Gulf International Bank (GIB), a leading bank in the Middle East, reported a net income of $31.2 million after tax in the second quarter (Q2) of the year, compared to $20.9 million in the prior year period.

The bank’s consolidated net income after tax reached $41.7 million for the period, compared to $47.3 million in Q2 2015.

Total income at $151.4 million for the six months was $2.4 million up on the prior year with year-on-year increases recorded in all income categories with the exception of fee and commission income, and foreign exchange income. The year-on-year increase in the Bank’s core income reflects the successful progress in the implementation of the new business strategy to transform GIB into a leading pan-GCC universal bank providing innovative customer-centric solutions.

Net interest income at $91.0 million for the six months was $5.4 million or 6 per cent up on the prior year period. The year-on-year increase in net interest income reflected increases in both loan volumes and loan margins as the Bank continues to successfully reorientate its lending activities from transactional-based long-term project and structured finance to relationship-based large and mid-cap corporates, a statement said.

Fee and commission income at $32.6 million was $6.5 million lower than in the prior year, although comprised more than 20 per cent of total income. The year-on-year decrease in fee and commission income was principally due to a difference in the timing of investment banking fees that are due to arise later in 2016 compared to 2015.

Foreign exchange income at $9.0 million was $2.8 million lower than in the prior year period. Foreign exchange income principally comprised revenue derived from customer-related activities, and in particular revenues derived from structured products designed to assist customers in hedging their foreign exchange exposures in the current volatile markets. Income in the first half of 2015 was at an exceptionally high level. This decrease was, however, partly compensation by higher revenue derived from customer-related interest rate derivative activities that is classified in trading income.

Trading income at $4.6 million was $0.2 million up on the prior year period. In addition to revenue derived from customer-related interest rate derivative activities, trading income comprised gains on an investment in a fund managed by the Bank’s London-based subsidiary GIB (UK) Limited.

Other income of $14.2 million for the six months compared to $8.1 million in the prior year period. Income for the period included an exceptional, one-off $8.5 million recovery relating to a previously written off loan. The remaining other income for the period principally comprised dividends on equity investments.

Total expenses at $102.3 million for the six months were $11.3 million or 12 per cent up on the prior year period. The year-on-year increase in expenses was attributable to costs associated with new core banking and treasury IT systems infrastructure that went live in the third quarter of 2015, and the on-going investment in the implementation of GIB’s new retail banking proposition.

As a result of recent actions taken to minimise expenses, the year-on-year increase in total expenses will be more subdued in the second half of the year, the statement said.

The provision charge for the first half of the year was $3.9 million being $6.0 million less than the provision charge in the first half of 2016. – TradeArabia News Service