United Gulf Bank B.S.C. (UGB), the investment banking subsidiary of the KIPCO Group, has announced the best results in its 26-years of operations with a net profit of US$ 81 million, or 10.54 US cents per share, for the year ended December 31, 2005, a jump of 87 per cent over the previous record of US$ 43.3 million posted in 2004.
The Board of Directors has recommended to the Annual General Meeting of shareholders and subject to appropriate regulators approvals, a dividend of 27.5 percent in cash or 6.875 US cents per share.
UGB’s return on average equity was an encouraging 24.7 per cent at year end, supported by continuing growth in its core business as well as a low cost base.
UGB managing director and KIPCO Asset Management Company (KAMCO) chairman, Masaud Hayat commented: “UGB has produced a third year of historic results in a row buoyed by strong GCC equity market performance, solid contributions from the wealth management business and banking network as well as from investments.
“UGB’s investment in its core subsidiaries and associates continues to represent a growing source of recurring revenues,” he continued, “and the market value of listed subsidiaries and associates, UGB Treasury shares included, now exceeds UGB’s carrying cost by US$ 623.1 million, 132 percent more than UGB’s shareholders’ equity.
“At the “ KIPCO Shafafia” transparency forum in Kuwait in June, 2005 we forecast year-end profits of US$ 50 million and this figure was later adjusted in November 2005 to $ 60 million at an investor conference in Bahrain. It is therefore indeed a reflection of the stable nature of our earnings quality that we achieved and even exceeded our forecasts,” he concluded.
UGB’s balance sheet grew a further US$ 299 million to reach US$ 1.69 billion, largely as a result of new investments and increase in associated companies resulting from increased share of profits. The balance sheet is supported by a strong capital base of US$ 472 million, as well as healthy liquidity. UGB’s ratio of liquid assets to the balance sheet total stood at 30 per cent. Capital Adequacy in the form of the BIS ratio was 25.8 per cent at year-end. This high capitalization excludes the beneficial impact of US$ 623.1 million excess in market value of quoted core investments and our Treasury shares over their carrying costs.
UGB’s revenues in 2005 reached US$ 198.8 million, compared to US$ 105.8 million in
2004. Fees and commission income, dividend income, realized gains on sale of investments and share of profits from associated companies have largely impacted the increase in revenue.
Commenting on the year ahead, UGB’s chief executive officer, William Khouri said: “2005 was an exceptional year for UGB fueled by substantial growth in investment and fee income coming mostly in the 4th quarter and in income from our core investments. We are guardedly optimistic that our strong growth will continue into 2006.
“The longer-term prospects are equally encouraging, as we anticipate further capital gains from our global portfolios, in particular US private equity fund of funds, meaningful distributions from our telecom and other regional investments, and expanding contributions from our growing banking network in Arab countries.”
UGB manages a diversified portfolio of investments in wealth and asset management, commercial banking, real estate, telecommunications, private equity and quoted securities. Core investments in subsidiaries and associates include: Algeria Gulf Bank, Algeria; Gulf Egypt for Hotels and Tourism Company, Egypt; Jordan Kuwait Bank, Jordan; KIPCO Asset Management Company, Kuwait; Tunis International Bank, Tunisia; United Gulf Bank Securities Company, Bahrain; United Cable Company, Kuwait; United Industries Company, Kuwait; Bank of Baghdad, Iraq; and United Real Estate Company, Kuwait.
UGB and its subsidiary KAMCO have a proven track record of successful investment banking transactions including corporate finance, advisory, new issue placement and underwriting, mergers and acquisitions, bond issuance and investment product structuring and placement. Assets under management exceed US$ 5.5 billion, up from US$ 4.3 billion in 2004.
KIPCO is Kuwait’s largest private sector company with more than US$ 15 billion of Group assets and a portfolio of some 55 companies with major activities in financial services and media and telecommunications, as well as real estate, industry and management and advisory throughout the Middle East and North Africa, and substantial ownership interests in the U.S and Europe. KIPCO employs more than 12,000 people internationally and its shares are among the most actively traded on the Kuwait Stock Exchange. UGB forms part of KIPCO’s Financial Services Group, which operates banks and investment companies in Algeria, Tunisia, Jordan, Palestine, Cyprus, Bahrain, Kuwait, Libya, Iraq and the U.S., with operations planned in Qatar and Syria.
