KUWAIT, 21 February 2008 — During the meeting held in Kuwait yesterday, the Board of Gulf Investment Corporation reviewed and approved the audited financial statements for the year 2007 with net profit $253 million after provisions, it represents credit and return on equity of 15 percent.
Commenting on GIC’s results, The Chairman of the Board Dr. Yousef Hamad Al-Ebraheem, said: “GIC achieved good results particularly in such a difficult year where the international capital markets in general and liquidity markets in particular faced one of the hardest shakes. GIC once again proved its ability to achieve good results reflecting sound strategic planning in its diversified assets and revenue sources and managing the risks in scientific methods.
GIC successfully won the bid to construct and develop Shuqaiq and Marafiq, two major power & utilities projects in Saudi Arabia, taking into consideration that Marafiq project won the international awards for best energy project in the Middle East, Europe and Africa.
In 2007 El- Ezzel Power Project and the stainless steel factory in Bahrain became operational; in addition, the iron pellets factory doubled its capacity.” Ebraheem also mentioned GIC’s intention to open branches in some of the GCC countries in 2008 to execute its expansion strategy in the coming five years. GIC has a well diversified portfolio of good quality assets and good geographical distribution. In building its balance sheet, GIC uses advanced methods in risk diversification and capital allocation.
Hisham A. Al-Razzuqi - chief executive officer added: “GIC made provisions for the impairment in the value of its portfolio of structured credits and SIV’s amounted to $246 million.
It is worth mentioning that these SIV’s did not suffer from the quality of its underlying assets but the main problem was the lack of liquidity internationally, which affected the way and the cost of financing these funds. The exposure to Sub Prime and monoline insurers is very limited and of good quality. The value of the unrated Sub Prime and monoline is limited and GIC has made full provision for it.”
Razzuqi added: “GIC achieved good results from its various investment activities in hedge funds and GCC Equities, also the projects portfolio achieved good results that were not totally added to the year results according to international accounting standards. Despite the mentioned provisions, the results of various activities added $283 million to the corporation’s capital base to reach approximately $2,000 million with a total capital ratio of 20 percent computed as per Basel II guidelines.
