Gulf International Bank’s net profit increases by 168%

Bahrain – The second quarter of 2022 recorded a significant increase in net profit attributable to shareholders of Gulf International Bank reaching $26.3 million compared to $9.8 million in the same period last year, an increase of 168%.

This positive performance was driven by a 28% growth in net interest income to $76.7 million, driven by higher yields, a 101% increase in net fee and commission income to 32, $6 million, primarily related to loan underwriting fees, and a reduction in trading revenue to a negative level. $10.7 million due to current unfavorable market conditions.

Provisions in the second quarter saw a reversal of $0.9 million, compared to a provision charge of $12.1 million in the second quarter of 2021.

Basic and diluted earnings per share attributable to shareholders of the bank were 1.05 cents in the second quarter of 2022, compared to 0.39 cents per share in the same period last year.

Total comprehensive income attributable to equity holders of the bank during the quarter was $20.8 million, compared to $14.3 million reported for the same period last year, representing an increase of 45 % thanks to a strong performance, as mentioned above.

For the first half of 2022, GIB achieved a notable 121% increase in net profit attributable to bank shareholders to $39.1 million from $17.7 million in the prior year period.

The improvement in performance reflects management’s success in achieving the bank’s strategic objectives. This was primarily related to a notable increase in net fees and commissions of 67% to $55.7 million, reflecting the success of the bank’s strategic initiative to diversify core revenue.

The group’s net income for the six months ended June 30, 2022 reached $46.6 million compared to $28.5 million for the same period last year, an increase of 64%.

Net interest income of $144.6 million was 25% higher than the prior year, due to improved credit spreads and higher interest rates resulting in spreads higher balance sheets.

Net fee and commission income of $55.7 million increased 67% over the prior year, again reflecting the effective and consistent execution of diversification initiatives aimed at reducing reliance on NII linked to lending while increasing asset management and business advisory fees.

Expenses

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 the fair market value of equity and managed funds managed by the Saudi subsidiary of the bank (GIB Capital) and the London-based company. subsidiary (GIB UK).

Total spending of $155.1 million for the six months was 20% higher than the prior year period due to the bank’s continued strategic investment in human capital.

Provision charge for the first half was $8.9 million, compared to a charge of $21.9 million in the first half of 2021, as the Bank took steps to actively increase its provision coverage during years, reflecting the prudent approach to risk management.

Basic and diluted earnings per share attributable to shareholders of the bank reached 1.56 cents compared to 0.71 cents per share in the prior period.

Total comprehensive income attributable to equity holders 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 equity excluding minority interests increased 2% during the period to $2.2 billion (December 31, 2021: $2.1 billion) and includes cumulative losses of $752.8 million which represent 30% of the capital and reserves of 448.4 million dollars which represent 18% of the capital.

Total consolidated assets at the end of the quarter were $38.8 billion, up 22% from the December 2021 level of $31.8 billion. Cash and other liquid assets, including short-term investments, reached $20.9 billion, representing a strong level of liquidity and representing 54% of total assets.

Investment securities of $5.9 billion consisted primarily of highly rated and liquid debt securities issued by large financial institutions and entities related to regional governments.

Loans and advances decreased 10% during the period to $10.5 billion, reflecting strategic and targeted acquisition and a 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 accounting for the majority of total deposits.

GIB’s strong funding position demonstrates the confidence of customers and counterparties in the bank based on its strong ownership and financial strength.

The bank’s liquidity coverage ratio of 283.4pc and stable net funding ratio of 156.1pc are both well above regulatory limits, reflecting the bank’s strong liquidity.

The Basel 3 total capital adequacy ratio at the end of the quarter was solid at 16.5%.

The financial statements for the first half of 2022 have been reviewed by external auditors Ernst & Young (EY) and comply with International Accounting Standard (IAS) 34 – Interim Financial Reporting.

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