gib’s general assembly ratifies - 2006 consolidated accounts and reports record profit of $255.5 million

Gulf International Bank’s (GIB) 2006 consolidated accounts were ratified at the 30^th meeting of the General Assembly convened today in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Manama, Kingdom of Bahrain.

GIB recorded consolidated net income after tax of $255.5 million for the year being $52.5 million or 26 per cent 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 $127.8 million dividend from the 2006 profits.

Commenting after the meeting, H.E. Shaikh Ebrahim K. Al-Khalifa, GIB’s Chairman and Undersecretary at the Ministry of Finance, Kingdom of Bahrain, said: “2006 proved to be the most successful year in the Bank’s history. This is the third consecutive year in which the bank has reported a record profit.  Record financial results and sound strategic progress were supported by significant business achievements and organizational developments. The overall year-on-year advance is all the more impressive when viewed in relation to GIB’s very conservative risk profile, and the increasingly competitive nature of the regional and international markets in which the Bank operates. This clearly illustrates the soundness of the Bank’s merchant banking strategy focused primarily on the Gulf Cooperation Council (GCC) states, which has successfully contributed to a diversification of earnings and sustained growth and profitability. In 2006, GIB continued to provide shareholders with enhanced returns, while maintaining favourable recognition from clients, counterparties, supervisory authorities, international credit rating agencies and market monitors. An important achievement during the year was the upgrade in GIB’s long term foreign currency rating from ‘A-‘ to ‘A’ by Fitch Ratings. This upgrade reinforces the Bank’s status as one of the highest-rated financial institutions in the Middle East.  GIB remains committed to its leadership role in the region and to its vision of becoming the merchant bank of choice in the GCC.”

Dr. Khaled Al-Fayez, GIB’s Chief Executive Officer, explained that: “The Group recorded a strong return on average equity of 14.3 per cent in 2006. The significant year-on-year increase in the Group’s profit reflected increases in both interest and non-interest income and a reduction in provisions for credit losses. Interest earnings increased by 42 per cent being principally attributable to higher GCC loan volumes, related in particular to project and structured financings, and also to a more favourable interest rate environment. GIB has consolidated its position as the leading financier and arranger of specialised lending within the GCC, with particular focus on oil, gas, petrochemical, power generation, and manufacturing sector projects as well as being the region’s most active financial institution in the loan agency business. An increase in non-interest income reflected strong fee-based earnings derived from the Group’s strategically important merchant banking activities, including asset and fund management and corporate advisory. Fee and commission income at $65.8 million for the year was 42 per cent up on the prior year, and represented the largest non-interest income category.  Funds under management increased by 21 per cent during the year rising to $21.7 billion at the year end. As a result, GIB is the largest commercial Arab-owned fund manager in the GCC region. Our objective is to continue to build the flow of non-interest income through a further increase in funds under management and important investment banking mandates.”

Consolidated total assets rose by $1.9 billion to $24.8 billion at the end of 2006. This reflected a significant growth in loans and advances which increased by $1.8 billion or 30 per cent during the year to $8.1 billion at the 2006 year end. The increase was due to further growth in the GCC loan portfolio. The year-on-year increase in the balance sheet also reflected the high level of liquidity prevailing in the GCC region. This contributed to a significant increase in customer deposits, rising by $1.8 billion to $11.2 billion at the end of 2006. Bank deposits also increased by $1.6 billion or 40 per cent during 2006.

Gulf International Bank (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 per cent of the bank, while the Saudi Arabian Monetary Agency (SAMA) owns 27.5 per cent. In addition to its main subsidiary Gulf International Bank (UK) Ltd., the Bank has branches in London, New York, Riyadh and Jeddah, as well as representative offices in Beirut and Abu Dhabi.

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