’s principal business activities, demonstrating the success of our strategic initiatives combined with an effective and proactive management of risk. This provides testimony to our embracing of strategic change in 2002 as a merchant bank focused primarily on the GCC, which has contributed to the diversification and enhancement of income. “The GIB Group remains steadfast in its goal to become the GCC merchant bank of choice, with market leadership in its portfolio of activities”.
Dr. Khaled Al-Fayez, GIB’s chief executive officer, explained that “the group’s return on average shareholder’s equity at 10.3 percent in 2004 compared extremely favorably against prevailing investment benchmarks. The significant year-on-year increase in the group’s profit was due to increases in interest and non interest earnings, the containment of expenses, and a lower level of provisions for credit losses.
The increase in interest earnings was principally due to significantly higher loan volumes and margins, related in particular to GCC project and structured financings. GIB has further consolidated its position as the leading financier and arranger of specialized lending within the GCC. The group has also expanded its capabilities in areas such as shipping finance, secondary market asset trading and Islamic finance. The increase in non-interest income reflected strong fee-based income derived from the group’s strategically important merchant banking activities, including asset and fund management and corporate advisory. “Our objective is to continue building the flow of non-interest income though important investment banking mandates. We were also successful in containing operating expenses below the prior year level. This reflected the group’s continued disciplined approach to cost control”.
Consolidated total assets rose by $1.8 billion to $19.1 billion at the end of 2004. The loan portfolio increased by $1.5 billion or 41 percent during the year. The increase principally reflected further growth in the GCC loan portfolio. Shareholder’s equity amounted to a little over $1.5 billion at the 2004 year end. This is the first time that the bank’s shareholder’s equity has exceeded $1.5 billion. The BIS risk asset ratio at Dec. 31, 2004 was 11.6 percent being very comfortably above the regulatory minimum of 8 percent and also at a level that will accommodate desired future balance sheet growth. As recognized by the international credit rating agencies, the group’s balance sheet-related financial ratios are strong with the liquid assets ratio standing at a particularly high 70.8 percent.
GIB is a leading merchant bank in the Middle East with its principal focus on the Gulf Cooperation Council (GCC) states. The six GCC governments, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, own 72.5 percent of the bank, while the Saudi Arabian Monetary Agency (SAMA) and J. P. Morgan Overseas Capital Corporation own 22.2 percent and 5.3 percent respectively. In addition to its main subsidiary Gulf International Bank (UK) Ltd., the bank has branches in London, New York, Riyadh and Jeddah, in addition to representative offices in Beirut and Abu Dhabi.